IB Chapter 12 The Global Capital Market

________ perform a direct connection function in capital markets.

Investment banks

The United States sells bonds that are denominated in dollars in Europe. This is an example of a

foreign bond.

The cost of capital is

higher in a purely domestic capital market than in a global market.

The liquidity of the market is ________ in a purely domestic capital market.

limited

Hedge funds position themselves to make ________ bets on assets that they think will ________.

long; increase in value

The Eurocurrency market is attractive to both depositors and borrowers because

of its lack of government regulation.

Which of the following statements is true of the deregulation of the financial industry?

Deregulation helped the development of an international capital market.

An Italian corporation issues a bond denominated in dollars that has no regulatory interference. This is an example of a

Eurobond.

Companies receive ________ when using the Eurocurrency market.

a higher interest rate on deposits and pay less for loans

The risk associated with a portfolio

decreases as the investor increases the number of stocks in her portfolio.