INTB 336 Final
10. Which of the following interest rate pair has usually the smallest gap/spread? (a) LIBOR -- LIBID (b) domestic lending rate -domestic borrowing rate (c) Eurocurrency lending rate - Euro currency deposit rate (d) consumer loan rate - domestic deposit rate
A
12. The Ted spread measures the difference between ___ and ___ . (a) LIBOR, TB rate (b) The Fed funds rate, the discount rate (c) TB rate, forward premium/discount (d) The prime rate, the 3-month CD rate
A
3. Which of the following theories to the exchange rate determination do you think should be applied to the long-run forecasting of the exchange rate? (a) purchasing power parity (PPP) theory (b) asset market approach (c) monetary approach (d) fundamental macroeconomic approach
A
4. Which of the following is one of the tools using the technical approach to FX rate forecasting? (a) using graphs of moving average and trend lines (b) asset market approach to exchange rate determination (c) FX forward rates (d) purchasing power parity
A
6. Which of the following factors is least likely used in the fundamental approach to the exchange rate forecasting? (a) trading volume, bid-ask spread and charts (b) the balance of payment (c) interest rate differentials (d) money supply and income
A
1. When a Big-Mac hamburger costs 100 Indian Rupee in New Delhi, and it costs 2 dollars in Philadelphia, the exchange rate based on the law of one price should be: (a) 200 Rupee per dollar (b) 50 Rupee per dollar (c) 98 Rupee per dollar (d) 0.02 Rupee per dollar
B
2. Which of the following is not a right match between FX rate determination theory and data required for the application of the theory? (a) PPP - price and inflation (b) asset market approach - housing price and stock market index (c) monetary approach - monetary policy and money growth (d) macroeconomic approach - GDP growth rates and business cycle
B
13. The largest benefit from international portfolio diversification can be obtained when (a) The correlation coefficient between national markets are positive and close to 1.0. (b) The covariance between national markets are zero. (c) The correlation coefficients are negative and close to -1.0. (d) The variances of return in each market are very large and increasing.
C
14. Which of the following is one of Eurobonds. (a) Samurai bond (b) Panda bond (c) Dim sum bond (d) Yankee bond
C
15. Which of the following is not one of main proposals for global banking sector reforms? (a) device early warning system (b) impose sufficient capital requirements on banks (c) break up too-big-to-fail banks (d) deregulate and liberalize shadow banking and credit derivatives
C
7. The contagion effect of the recent global financial crisis including the European sovereign debt problems throughout the world implies that: (a) the country pair-wise correlation coefficients for stock markets will decrease. (b) The national stock markets will become more decoupling. (c) The opportunities for international portfolio diversification will become smaller. (d) The size of global systematic risks will become smaller.
C
8. Which of the following is not one of advantages of Eurocurrency market? (a) a low financing cost for the international borrower (b) no reserve requirements on Eurocurrency deposits (c) strict regulation and surveillance for Euro-banking institutions (d) tax advantages with offshore financing
C
11. Which of the following is an example of Eurobonds? (a) Intel issues a 20-year bond in the UK pound in London. (b) HSBC of UK issues a 10-year bond in the euro in Paris. (c) Toyota of Japan issues a 15-year bond in the Japanese yen in Tokyo. (d) Samsung of Korea issues a 10-year bond in the euro in New York.
D
5. Foreign banks used __________ to transfer funds between the headquarters and their foreign subsidiaries during the recent financial crisis of 2008-9. (a) FX options (b) global bond markets (c) Credit derivatives (d) internal capital markets
D
9. Which of the following is the most widely used reference interest rate which is used in the Eurocurrency market? (a) US prime rate (b) Eurocurrency deposit rates (c) Eurocurrency lending rate (d) LIBOR
D
