Chapter 18
International bonds issued in a single country and generally denominated in that country's currency are called:
Foregin bonds
The concept that the difference in interest rates between two countries is equal to the percentage difference between the forward exchange rate and the spot exchange rate is called:
Interest rate paritys
Suppose that you could buy 108 Japanese yen last year for $1. Today, $1 will buy you 104 yen. Over the past year, the:
U.S. dollar depreciated against the Japanese yen.
Most currency prices are quoted in:
US dollars
If you agree today to exchange yen for euros 6 months from now, you are:
establishing the relative PPP rate for the future.
An agreement to exchange currencies some time in the future is referred to as a _____ trade.
forward
The agreed-upon exchange rate used as the basis for an agreement to exchange currencies at some point in time in the future is called the _____ rate.
forward exchange
The London Interbank Offer Rate (LIBOR) is the rate that most _____ banks charge one another for overnight _____ loans.
international:Eurodllar
Which one of the following is the best definition of Eurocurrency?
money deposited in a financial institution outside of the country whose currency is involved
Rembrandt, Samurai, Yankee, and Bulldog are all names given to:
not domestic interest rates
The implicit exchange rate between two currencies which are both quoted in some third currency is called the:
not eurate
trading in the foreign exchange markets with the sole purpose of arbitrage.
not eurate
The concept that exchange rates vary to keep purchasing power constant among currencies is referred to as:
not exchange rate equilibrium and exchange rate.
Which of the following changes is a political risk that may be faced by a firm with international operations?
not production technology
The foreign exchange market is the market where:
not the currency
Which one of the following is the best universal definition of an exchange rate?
not the price
Exchange rate risk is defined by your textbook as the risk related to:
not trading in the foreign exchange markets with the sole purpose of arbitrage.
Political risk is defined by your textbook as the risk:
not: that a country will seize all foreign-owned property.
The spot exchange rate is the exchange rate:
on a spot trade, which is based on today's exchange rate.
The U.S. dollar equivalent is .3841 for the Brazilian real and 1.8759 for the U.K. pound. This means that:
one U.K. pound will buy 1.8759 U.S. dollars.
Later this week, you are traveling from the U.S. to Germany for a week's vacation. This morning, you will be exchanging some U.S. dollars for euros in preparation for that trip. You could best describe your exchange as:
participation in the spot market.
