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1、Chapter 3International Financial Markets 1. Assume that a banks bid rate on Swiss francs is $.45 and its ask rate is $.47. Its bid-ask percentage spread is: a. about 4.44%. b. about 4.26%. c. about 4.03%. d. about 4.17%. ANS: B SOLUTION: Bid-ask percentage spread = ($.47 $.45)/$.47 = 4.26% PTS: 1 2.
2、 Assume that a banks bid rate on Japanese yen is $.0041 and its ask rate is $.0043. Its bid-ask percentage spread is: a. about 4.99%. b. about 4.88%. c. about 4.65%. d. about 4.43%. ANS: C SOLUTION: Bid-ask percentage spread = ($.0043 $.0041)/$.0043 = 4.65% PTS: 1 3. The bid/ask spread for small ret
3、ail transactions is commonly in the range of _ percent. a. 3 to 7 b. .01 to .03 c. 10 to 15 d. .5 to 1 ANS: A PTS: 1 4. _ is not a factor that affects the bid/ask spread. a. Order costs b. Inventory costs c. Volume d. All of the above factors affect the bid/ask spread ANS: D PTS: 1 5. The forward ra
4、te is the exchange rate used for immediate exchange of currencies. a. True b. False ANS: F PTS: 1 6. The ask quote is the price for which a bank offers to sell a currency. a. True b. False ANS: T PTS: 1 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole o
5、r in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 7. According to the text, the forward rate is commonly used for: a. hedging. b. immediate transactions. c. previous transactions. d. bond
6、transactions. ANS: A PTS: 1 8. If a U.S. firm desires to avoid the risk from exchange rate fluctuations, and it is receiving 100,000 in 90 days, it could: a. obtain a 90-day forward purchase contract on euros. b. obtain a 90-day forward sale contract on euros. c. purchase euros 90 days from now at t
7、he spot rate. d. sell euros 90 days from now at the spot rate. ANS: B PTS: 1 9. If a U.S. firm desires to avoid the risk from exchange rate fluctuations, and it will need C$200,000 in 90 days to make payment on imports from Canada, it could: a. obtain a 90-day forward purchase contract on Canadian d
8、ollars. b. obtain a 90-day forward sale contract on Canadian dollars. c. purchase Canadian dollars 90 days from now at the spot rate. d. sell Canadian dollars 90 days from now at the spot rate. ANS: A PTS: 1 10. Assume the Canadian dollar is equal to $.88 and the Peruvian Sol is equal to $.35. The v
9、alue of the Peruvian Sol in Canadian dollars is: a. about .3621 Canadian dollars. b. about .3977 Canadian dollars. c. about 2.36 Canadian dollars. d. about 2.51 Canadian dollars. ANS: B SOLUTION: $.35/$.88 = .3977 PTS: 1 11. Which of the following is not true with respect to spot market liquidity? a
10、. The more willing buyers and sellers there are, the more liquid a market is. b. The spot markets for heavily traded currencies such as the Japanese yen are very liquid. c. A currencys liquidity affects the ease with which an MNC can obtain or sell that currency. d. If a currency is illiquid, an MNC
11、 is typically able to quickly purchase that currency at a reasonable exchange rate. ANS: D PTS: 1 12. Forward markets for currencies of developing countries are: a. prohibited. b. less liquid than markets for developed countries. c. more liquid than markets for developed countries. d. only available
12、 for use by government agencies. ANS: B PTS: 1 13. A forward contract can be used to lock in the _ of a specified currency for a future point in time. 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
13、distributed with a certain product or service or otherwise on a password-protected website for classroom use. a. purchase price b. sale price c. A or B d. none of the above ANS: C PTS: 1 14. The forward market: a. for euros is very illiquid. b. for Eastern European countries is very liquid. c. does
14、not exist for some currencies. d. none of the above ANS: C PTS: 1 15. _ is not a bank characteristic important to customers in need of foreign exchange. a. Quote competitiveness b. Speed of execution c. Forecasting advice d. Advice about current market conditions e. All of the above are important ba
15、nk characteristics to customers in need of foreign exchange. ANS: E PTS: 1 16. The Basel II accord is focused on eliminating inconsistencies in _ across countries. a. capital requirements b. deposit rates c. deposit insurance d. bank failure policies ANS: A PTS: 1 17. The international money market
16、primarily concentrates on: a. short-term lending (one year or less). b. medium-term lending. c. long-term lending. d. placing bonds with investors. e. placing newly issued stock in foreign markets. ANS: A PTS: 1 18. The international credit market primarily concentrates on: a. short-term lending (less than one year). b. medium-term lending. c. long-term lending. d. providing an exchange of foreign currencies for firms who need them. e. placing newly issued stock in f
