国际金融学练习题：Lecture 7

Lecture7(Chapter7)InternationalBankingandMoneyMarket

True/FalseQuestions

1.

EdgeActbanksarenotprohibitedfromowningequityinbusinesscorporations,unlikedomesticcommercialbanks.

True

False

2.

AnEdgeActbankistypicallylocatedinastatedifferentfromthatofitsparentinordertogetaroundtheprohibitiononinterstatebranchbanking.

True

False

MultipleChoiceQuestions

3.

Internationalbanksaredifferentfromdomesticbanksinwhatway(s)?

A.

Internationalbankscanarrangetradefinancing.

B.

Internationalbankscanarrangeforforeignexchangetransactions.

C.

Internationalbankscanassisttheirclientsinhedgingexchangeraterisk.

D.

Alloftheabove

4.

Majordistinguishingfeaturesbetweendomesticbanksandinternationalbanksare

A.

thetypesofdepositstheyaccept.

B.

thetypesofloansandinvestmentstheymake.

C.

membershipinloansyndicates.

D.

alloftheabove

5.

Sinceinternationalbankshavethefacilitiestotradeforeignexchange,

A.

theygenerallyalsomakeamarketasadealerinforeignexchange.

B.

theygenerallyalsomakeamarketasadealerinforeignexchangederivatives.

C.

theygenerallyalsotradeforeignexchangeproductsfortheirownaccount.

D.

noneoftheabove

6.

Banksthatbothperformtraditionalcommercialbankingfunctionsandengageininvestmentbankingactivitiesareoftencalled

A.

internationalservicebanks.

B.

investmentbanks.

C.

commercialbanks.

D.

merchantbanks.

7.

Merchantbanksaredifferentfromtraditionalcommercialbanksinwhatway(s)?

A.

Merchantbankscanengageininvestmentbankingactivities.

B.

Merchantbankscanarrangeforforeignexchangetransactions.

C.

Merchantbankscanassisttheirclientsinhedgingexchangeraterisk.

D.

Alloftheabove

8.

Byfarthemostimportantinternationalfinancecentersare

A.

NewYorkandLondon.

B.

NewYork,London,andTokyo.

C.

NewYork,London,Tokyo,Paris,andZurich.

D.

NewYork,London,Tokyo,Paris,Zurich,andFrankfurt.

9.

Multinationalbanksareoftennotsubjecttothesameregulationsasdomesticbanks.

A.

Theremaybeincreasedneedtopublishadequatefinancialinformation.

B.

Theremaybereducedneedtopublishadequatefinancialinformation.

C.

Theirrequirementstopublishadequatefinancialinformationarethesame.

D.

Noneoftheabove

10.

Adomesticbankthatfollowsamultinationalclientabroadtopreservethatbankingrelationship

A.

isplayingtheroleofthedesperatehousewifeinthisrelationship.

B.

ispursuingawholesaledefensivestrategy.

C.

ispursuingaretaildefensivestrategy.

D.

noneoftheabove

11.

Adomesticbankthatbecomesamultinationalbanktopreventerosionbyforeignbanksofthetraveler'schecks,touring,andforeignbusinessmarket

A.

isplayingtheroleofthedesperatehousewifeinthisrelationship.

B.

ispursuingawholesaledefensivestrategy.

C.

ispursuingaretaildefensivestrategy.

D.

noneoftheabove

12.

Bankingtendstobe

A.

alowmarginalcostindustry.

B.

ahighmarginalcostindustry.

C.

aconstantaveragecostindustry.

D.

noneoftheabove

13.

AU.S.-basedmultinationalbank

A.

wouldnothavetoprovidedepositinsuranceandmeetreserverequirementsonforeigncurrencydeposits.

B.

wouldhavetoprovidedepositinsuranceandmeetreserverequirementsonforeigncurrencydeposits.

C.

wouldnothavetoprovidedepositinsurancebutwouldhavetomeetreserverequirementsonforeigncurrencydeposits.

D.

wouldhavetoprovidedepositinsurancebutnotmeetreserverequirementsonforeigncurrencydeposits.

14.

Abankmayestablishamultinationaloperationforthereasonoflowmarginalcosts.Theunderlyingrationalebeingthat

A.

banksfollowtheirmultinationalcustomersabroadtopreventtheerosionoftheirclienteletoforeignbanksseekingtoservicethemultinational'sforeignsubsidiaries.

B.

multinationalbankingoperationshelpabankpreventtheerosionofitstraveler'scheck,tourist,andforeignbusinessmarketsfromforeignbankcompetition.

C.

managerialandmarketingknowledgedevelopedathomecanbeusedabroadwithlowmarginalcosts.

D.

theforeignbanksubsidiarycandrawontheparentbank'sknowledgeofpersonalcontactsandcreditinvestigationsforuseinthatforeignmarket.

15.

Abankmayestablishamultinationaloperationforthereasonofknowledgeadvantage.Theunderlyingrationalebeingthat

A.

localfirmsmaybeabletoobtainfromaforeignsubsidiarybankoperatingintheircountrymorecompletetradeandfinancialmarketinformationaboutthesubsidiary'shomecountrythantheycanobtainfromtheirowndomesticbanks.

B.

bymaintainingforeignbranchesandforeigncurrencybalances,banksmayreducetransactioncostsandforeignexchangeriskoncurrencyconversionifgovernmentcontrolscanbecircumvented.

C.

greaterstabilityofearningsispossiblewithinternationaldiversification.Offsettingbusinessandmonetarypolicycyclesacrossnationsreducesthecountry-specificriskofanyonenation.

D.

theforeignbanksubsidiarycandrawontheparentbank'sknowledgeofpersonalcontactsandcreditinvestigationsforuseinthatforeignmarket.

16.

Abankmayestablishamultinationaloperationforthereasonofprestige.Theunderlyingrationalebeingthat

A.

localfirmsmaybeabletoobtainfromaforeignsubsidiarybankoperatingintheircountrymorecompletetradeandfinancialmarketinformationaboutthesubsidiary'shomecountrythantheycanobtainfromtheirowndomesticbanks.

B.

theforeignbanksubsidiarycandrawontheparentbank'sknowledgeofpersonalcontactsandcreditinvestigationsforuseinthatforeignmarket.

C.

verylargemultinationalbankshavehighperceivedprestige,liquidity,anddepositsafetythatcanbeusedtoattractclientsabroad.

D.

multinationalbanksareoftennotsubjecttothesameregulationsasdomesticbanks.Theremaybereducedneedtopublishadequatefinancialinformation,lackofrequireddepositinsuranceandreserverequirementsonforeigncurrencydeposits,andtheabsenceofterritorialrestrictions.

17.

Abankmayestablishamultinationaloperationforthereasonofriskreduction.Theunderlyingrationalebeingthat

A.

bymaintainingforeignbranchesandforeigncurrencybalances,banksmayreducetransactioncostsandforeignexchangeriskoncurrencyconversionifgovernmentcontrolscanbecircumvented.

B.

greaterstabilityofearningsispossiblewithinternationaldiversification.Offsettingbusinessandmonetarypolicycyclesacrossnationsreducesthecountry-specificriskofanyonenation.

C.

multinationalbanksareoftennotsubjecttothesameregulationsasdomesticbanks.Theremaybereducedneedtopublishadequatefinancialinformation,lackofrequireddepositinsuranceandreserverequirementsonforeigncurrencydeposits,andtheabsenceofterritorialrestrictions.

D.

multinationalbankingoperationshelpabankpreventtheerosionofitstraveler'scheck,tourist,andforeignbusinessmarketsfromforeignbankcompetition.

18.

Abankmayestablishamultinationaloperationforthereasonofregulatoryadvantage.Theunderlyingrationalebeingthat

A.

banksfollowtheirmultinationalcustomersabroadtopreventtheerosionoftheirclienteletoforeignbanksseekingtoservicethemultinational'sforeignsubsidiaries.

B.

multinationalbankingoperationshelpabankpreventtheerosionofitstraveler'scheck,tourist,andforeignbusinessmarketsfromforeignbankcompetition.

C.

bymaintainingforeignbranchesandforeigncurrencybalances,banksmayreducetransactioncostsandforeignexchangeriskoncurrencyconversionifgovernmentcontrolscanbecircumvented.

D.

multinationalbanksareoftennotsubjecttothesameregulationsasdomesticbanks.Theremaybereducedneedtopublishadequatefinancialinformation,lackofrequireddepositinsuranceandreserverequirementsonforeigncurrencydeposits,andtheabsenceofterritorialrestrictions.

19.

Currently,thebiggestbankintheworldis

A.

Citigroup.

B.

BankofAmerica.

C.

UBS.

D.

TheWorldBank.

20.

Abankmayestablishamultinationaloperationforthereasonofretaildefensivestrategy.Theunderlyingrationalebeingthat

A.

banksfollowtheirmultinationalcustomersabroadtopreventtheerosionoftheirclienteletoforeignbanksseekingtoservicethemultinational'sforeignsubsidiaries.

B.

multinationalbankingoperationshelpabankpreventtheerosionofitstraveler'scheck,tourist,andforeignbusinessmarketsfromforeignbankcompetition.

C.

bymaintainingforeignbranchesandforeigncurrencybalances,banksmayreducetransactioncostsandforeignexchangeriskoncurrencyconversionifgovernmentcontrolscanbecircumvented.

D.

multinationalbanksareoftennotsubjecttothesameregulationsasdomesticbanks.Theremaybereducedneedtopublishadequatefinancialinformation,lackofrequireddepositinsuranceandreserverequirementsonforeigncurrencydeposits,andtheabsenceofterritorialrestrictions.

21.

Abankmayestablishamultinationaloperationforthereasonofwholesaledefensivestrategy.Theunderlyingrationalebeingthat

A.

banksfollowtheirmultinationalcustomersabroadtopreventtheerosionoftheirclienteletoforeignbanksseekingtoservicethemultinational'sforeignsubsidiaries.

B.

multinationalbankingoperationshelpabankpreventtheerosionofitstraveler'scheck,tourist,andforeignbusinessmarketsfromforeignbankcompetition.

C.

bymaintainingforeignbranchesandforeigncurrencybalances,banksmayreducetransactioncostsandforeignexchangeriskoncurrencyconversionifgovernmentcontrolscanbecircumvented.

D.

multinationalbanksareoftennotsubjecttothesameregulationsasdomesticbanks.Theremaybereducedneedtopublishadequatefinancialinformation,lackofrequireddepositinsuranceandreserverequirementsonforeigncurrencydeposits,andtheabsenceofterritorialrestrictions.

22.

Whichofthefollowingarereasonswhyabankmayestablishamultinationaloperation?

A.

Lowmarginalandtransactioncosts

B.

Homenationinformationservices,andprestige

C.

Growthandriskreduction

D.

Alloftheabove

23.

Abankmayestablishamultinationaloperationforthereasonoftransactioncosts.Theunderlyingrationalebeingthat

A.

banksfollowtheirmultinationalcustomersabroadtopreventtheerosionoftheirclienteletoforeignbanksseekingtoservicethemultinational'sforeignsubsidiaries.

B.

multinationalbankingoperationshelpabankpreventtheerosionofitstraveler'scheck,tourist,andforeignbusinessmarketsfromforeignbankcompetition.

C.

bymaintainingforeignbranchesandforeigncurrencybalances,banksmayreducetransactioncostsandforeignexchangeriskoncurrencyconversionifgovernmentcontrolscanbecircumvented.

D.

multinationalbanksareoftennotsubjecttothesameregulationsasdomesticbanks.Theremaybereducedneedtopublishadequatefinancialinformation,lackofrequireddepositinsuranceandreserverequirementsonforeigncurrencydeposits,andtheabsenceofterritorialrestrictions.

24.

Abankmayestablishamultinationaloperationforthereasonofgrowth.Therationalebeingthat

A.

growthprospectsinahomenationmaybelimitedbyamarketlargelysaturatedwiththeservicesofferedbydomesticbanks.

B.

multinationalbanksareoftennotsubjecttothesameregulationsasdomesticbanks.Theremaybereducedneedtopublishadequatefinancialinformation,lackofrequireddepositinsuranceandreserverequirementsonforeigncurrencydeposits,andtheabsenceofterritorialrestrictions.

C.

greaterstabilityofearningsispossiblewithinternationaldiversification.Offsettingbusinessandmonetarypolicycyclesacrossnationsreducesthecountry-specificriskofanyonenation.

D.

bymaintainingforeignbranchesandforeigncurrencybalances,banksmayreducetransactioncostsandforeignexchangeriskoncurrencyconversionifgovernmentcontrolscanbecircumvented.

25.

Abankmayestablishamultinationaloperationforthereasonofhomecountryinformationservices.Theunderlyingrationalebeingthat

A.

bymaintainingforeignbranchesandforeigncurrencybalances,banksmayreducetransactioncostsandforeignexchangeriskoncurrencyconversionifgovernmentcontrolscanbecircumvented.

B.

localfirmsmaybeabletoobtainfromaforeignsubsidiarybankoperatingintheircountrymorecompletetradeandfinancialmarketinformationaboutthesubsidiary'shomecountrythantheycanobtainfromtheirowndomesticbanks.

C.

theforeignbanksubsidiarycandrawontheparentbank'sknowledgeofpersonalcontactsandcreditinvestigationsforuseinthatforeignmarket.

D.

greaterstabilityofearningsispossiblewithinternationaldiversification.Offsettingbusinessandmonetarypolicycyclesacrossnationsreducesthecountry-specificriskofanyonenation.

26.

Acorrespondentbankrelationshipisestablishedwhen

A.

twobanksmaintaindepositswithoneanother.

B.

twobankswritetoeachotheraboutthecreditconditionsoftheircountries.

C.

agroupofbanksformasyndicatetospreadouttheriskandcostofalargebondoffering.

D.

alloftheabove

27.

Correspondentbankrelationshipscanbebeneficial

A.

becauseabankcanserviceitsMNCclientsataverylowcost.

B.

becauseabankcanserviceitsMNCclientswithouttheneedtohavepersonnelinmanydifferentcountries.

C.

becauseabankcanserviceitsMNCclientswithoutdevelopingitsownforeignfacilitiestoserviceitsclients.

D.

alloftheabove

28.

ConsideraU.S.importerdesiringtopurchasemerchandisefromaDutchexporterinvoicedineuros,atacostof€160,000.TheU.S.importerwillcontacthisU.S.bank(whereofcoursehehasanaccountdenominatedinU.S.dollars)andinquireabouttheexchangerate,whichthebankquotesas€0.6250/$1.00.Theimporteracceptsthisprice,sohisbankwillproceedto____________theimporter'saccountintheamountof____________.

A.

Debit,$256,000

B.

Credit,€512,100

C.

Credit,$500,000

D.

Debit,€100,000

29.

Thecurrentexchangerateis£1.00=$2.00.ComputethecorrectbalancesinBankA'scorrespondentaccount(s)withBankBifacurrencytraderemployedatBankAbuys£45,000fromacurrencytraderatBankBfor$90,000usingitscorrespondentrelationshipwithBankB.

A.

BankA'sdollar-denominatedaccountatBwillriseby$90,000.

B.

BankB'sdollar-denominatedaccountatAwillfallby$90,000.

C.

BankA'spound-denominatedaccountatBwillriseby£45,000.

D.

BankB'spound-denominatedaccountatAwillriseby£45,000.

30.

Correspondentbankservicesinclude

A.

prepaidpostageandpackingmaterials.

B.

lettersofintroduction.

C.

foreignexchangeconversions.

D.

bothb)andc)

31.

Thecurrentexchangerateis£1.00=$2.00.ComputethecorrectbalancesinBankA'scorrespondentaccount(s)withBankBifacurrencytraderemployedatBankAbuys£45,000fromacurrencytraderatBankBfor$90,000usingitscorrespondentrelationshipwithBankB.

A.

BankA'sdollar-denominatedaccountatBwillfallby$90,000.

B.

BankB'sdollar-denominatedaccountatAwillriseby$90,000.

C.

BankA'spound-denominatedaccountatBwillriseby£45,000.

D.

BankB'spound-denominatedaccountatAwillfallby£45,000.

E.

Alloftheabovearecorrect

32.

Thecurrentexchangerateis€1.00=$1.50.ComputethecorrectbalancesinBankA'scorrespondentaccount(s)withBankBifacurrencytraderemployedatBankAbuys€100,000fromacurrencytraderatBankBfor$150,000usingitscorrespondentrelationshipwithBankB.

A.

BankA'sdollar-denominatedaccountatBwillfallby$150,000.

B.

BankB'sdollar-denominatedaccountatAwillfallby$150,000.

C.

BankA'spound-denominatedaccountatBwillfallby€100,000.

D.

BankB'spound-denominatedaccountatAwillriseby€100,000.

33.

Arepresentativeoffice

A.

iswhatlawyers'officesarecalledinMexico.

B.

isasmallservicefacilitystaffedbyparentbankpersonnelthatisdesignedtoassistMNCclientsoftheparentbankindealingswiththebank'scorrespondents.

C.

isasmallservicefacilitystaffedbycorrespondentbankpersonnelthatisdesignedtoassistMNCclientsoftheparentbankindealingswiththebank'scorrespondents.

D.

noneoftheabove

34.

Arepresentativeoffice

A.

isawayfortheparentbanktoprovideitsMNCclientswithalevelofservicegreaterthanthatprovidedthroughmerelyacorrespondentrelationship.

B.

isasmallservicefacilitystaffedbyparentbankpersonnelthatisdesignedtoassistMNCclientsoftheparentbankindealingswiththebank'scorrespondents.

C.

isastepupfromacorrespondentrelationship,butbelowaforeignbranch.

D.

alloftheabove

35.

Aforeignbranchbank

A.

isasmallservicefacilitystaffedbyparentbankpersonnelthatisdesignedtoassistMNCclientsoftheparentbankindealingswiththebank'scorrespondents.

B.

operateslikealocalbank,butlegallyisapartoftheparentbank.

C.

issubjecttodomesticregulationonly

D.

alloftheabove

36.

WhywouldaU.S.bankopenaforeignbranchbank?

A.

BecausethisformofbankorganizationcanallowaU.S.banktoprovideafullerrangeofservicesforitsMNCcustomersthanitcanthrougharepresentativeoffice.

B.

ToavoidU.S.bankingregulationontransactionsroutedthroughthatforeigncountry.

C.

BecausethisformoforganizationallowsthebanktoserviceMNCclientsatlowcostandwithouttheneedofhavingbankpersonnellocatedinthecountry.

D.

botha)andb)

37.

WhywouldaU.S.bankopenaforeignbranchbankinsteadofaforeigncharteredsubsidiary?

A.

Thisformofbankorganizationallowsthebanktobeabletoextendalargerloantoacustomerthanalocallycharteredsubsidiarybankoftheparent.

B.

Toslowdowncheckclearingandmaximizethebank'sfloat.

C.

ToavoidU.S.bankingregulation.

D.

Botha)andc)

38.

ThemostpopularwayforaU.S.banktoexpandoverseasis

A.

branchbanks.

B.

representativeoffices.

C.

subsidiarybanks.

D.

affiliatebanks.

39.

Aforeignbranchbankoperateslikealocalbank,butlegally

A.

itisapartoftheparentbank.

B.

abranchbankissubjecttoboththebankingregulationsofitshomecountryandthecountryinwhichitoperates.

C.

abranchbankissubjecttoonlythebankingregulationsofitshomecountryandnotthecountryinwhichitoperates.

D.

botha)andb)

40.

ThemajorlegislationcontrollingtheoperationofforeignbanksintheU.S.

A.

specifiesthatforeignbranchbanksoperatingintheU.S.mustcomplywithU.S.bankingregulationsjustlikeU.S.banks.

B.

specifiesthatforeignbranchbanksoperatingintheU.S.mustcomplywiththeircountry-of-originbankingregulationsjustlikeU.S.banksoperatingabroad.

C.

specifiesthatthe"shell"branchesareillegalforU.S.andforeignbanks.

D.

botha)andc)

41.

Asubsidiarybankis

A.

alocallyincorporatedbankthatiswhollyownedbyaforeignparent.

B.

alocallyincorporatedbankthatismajorityownedbyaforeignparent.

C.

alocallyincorporatedbankthatispartiallyowned(butnotcontrolled)byaforeignparent.

D.

botha)andb)

42.

Anaffiliatebankis

A.

alocallyincorporatedbankthatiswhollyownedbyaforeignparent.

B.

alocallyincorporatedbankthatismajorityownedbyaforeignparent.

C.

alocallyincorporatedbankthatispartiallyowned(butnotcontrolled)byaforeignparent.

D.

botha)andb)

43.

Bothsubsidiaryandaffiliatebanks

A.

operateunderthebankinglawsofthecountryinwhichtheyareincorporated.

B.

operateunderthebankinglawsoftheU.S.

C.

canunderwritesecurities,butnotacceptdollar-denominateddeposits.

D.

botha)andb)

44.

U.S.banksthatestablishsubsidiaryandaffiliatebanks

A.

areallowedtounderwritesecurities.

B.

mustprovideFDICinsuranceontheirforeign-currencydenominateddemanddeposits.

C.

canunderwritesecurities,butnotacceptdollar-denominateddeposits.

D.

botha)andb)

45.

ForeignbanksthatestablishsubsidiaryandaffiliatebanksintheU.S.

A.

tendtolocateinstatesthataremajorcentersoffinancialactivity.

B.

tendtolocateinthehighlypopulousstatesofNewYork,California,Illinois,Florida,Georgia,andTexas.

C.

canunderwritesecurities,butnotacceptdollar-denominateddeposits.

D.

botha)andb)

46.

EdgeActbanksareso-calledbecause

A.

theyareFederallycharteredsubsidiariesofU.S.banksthatarephysicallylocatedintheUnitedStatesandareallowedtoengageinafullrangeofinternationalbankingactivities.

B.

SenatorWalterE.EdgeofNewJerseysponsoredthe1919amendmenttoSection25oftheFederalReserveActtoallowU.S.bankstobecompetitivewiththeservicesforeignbankscouldsupplytheircustomers.

C.

theycanonlybecharteredinstatesthatareonthebordersoftheUnitedStates—onthe"edge"ofthemap.

D.

noneoftheabove

47.

EdgeActbanks

A.

canacceptforeigndeposits,extendtradecredit,financeforeignprojectsabroad,tradeforeigncurrencies,andengageininvestmentbankingactivitieswithU.S.citizensinvolvingforeignsecurities.

B.

arefederallycharteredsubsidiariesofU.S.banksthatarephysicallylocatedintheUnitedStatesandareallowedtoengageinafullrangeofinternationalbankingactivities.

C.

canunderwritesecurities,butcanonlybelocatedinstatesontheedgeoftheU.S.

D.

botha)andb)

48.

EdgeActbanks

A.

arenotprohibitedfromowningequityinbusinesscorporations.

B.

areprohibitedfromowningequityinbusinesscorporations.

C.

botha)andb)

D.

Noneoftheabove

49.

AnOffshorebankingcenteris

A.

acountrywhosebankingsystemisorganizedtopermitexternalaccountsbeyondthenormaleconomicactivityofthecounty.

B.

isexternaltoanygovernment,frequentlylocatedonoldoildrillingplatformslocatedininternationalwaters.

C.

acountrylikeNorthKorea.

D.

noneoftheabove

50.

Offshorebanks

A.

arefrequentlylocatedonoldoildrillingplatformslocatedininternationalwaters.

B.

areoftenlocatedin"pariah"countrieslikeNorthKoreaandIran.

C.

operateasbranchesorsubsidiariesoftheparentbank.

D.

noneoftheabove

51.

Theprimaryactivitiesofoffshorebanks

A.

includemoneylaunderingwherebankingsecrecylawsarestrict.

B.

istoseekdepositsandgrantloansincurrenciesotherthanthecurrencyofthehostgovernment.

C.

involvecheckclearingoflargebagsofchecks.

D.

noneoftheabove

52.

Whichbankscannotacceptforeigndeposits?

A.

DomesticbankslocatedintheU.S.

B.

EdgeActbankslocatedintheU.S.

C.

Subsidiarybankslocatedoverseas

D.

Foreignbrancheslocatedoverseas

53.

Inreferencetocapitalrequirements,

A.

bankcapitaladequacyreferstotheamountofequitycapitalabankholdsasreservesagainstimpairedloans.

B.

bankcapitaladequacyreferstotheamountofdebtcapitalabankholdsasreservesagainstriskyassetstoreducetheprobabilityofbankfailure.

C.

mostbankregulatorsagreewiththedoctrineof"lessismore".

D.

noneoftheabove

54.

Inreferencetocapitalrequirements,value-at-riskanalysis

A.

referstotraditionalbankloansanddeposits.

B.

referstoa"risk-focused"approachtodeterminingadequatebankcapital.

C.

providesalevelofconfidencemeasureoftheprobabilityofthemaximumlossthatcanoccurduringaperiodoftime.

D.

bothb)andc)

55.

Thecoreoftheinternationalmoneymarketis

A.

theEurocurrencymarket.

B.

themarketforforeignexchange.

C.

thefuturesforwardsandoptionsmarketsonforeignexchange.

D.

noneoftheabove

56.

Eurocurrency

A.

istheeuro,thecommoncurrencyofEurope.

B.

isatimedepositofmoneyinaninternationalbanklocatedinacountydifferentfromthecountrythatissuedthecurrency.

C.

isademanddepositofmoneyinaninternationalbanklocatedinacountydifferentfromthecountrythatissuedthecurrency.

D.

eitherb)orc)

57.

TheEurocurrencymarket

A.

isonlyinEurope.

B.

isanexternalbankingsystemthatrunsparalleltothedomesticbankingsystemofthecountrythatissuedthecurrency.

C.

haslanguishedfollowingmonetaryunioninEurope.

D.

noneoftheabove

58.

LIBOR

A.

isamarketrate,analogoustotheU.S.FederalFundsrate.

B.

isagovernmentsetrate,likethediscountrate.

C.

istherateatwhichbanksinLondonwillacceptinterbankdeposits.

D.

noneoftheabove

59.

LIBOR

A.

istheLondonInterbankOfferedRate.

B.

isthereferencerateinLondonforEurodollardeposits.

C.

oneofseveralreferenceratesinLondon:thereisaLIBORforEurodollars,Euroyen,Euro—Canadiandollars,andeveneuro.

D.

alloftheabove

60.

Theratechargedbybankswithexcessfundsisreferredtoastheinterbankofferedrate;theywillacceptinterbankdepositsattheinterbankbidrate.

A.

Thespreadisgenerally1/8of1percentformostmajorEurocurrencies.

B.

Thespreadisgenerallyreferredtoas"theTEDspread".

C.

Thespreadisgenerallyreferredtoasthebid-askcommission.

D.

Noneoftheabove

61.

TheLIBORrateforeuro

A.

isEURIBOR.

B.

isagovernmentsetrate.

C.

istherateatwhichInterbankdepositsofeuroareofferedbyoneprimebanktoanotherintheeurozone.

D.

botha)andc)

62.

Inthewholesalemoneymarket,denominations

A.

areatleast$10,000,butsizesof$100,000orlargeraremoretypical.

B.

areatleast$100,000,butsizesof$500,000orlargeraremoretypical.

C.

areatleast$500,000,butsizesof$1,000,000orlargeraremoretypical.

D.

noneoftheabove

63.

Approximately___percentofwholesaleEurobankexternalliabilitiescomefromfixedtimedeposits,theremainderfromNegotiableCertificatesofDeposit.

A.

50%

B.

75%

C.

90%

D.

Noneoftheabove

64.

Eurodollarsreferstodollardepositswhenthedepositorybankislocatedin

A.

Europe.

B.

Europe,andtheCaribbean.

C.

OutsidetheUnitedStates.

D.

UnitedStates.

65.

Eurocredits

A.

arecreditcardsthatworkintheeurozone.

B.

areshort-tomedium-termloansofEurocurrencyextendedbyEurobankstocorporations,sovereigngovernments,nonprimebanks,orinternationalorganizations.

C.

areshort-tomedium-termloansofeurocurrencyextendedbyEurobankstocorporations,sovereigngovernments,nonprimebanks,orinternationalorganizations.

D.

noneoftheabove

66.

Eurocredits

A.

areoftensolargethatindividualbankscannothandlethem.

B.

areshort-tomedium-termloansofEurocurrencyextendedbyEurobankstocorporations,sovereigngovernments,nonprimebanks,orinternationalorganizations.

C.

frequentlyrequiretheuseofabankingsyndicate.

D.

alloftheabove

67.

Eurocreditsfeaturerolloverpricing.

A.

Rol