STUDY GUIDE BUS 245 TEST 2 (LATEST UPDATE) REAL
QUESTIONS AND VERIFIED ANSWERS |100% CORRECT |
ALREADY GRADED A
Explain the importance of the international capital market? Ans✓✓✓ The
international capital market is meant to (1) expand the supply of capital
for borrowers, (2) lower interest rates for borrowers, and (3) lower risk
for lenders
Growth in the international capital market is due mainly to? Ans✓✓✓ (1)
advances in information technology, (2) deregulation of capital markets,
and (3) innovation in financial instruments.
World's most important financial centers? Ans✓✓✓ London, New York,
and Tokyo are the world's most important financial centers. Offshore
financial centers handle less business than the world's most important
financial centers but have few regulations and few, if any, taxes.
Describe the main components of the international capital market?
Ans✓✓✓ International bond market, International equity market,
Eurocurrency market
International bond market? Ans✓✓✓ The international bond market
consists of all bonds sold by issuers outside their own countries. It is
growing as investors in developed markets search for higher rates from
borrowers in emerging markets, and vice versa.
International equity market? Ans✓✓✓ The international equity market
consists of all stocks bought and sold outside the home country of the
, issuing company. Factors driving its growth are (1) privatization, (2)
increased activity by companies in emerging nations, (3) global reach of
investment banks, and (4) global electronic trading
Eurocurrency? Ans✓✓✓ The Eurocurrency market consists of all the
world's currencies banked outside their countries of origin. Its appeal is a
lack of government regulation and a lower cost of borrowing
Outline the functions of the foreign exchange market? Ans✓✓✓ Convert,
Insure against, Earn a profit, Speculate
First function of the foreign exchange market? Ans✓✓✓ One function is
to convert one currency into another for individuals, companies, and
governments.
Second function of the foreign exchange market? Ans✓✓✓ Second, it is
used as a hedging device to insure against adverse changes in exchange
rates.
Third function of the foreign exchange market? Ans✓✓✓ Third, it is used
to earn a profit from currency arbitrage or other interest-paying security
in different markets
Fourth function of the foreign exchange market? Ans✓✓✓ Fourth, it is
used to speculate about a change in the value of a currency and thereby
earn a profit
QUESTIONS AND VERIFIED ANSWERS |100% CORRECT |
ALREADY GRADED A
Explain the importance of the international capital market? Ans✓✓✓ The
international capital market is meant to (1) expand the supply of capital
for borrowers, (2) lower interest rates for borrowers, and (3) lower risk
for lenders
Growth in the international capital market is due mainly to? Ans✓✓✓ (1)
advances in information technology, (2) deregulation of capital markets,
and (3) innovation in financial instruments.
World's most important financial centers? Ans✓✓✓ London, New York,
and Tokyo are the world's most important financial centers. Offshore
financial centers handle less business than the world's most important
financial centers but have few regulations and few, if any, taxes.
Describe the main components of the international capital market?
Ans✓✓✓ International bond market, International equity market,
Eurocurrency market
International bond market? Ans✓✓✓ The international bond market
consists of all bonds sold by issuers outside their own countries. It is
growing as investors in developed markets search for higher rates from
borrowers in emerging markets, and vice versa.
International equity market? Ans✓✓✓ The international equity market
consists of all stocks bought and sold outside the home country of the
, issuing company. Factors driving its growth are (1) privatization, (2)
increased activity by companies in emerging nations, (3) global reach of
investment banks, and (4) global electronic trading
Eurocurrency? Ans✓✓✓ The Eurocurrency market consists of all the
world's currencies banked outside their countries of origin. Its appeal is a
lack of government regulation and a lower cost of borrowing
Outline the functions of the foreign exchange market? Ans✓✓✓ Convert,
Insure against, Earn a profit, Speculate
First function of the foreign exchange market? Ans✓✓✓ One function is
to convert one currency into another for individuals, companies, and
governments.
Second function of the foreign exchange market? Ans✓✓✓ Second, it is
used as a hedging device to insure against adverse changes in exchange
rates.
Third function of the foreign exchange market? Ans✓✓✓ Third, it is used
to earn a profit from currency arbitrage or other interest-paying security
in different markets
Fourth function of the foreign exchange market? Ans✓✓✓ Fourth, it is
used to speculate about a change in the value of a currency and thereby
earn a profit
