FINA4810 - Final Exam - Moore with correct answers 2024
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Course
FINA4810 - F
Institution
FINA4810 - F
long forward (buy) correct answers negative exposure coefficient
short forward (sell) correct answers positive exposure coefficient
seller pays correct answers SR > AR
buyer pays correct answers AR > SR
False correct answers T/F: Firms that source all materials domestically a...
long forward (buy) correct answers negative exposure
coefficient
short forward (sell) correct answers positive exposure
coefficient
seller pays correct answers SR
> AR
buyer pays correct answers AR
> SR
False correct answers T/F: Firms that source all materials domestically
and sell
exclusively in the domestic market are insulated from both transaction
exposure and
economic
exposure.
operating exposure correct answers measures the extent to which a
firm'sflows
cash operating
will be affected by unexpected changes in
exchange rates
short, $6,000 correct answers A Canadian firm owns a building located
in NY. The value of the exposure coefficient for this asset is 6,000.
estimated
Therefore,
its to hedgethe Canadian firm can enter a
asset exposure forward
on .
True correct answers T/F: If the domestic currency is strong or expected
to become
strong, a firm may reduce operating exposure by locating production
facilities in a
foreign country where costs are low due to either the undervalued
currency or factors of
underpriced
production.
Eurodollar correct answers a time deposit of US dollars held in an
international
located bank
outside of the
US
subsidiary bank correct answers subject to the banking regulations of its
hostnot
but country,
those of its home
country
retail defensive strategy correct answers multinational banks are better able
to compete
with foreign banks for retail services such as travelers checks and in the
tourist and
foreign business
market
correspondent bank relationship correct answers established when two
banks maintain
demand deposit accounts with one
another
caused the international debt crisis of the 1980s correct answers
international
lending more banks
to third world sovereign governments than they
should have
,Eurobonds correct answers usually bearer
bonds
True correct answers T/F: Other things equal, investors will generally
accept
yield onabearer
lower bonds than on registered bonds of
comparable terms.
yen, the US correct answers Toyota, a Japanese MNC, wishes to raise
capital in the bond market. Toyota could, for example, issue a foreign
international
bond that is in
denominated and sold to investors in
.
dual currency bonds correct answers most appropriate for a borrower who
has aproject
term long- that will be financed with the home currency but is expected
to produce
enough foreign currency profits to repay the principal at
maturity
economic exposure correct answers the extent to which the value of the
firmunanticipated
by is affected changes in exchange
rates
operating exposure correct answers the extent to which the firm's operating
cashaffected
are flows by unexpected changes in the
exchange rate
determinants of operating exposure correct answers the market structure
of inputs &and the firm's ability to adjust its markets, product mix,
products,
and sourcing
functions of international banks correct answers - arrange trade
financing
- arrange foreign
exchange
- offer hedging services for foreign currency receivables and payables
through
and forward
option
contracts
- offer investment banking services (where
allowed)
why banks establish international operations correct answers - low
-marginal
knowledge costs
- home country information
advantage
services
-
prestige
- regulatory
advantage
- wholesale defensive
strategy
- retail defensive
strategy
- transactions
-
costs
growth
- risk
reducction
wholesale defensive strategy correct answers banks follow their
multinational
abroad clients
to avoid losing their business at home and
abroad
representative office correct answers a small service facility staffed by
parent bank
personnel that is designed to assist MNC clients of the parent bank in
dealings with the
bank's
correspondents
, foreign branch bank correct answers operates like a local bank, but is legally
part of the
parent
bank
affiliate bank correct answers partially owned but not controlled by its
foreign parent
ban
k
Edge Act Banks correct answers federally chartered subsidiaries of US
banks thatlocated
physically are in the US and are allowed to engage in a full range of
international
banking
activities
offshore banking centers correct answers a country whose banking
system is to permit external accounts beyond the normal scope of local
organized
economic
activit
y
shell branches correct answers need to be nothing more than a PO box
in the host
countr
y
international banking facilities correct answers - separate set of asset
and liability
accounts that are segregated on the parent
-bank's books physical or legal
not a unique
entity
- operate as foreign banks in
-the
notUS
subject to domestic reserve requirements on
deposits
- FDIC insurance is not required on
deposits
- established as a result of the success of offshore
banking
bank capital adequacy correct answers the amount of equity capital
and other a bank holds as
securities
reserves
3 pillars of capital adequacy correct answers 1. minimum capital
requirements
2. supervisory review
3. effective use of market
process
discipline
Basel II Accord correct answers - endorsed by central bank governors
and bank in the G10
supervisors
countries
- sets out the details for establishing more risk-sensitive minimum capital
requirements
- the key variables that the bank must estimate are the probability of default
and the
given default
loss for each asset on their
books
Eurocurrency correct answers a time deposit in an international bank
located in
country a
different from the country that issued the
currency
Eurodollars correct answers US dollar-denominated time deposits in
banks located
abroa
d
Euroyen correct answers yen-denominated time deposits in banks located
outside of
Japan
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