CHP 12 BUS 250

Economist Martin Feldstein has coined the term _____ to pertain to long-term, cross-border capital flows.

"patient money"

A(n) _____ is any currency banked outside its country of origin.

Eurocurrency

_____ are sold outside of the borrower's country and denominated in the currency in which they are issued, and _____ are normally underwritten by an international syndicate of banks and placed in countries other than the one in which the bond is denominated.

Foreign bonds; Eurobonds

Which of the following is one of the attractions of the Eurobond market?

The tax status is favorable.

The Eurocurrency market has two significant drawbacks: _____ and _____.

a higher probability of a bank failure due to a lack of regulation; foreign exchange risk

The function of a capital market is to

bring together those who want to invest money with those who want to borrow money.

Investors using the global capital market have a wider range of investment opportunities than a purely domestic capital market. One of the most significant consequences of their choice is that they

can reduce their risk to below what could be achieved in a strictly domestic market.

One of the consequences of the global financial crisis of 2008 and 2009 for hedge funds, which are private investment funds, was a(n)

growing concern that deregulation had gone too far.

A global capital market benefits borrowers by lowering the cost of capital and

increasing the supply of funds available for borrowing.

Two factors that helped global capital markets take off in the last decades of the 20th century were _____ and _____.

information technology; deregulation by governments

Different accounting conventions can make the problem of lack of information about the quality of foreign investments by

making direct comparisons difficult.