Which of the following does NOT fulfill the purpose of a capital market? A. To p
ID: 2495344 • Letter: W
Question
Which of the following does NOT fulfill the purpose of a capital market?
A.
To provide services across national borders
B.
To provide external financing through debt and equity
C.
To provide a mechanism to invest money efficiently
D.
To provide a mechanism through which to borrow money efficiently
E.
To provide services to individuals, companies, governments, and nonprofits
The exchange rate depends on all of the following EXCEPT ________.
A.
the securities exchange
B.
the size of the transaction
C.
the trader conducting it
D.
general economic conditions
E.
government mandate
Which of the following is NOT a function of the spot market?
A.
Converting funds into the currency of an international supplier
B.
Converting income generated from sales abroad into home-country currency
C.
Converting funds into the currency of a country in which they wish to invest
D.
Exchanging currencies at a local bank for travel
E.
Available only for very large trades
Which of the following is NOT a source of deposits for the Eurocurrency market?
A.
Governments with excess funds generated
B.
Small companies, banks, and governments
C.
International companies with excess cash
D.
Commercial banks with large deposits
E.
Extremely wealthy individuals
To exchange currency in international transactions, companies rely on the ________, where currencies are bought and sold.
A.
foreign exchange market
B.
over-the-counter (OTC) market
C.
forward market
D.
interbank market
E.
Eurocurrency market
Companies can be better skilled at foreign exchange activities by doing all of the following EXCEPT ________.
A.
consolidating to save
B.
working with major banks
C.
matching needs to providers
D.
getting the best deal possible
E.
using telephones, e-mails, or faxes
Which of the following statements about forward rates is FALSE?
A.
Forward rates show the expectations of traders and bankers regarding a currency's future spot rate.
B.
The forward rate shows a nation's present and future economic conditions.
C.
Forward rates do not reflect a country's social and political situation.
D.
It is an exchange rate at which two parties agree to exchange currencies on a future date.
E.
The forward market handles transactions at forward rate
Which of the following currency instruments is NOT used in the forward market?
A.
Derivatives
B.
Currency swaps
C.
Clearing
D.
A currency forward contract
E.
Forward contracts
Equity normally takes the form of ________, or shares of ownership in a company's assets.
A.
bonds
B.
debt
C.
liquidity
D.
stock
E.
derivative
Which of the following is NOT a purpose of the international capital market?
A.
Offering loans to borrowers in developing nations
B.
Reducing the cost of money
C.
Minimizing risk since international securities' prices move independently
D.
Expanding the money supply
E.
Lowering risk for lenders
The international capital market consists of the ________, ________, and ________.
A.
vehicle currency, currency futures contract, liquidity
B.
stock market, bond market, currency market
C.
liquidity, Eurobond, over-the-counter (OTC) market
D.
international bond market, international equity market, Eurocurrency market
E.
countertrade, interbank market, securities exchange
Which government policy does NOT restrict currency convertibility?
A.
Approval by a country's central bank
B.
Implementing multiple exchange rates
C.
Countertrade
D.
Issuing import deposit requirements
E.
Requirement of import licenses
Which of the following is NOT a goal for government imposing currency restrictions?
A.
Protecting a currency from speculators
B.
Preserving hard currencies to pay for imports and financing trade deficits
C.
Permitting convertibility of currency
D.
Preventing investment in other nations
E.
Preserving a country's hard currencies
Explanation / Answer
Ans 1 To provide services across national borders
Ans 2. the trader conducting it
Ans 3. Available only for very large trades
Ans 4. International companies with excess cash.
Ans 5. foreign exchange market
Ans 6. matching needs to providers
Ans 7. The forward rate shows a nation's present and future economic conditions.
Ans 8. Clearing
Ans 9. stock
Ans 10. Expanding the money supply
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