FIN 6420 CH 3 QUESTIONS AND ANSWERS ALREADY PASSED
Assume that $1 is equal to .85 Euros and 98 yen. The value of yen in euros is
a. .01
b. 118
c. 1.18
d. .0087 - Answers .0087
In general, stock markets allow for more governance and attract more investors when they have
all of the following except:
a. less stringent accounting requirements
b. more legal protection for shareholders
c. more enforcement of the laws
d. more voting rights for shareholders - Answers less stringent accounting requirements
A cross exchange rate expresses the amount of one foreign currency per unit of another foreign
currency. T/F? - Answers TRUE
The bid/ask spread quoted on more liquid, heavily traded currencies are larger than the spreads
on less liquid, less traded currencies. T/F? - Answers FALSE
Which of the following is NOT true about syndicated loans?
a. a borrower that receives a syndicated loan incurs various fees besides the interest rate
b. the loans must be denominated in US dollars
c. the loans are provided by a group of banks to a borrower
d. all of these are true - Answers the loans must be denominated in US dollars
The bid quote is the price at which a bank offers to sell a currency. T/F? - Answers FALSE
A Japanese yen is worth $.0080, and a Fijian dollar (F$) is worth $.5900. What is the value of the
yen in Fijian dollars (i.e., how many Fijian dollars do you need to buy a yen)?
, a. 125
b. 1.69
c 0.014
d. 73.75 - Answers 0.014
A syndicated loan:
a. represents a loan by a single bank to a syndicate of corporations
b. represents a loan by a single bank to a syndicate of country governments
c. represents a direct loan by a syndicate of oil-producing exporters to a less developed country
d. represents a loan by a single bank to a syndicate of corporations AND represents a loan by a
single bank to a syndicate of country governments
e. represents a loan by a group of banks to a borrower - Answers represents a loan by a group
of banks to a borrower
At any given point in time, a bank's bid quote will be greater than its ask quote. T/F? - Answers
FALSE
Shareholders have more voting power in some countries than in others. T/F? - Answers TRUE
Which of the following is NOT a possible bid/ask quotation for the Barbados dollar?
a. $.51/$.52
b. $.49/$.50
c. $.50/$.51
d. $.52/$.51 - Answers $.52/$.51
Assume that a bank's bid rate on Swiss francs is $.45 and its ask rate is $.47. Its bid/ask
percentage spread is:
a. about 4.26%
Assume that $1 is equal to .85 Euros and 98 yen. The value of yen in euros is
a. .01
b. 118
c. 1.18
d. .0087 - Answers .0087
In general, stock markets allow for more governance and attract more investors when they have
all of the following except:
a. less stringent accounting requirements
b. more legal protection for shareholders
c. more enforcement of the laws
d. more voting rights for shareholders - Answers less stringent accounting requirements
A cross exchange rate expresses the amount of one foreign currency per unit of another foreign
currency. T/F? - Answers TRUE
The bid/ask spread quoted on more liquid, heavily traded currencies are larger than the spreads
on less liquid, less traded currencies. T/F? - Answers FALSE
Which of the following is NOT true about syndicated loans?
a. a borrower that receives a syndicated loan incurs various fees besides the interest rate
b. the loans must be denominated in US dollars
c. the loans are provided by a group of banks to a borrower
d. all of these are true - Answers the loans must be denominated in US dollars
The bid quote is the price at which a bank offers to sell a currency. T/F? - Answers FALSE
A Japanese yen is worth $.0080, and a Fijian dollar (F$) is worth $.5900. What is the value of the
yen in Fijian dollars (i.e., how many Fijian dollars do you need to buy a yen)?
, a. 125
b. 1.69
c 0.014
d. 73.75 - Answers 0.014
A syndicated loan:
a. represents a loan by a single bank to a syndicate of corporations
b. represents a loan by a single bank to a syndicate of country governments
c. represents a direct loan by a syndicate of oil-producing exporters to a less developed country
d. represents a loan by a single bank to a syndicate of corporations AND represents a loan by a
single bank to a syndicate of country governments
e. represents a loan by a group of banks to a borrower - Answers represents a loan by a group
of banks to a borrower
At any given point in time, a bank's bid quote will be greater than its ask quote. T/F? - Answers
FALSE
Shareholders have more voting power in some countries than in others. T/F? - Answers TRUE
Which of the following is NOT a possible bid/ask quotation for the Barbados dollar?
a. $.51/$.52
b. $.49/$.50
c. $.50/$.51
d. $.52/$.51 - Answers $.52/$.51
Assume that a bank's bid rate on Swiss francs is $.45 and its ask rate is $.47. Its bid/ask
percentage spread is:
a. about 4.26%
