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1INTERNATIONALFINANCEAssignmentProblems(7)Name:Student#:I.Choosethecorrectanswerforthefollowingquestions(onlyONEcorrectanswer)(4creditsforeachquestion,totalcredits3x21=63)1.__________aredomesticcurrenciesofonecountryondepositinothercountries.A.LIBORsB.EurobondsC.EurocurrenciesD.Euronotes2.Eurocreditsare__________.A.bankloanstoMNCsorothersdenominatedinacurrencyotherthanthatofacountrywherethebankislocatedB.typicallyvariablerateswhicharetiedtotheLIBORC.usuallyformaturitiesofsixmonthsorlessD.alloftheabovearetrue3.AJapanesefirmhadchosentodepositmoneyinaGermanbankandhaveitdenominatedinJapaneseyen,thisisanexampleofa__________deposit.A.EurobondB.EuronoteC.EuroyenD.foreignyen4.Ifabondisissuedbyadomesticborrower,denominatedbydomesticcurrency,marketedandregulatedbydomesticmonetaryauthorities,thisisa__________.A.foreignbondB.EurobondC.domesticbondD.globalbond5.AbondthattradesintheEurobondmarketaswellasinoneormorenationalbondmarketsisa__________.A.EurobondB.globalbondC.foreignbondD.domesticbond6.__________areissuedinadomesticmarketbyaforeignborrower,denominatedindomesticcurrency,marketedtodomesticresidents,andregulatedbydomesticauthorities.A.foreignbondsB.Eurobonds2C.domesticbondsD.Yankeebonds7.TheFederalNationalMortgageAssociation(FannieMae)issuedadollar-denominatedbondwitha7.25%annualcouponandamaturitydatein2030tonon-U.S.investorsinanexternalmarket.Thisbondistypicallya__________.A.foreignbondB.EurobondC.domesticbondD.Yankeebond8.Aeuro-denominatedloanistradedinEurocurrencymarket.Thisloaniscalled__________.A.euroloanB.EuroeuroloanC.foreigneuroloanD.noneoftheabove9.WhichofthefollowingistrueforaEurocurrencymarket?A.AEurocurrencymarketisnotsubjecttoanycountries’interestrateregulations.B.AEurocurrencymarketdoesnotneedtomeetanycountries’reserverequirements.C.AEurocurrencymarketenjoystheprivilegeoffreeflowofcapitalsD.Alloftheabovemustbetrue10.CitigroupinLosAngelesborrowsaCanadiandollar-denominateddepositfromUnionBankofSwitzerland(UBS)inGeneva.Thisisa__________deposit.A.EuronoteB.Euro-SwissfrancC.Euro-CanadiandollarD.Eurobond11.WhichofthefollowingisNOTtrueabouttheoriginalEurodollar?A.TheSovietUnionmaintaineddollar-denominateddepositsinU.S.banksintheearly1950s.TheSovietgovernmentfearedthatU.S.mightfreezethosedepositsbecauseoftheColdWar.B.TheSovietUnionmovedthosedollarstobanksinLondon.C.SincethedollarswereinEurope,theywerecalled“Eurodollars”.D.TheSovietUnionworriedthattheU.S.wouldnotconverttheU.S.dollarintothegoldaspromised.12.Therearemanywaystoclassifyfinancialmarkets.Thecategoryofmoneymarketandcapitalmarketismadeaccordingto__________.A.whetherornottheyareregulatedbyasinglecountryB.whetherornotafinancialintermediarystandsbetweenborrowersandsaversC.thematurityofthefinancialassetsandliabilitiesD.theparticipantsofthemarkets313.A__________isanagreementinwhichaborrowersellshisT-billstoabankandpromisestobuythembacklateratanagreedprice.A.commercialpaperB.repoC.banker’sacceptanceD.negotiablecertificateofdeposit14.Accepteddraftsrefertothosetimedraftsissuedby__________andpromisedtopayby__________atmaturity.A.aninvestor;abankB.afirm;abankC.abank;afirmD.abank;aninvestor15.WhichofthefollowingdidNOTcontributetotheprosperityoftheEurodollarmarket?A.increasedregulationofbankingactivitiesprevailedin1960sinU.S.B.easyaccesstoU.S.capitalmarketbyforeigninvestorsC.hugedollarincomeofOPECcountriesin1970sD.tremendousgrowthofinternationaltradeandinvestment16.ThemostfrequentquotedrateonEurocurrencymarketisthe__________.A.U.S.T-billrateB.BankofEngland’srateC.LIBORD.Federalfunds’rate17.WhichofthefollowingisNOTafeatureoftheEurobond?A.Eurobondsareusuallyissuedinbearerform.B.Eurobondsare“straight”bonds.C.Eurobondsusuallyhavelongermaturitiesthanthoseondomesticmarkets.D.Eurobondsdonothavewithholdingtaxes.18.ASamuraibondis__________.A.ayenbondissuedintheUnitedStatesbyaninstitutionresidinginJapanB.ayenbondissuedinJapanbyaninstitutionresidingoutsideofJapanC.anon-yenbondissuedinJapanbyaninstitutionresidingoutsideJapanD.noneoftheaboveareSamuraibond19.IfIBMissuesregisteredbondinNewYorkStockExchange,the__________needstokeeptherecordsoftheownersofitsbonds.A.IBMB.NewYorkStockExchangeC.IRS(InternalRevenueService)D.U.S.TreasuryDepartment420.Iftheinterestratesdecline,onecanexpectthat__________.A.pricesofthebondswillusuallybeupB.pricesofthebondswillusuallybedown.C.pricesofthebondswillusuallyremainthesame.D.pricesofthebondsmaybeupormaybedown,becausethepriceofbondhasnorelationwiththeinterestrate.21.Eurobanksare__________.A.bankswhereEurocurrenciesaredepositedB.majorworldbanksthatconductaEurocurrencybusinessinadditiontonormalbankingactivitiesC.financialintermediariesthatsimultaneouslybidfortimedepositsinandmakeloansinacurrencyotherthanthatofthecurrencyofwhereitislocatedD.alloftheabovearedescriptionsofaEurobank.II.Problems(17Credits)1.WhichofthefollowingareEurodollarsandwhicharenot?(1creditforeachquestion,totalcredits1x10=10)a.AU.S.dollardepositownedbyaGermancorporationandheldinBarclay’sBankinLondon.b.AU.S.dollardepositownedbyGermancorporationandheldinBankofAmerica’sofficeinLond