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88) ________ can inject risk into foreign currency borrowing.
A) Movements in exchange rates
B) Use of fixed-exchange rates
C) Issue of domestic bonds
D) Use of pegged exchange rates
89) Borrowers can hedge against foreign exchange risks by entering into a ________ contract.
A) hedge fund insurance
B) prevailing exchange rate
C) forward
D) global capital market
90) Entering into a forward contract will
A) increase the risk involved in a transaction.
B) lower the borrower's cost of capital.
C) benefit the borrower because the interest rate will be lower.
D) raise the borrower's cost of capital.
91) What is a capital market? Define market makers.
92) Explain how equity loans and debt loans differ in terms of attractiveness to businesses.
93) Explain the changes observed in the risk of investments when an investor increases the number
of stocks in his or her portfolio.
94) There is a low correlation between the movement of stock markets in two different countries.
What are the two factors that influence this?
95) Discuss the impact of technology on the growth of the global capital market.
96) Briefly describe the trends observed in the global deregulation of financial services.
97) What are the financial advantages that make the Eurocurrency market attractive to both
depositors and borrowers?
98) What are the drawbacks of the Eurocurrency market?
99) Describe a fixed-rate bond.
100) What are foreign bonds?
101) Explain Eurobonds with an example.
102) Write a brief note on foreign exchange risks and the cost of capital.
103) How can a borrower hedge against unpredictable movements in exchange rates?
104) How does growth in global capital markets impact investing firms?
