1) publicly traded yankee bonds must
a.meet the same regulations as u.s. domestic bonds
b.meet the same regulations as eurobonds if sold to europeans
c.meet the same regulations as samurai bonds if sold to japanese
d.none of the above
2) the ________’s bank sends the letter of credit to the ________’s bank. after sending
the merchandise, the ________ gives the shipping documents and time draft to his
bank.
a.importer; exporter; exporter
b.exporter; importer; importer
c.importer; exporter; importer
d.exporter; importer; exporter
3) find the yield to maturity for this floating rate note: the reset date is today; coupons
are paid annually according to the formula (libor + percent); since issuance, there has
not been a change in the issuer’s credit rating. the bond has ten years to maturity and
libor = 3.5 percent.
a.3.5%
b.4%
c.3.75%
d.there is not enough information provided to make a determination
4) the massive privatization that is currently taking place in formerly socialist countries,
will likely
a.eventually enhance the standard of living to these countries’ citizens
b.depend on private investment
c.increase the opportunity set facing these countries’ citizens
d.all of the above
5) good cash management boils down to
a.investing excess funds at the most favorable interest rate and borrowing at the lowest
rate when there is a temporary cash shortage
b.investing excess funds at the lowest rate and borrowing at the highest rate when there
is a temporary cash shortage
c.hedging currency exposure with judicious use of futures, forwards, and currency
option contracts
d.none of the above
6) generally, the higher the turnover ratio,
a.the less liquid the secondary stock market, indicating ease in trading
b.the more liquid the secondary stock market, indicating ease in trading
c.the more liquid the primary stock market, indicating ease in trading
d.the more efficient the stock market is
7) the territorial method of declaring a national tax jurisdiction is to
a.tax all income earned within the country by any taxpayer, domestic or foreign
b.tax national residents of the country on their worldwide income no matter in which
country it is earned
c.also known as the residential method
d.none of the above
8) the /$ spot exchange rate is $1.50/ and the 90-day forward premium is 10 percent.
find the 90-day forward price.
a.$1.65/
b.$1.5375/
c.$1.9125/
d.none of the above
9) which of the following statements about multilateral netting system are correct?
(i) – each affiliate nets all its interaffiliate receipts against all its disbursements
(ii) – each affiliate transfers or receives a balance, depending on whether it is a net payer
or receiver
(iii) – the net funds to be received by the affiliates will equal the net disbursements to be
made by the affiliates
(iv) – only two foreign exchange transactions are necessary since the affiliates’ net
receipts will always be equal to zero
(v) – only two foreign exchange transactions are necessary since the affiliates’ net
disbursements will always be equal to zero
a.(i) and (ii)
b.(i), (ii), and (iii)
c.(i), (ii), (iii), and (iv)
d.(i), (ii), (iii), and (v)
10) the bond equivalent yield that the exporter pays in discounting the b/a is:
a.6.10%
b.9.29%
c.6.02%
d.none of the above
11) which of the following is true regarding leveraged buy-outs (lbos)?
a.lbos involve managers or buyout partners acquiring controlling interests in public
companies, usually financed by heavy borrowing
b.concentrated ownership and high level of debt associated with lbos are the mechanism
for solving the agency problem
c.lbos improve a company’s free cash flow and this is the mechanism by which they can
solve the agency problem
d.both a and b
12) which factors fuel the sale of “yankee” stock offerings?
a.privatization by many latin american and eastern european government-owned
companies
b.the rapid growth in the economies of the developing world
c.the expected large demand for new capital by mexican companies now that nafta has
been approved
d.all of the above
13) during the period of the classical gold standard (1875-1914) there were
a.highly volatile exchange rates
b.volatile exchange rates
c.moderately volatile exchange rates
d.stable exchange rates
e.no exchange rates
14) assume the time from acceptance to maturity on a $5,000,000 banker’s acceptance is
90 days. further assume that the importing bank’s acceptance commission is 1.5 percent
and that the market rate for 90-day b/as is 6.0 percent. calculate the amount the exporter
will receive if he discounts the b/a with the importer’s bank.
a.$4,981,750
b.$4,906,250
c.$4,009,375
d.none of the above
15) the comparative advantage argument in free trade
a.ignores the cost of readjustment
b.is a short-run argument
c.only works for two goods at a time
d.none of the above
16) comparing “forward” and “futures” exchange contracts, we can say that
a.delivery of the underlying asset is seldom made in futures contracts
b.delivery of the underlying asset is usually made in forward contracts
c.delivery of the underlying asset is seldom made in either contractthey are typically
cash settled at maturity
d.both a and b
e.both a and c
17) eurocredits
a.are often so large that individual banks cannot handle them
b.short- to medium-term loans of eurocurrency extended by eurobanks to corporations,
sovereign governments, nonprime banks, or international organizations
c.frequently require the use of a banking syndicate
d.all of the above
18) consider the no-trade input/output situation presented in the following table and
graph for south and north carolina. assume that free trade is legal.
what is the relative price of a gun in terms of butter in south carolina?
a.1 gun costs 3 butters
b.3 guns costs 1 butter
c.1 gun costs 2 butters
d.2 guns costs 1 butter