Question : 20.2   International Banking and the International Capital Market 1) As a : 1303697

 

 

20.2   International Banking and the International Capital Market

 

1) As a country begins to liberalize its capital account, what would you expect to happen to the difference between the interest rates for similar assets in this country and another country with open capital markets?

A) get larger

B) get smaller

C) stay the same

D) it depends on the existing exchange rate.

E) exponential divergence

 

 

2) Investment banks in the U.S. are

A) regular banks specializing in investment projects.

B) not banks at all but institutions which specialize in underwriting sales of stocks and bonds.

C) special arm of the U.S. government for U.S. banks operating outside the U.S.

D) regular banks specializing in investment projects, but allowed to offer limited domestic transactions.

E) international banks that are heavily invest in the U.S.

 

3) Credit Suisse, Goldman Sachs, and Lazard Freres are examples of

A) commercial banks.

B) corporations.

C) non-bank financial institutions, such as insurance companies, pension funds, and mutual funds. This includes investment banks, which specialize in underwriting sales of stocks and bonds by corporations and in some cases governments.

D) central banks and other government agencies.

E) non-profit organizations.

 

 

4) A country can control

A) its flexible exchange rate.

B) monetary policy oriented toward domestic goals.

C) international capital movements.

D) foreign inflationary policies.

E) and avoid risks in international trade.

 

 

5) Under a gold standard, countries control

A) its flexible exchange rate.

B) monetary policy oriented toward domestic goals.

C) international capital movements.

D) foreign inflationary policies.

E) and avoid risks in international trade.

 

 

6) After Bretton Woods period, countries chose to control

A) fixed exchange rate only.

B) monetary policy oriented toward domestic goals only.

C) freedom of international capital movements only.

D) fixed exchange rate and freedom of international capital movements.

E) fixed exchange rate and monetary policy oriented toward domestic goals.

 

 

7) Under the unified Euro regime, the European countries control

A) fixed exchange rate only.

B) monetary policy oriented toward domestic goals only.

C) freedom of international capital movements only.

D) monetary policy oriented toward domestic goals and freedom of international capital movements.

E) fixed exchange rate and freedom of international capital movements.

 

8) Which one of the following possibilities is TRUE?

A) Much of eurocurrency trading occurs in Europe.

B) Much of eurocurrency trading occurs in the United States.

C) Eurocurrencies trading occurs everywhere except the United States.

D) Eurocurrencies trading occurs everywhere except Europe.

E) Eurocurrencies trading occurs everywhere except China.

 

 

9) Eurodollars are

A) dollar deposits located in the United States.

B) dollar deposits located in Europe.

C) dollar deposits located outside Europe.

D) dollar deposits located outside the United States.

E) dollar deposits located outside both Europe and the United States.

 

 

10) Eurobanks are

A) all European Banks.

B) all non American banks.

C) banks that accept deposits denominated in Eurocurrencies excluding Eurodollars.

D) banks that accept deposits denominated in Eurocurrencies including Eurodollars.

E) banks that do not take U.S. dollars.