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Financial Management > Foreign Exchange, Money Market , Bonds Market > Flashcards

Foreign Exchange, Money Market , Bonds Market Flashcards

1
Q

This types of market allow participants to lock in an exchange rate at certain future dates by purchasing or selling a futures contract.

A

Future market

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2
Q

It is the types of derivatives market which the agreements similar to future contracts, providing for the sale of a given amount of currency at a specified exchange rate on an agreed date.

A

Forward contracts

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3
Q

It is a buy and sell currencies solely to profit from anticipated changes in exchange rates, without engaging in other sort of business dealings for which foreign currency is essential.

A

Speculators

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4
Q

Which is not belong to the group?

a. Spot market
b. Options market
c. Speculator
d. Derivatives market

A

Speculator

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5
Q

He must enter the foreign exchange market to obtain the currency to make a purchase, to convert the earning from its foreign investment into its home currency

A

Investor

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6
Q

The greatest risk arises from the fact that trading often occurs across many time zones.

A

Herstatt Risk

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7
Q

The government’s deliberate attempt to alter the exchange rate between two currencies by buying one and selling the other is called ____.

A

Intervention

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8
Q

Once two parties have agreed upon a currency trade, they must make arrangements for the actual exchange of currencies.

A

Settlement

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9
Q

The largest economy in the world and its currency is the most traded currency in the forex market.

A

United State

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10
Q

The rate of interest an investor expects to receive after subtracting inflation

A

Real Interest Rates

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11
Q

It the mechanism whereby real interest rates affect exchange rates.

A

Covered interest arbitrage

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12
Q

It is a theoretical condition in which the relationship between interest rates and the spot and forward currency values of two countries are in equilibrium.

A

Covered interest parity

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13
Q

Governments’ decisions about exchange-rate management continue to be the single most important factor shaping the currency markets. Many different exchange-rate regimes have been tried.

A

Managing exchange rates

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14
Q

A monetary system in which the standard economic unit of account is based on a fixed quantity of gold.

A

Gold standard

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15
Q

A set of unified rules and policies that provided the framework necessary to create fixed international currency exchange rates.

A

Bretton Woods

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16
Q
  1. What are the 5 most liquid currencies?
    a. USD
    b. CHF
    c. JPY
    d. HKD
    e. MYR
    f. GBP
    g. EUR
A

A, B, C, F, G

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17
Q

What is one of the most common currency pair?

A

d. Euro/Japanese Yen

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18
Q

It is an unsecured, short-term debt instrument issued by corporations. It’s typically used to the finance short-term liabilities such as payroll, accounts payable, and inventories.

A

Commercial Paper

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19
Q

It is one of the money market instruments of short-term U.S government debt obligation backed by the Treasury Department with a maturity of one year or less.

A

Treasury Bill

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20
Q

It is a negotiable piece of paper that functions like a post-dated check. A bank, rather than an account holder, guarantees the payment.

A

Banker’s Acceptance

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21
Q

Borrowers in the money markets pay interest for the use of the money they have borrowed. Most money-market securities pay interest at a fixed rate, which is determined by market conditions at the time they are issued.

A

Interest Rates and Prices

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22
Q

It refers to private firms that offer opinions about the credit worthiness of borrowers in the financial markets.

A

Ratings agencies

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23
Q

It is a designated intermediary between a buyer and seller in a financial market.

A

Clearing house

24
Q

It is a short-term form of borrowing that involves selling a security with an agreement to repurchase it at highest price at a later date.
Repos
Repurchase Agreement
Both a and b

A

Both a and b

25
Q

It is a type of a repurchase agreement which carries the lowest interest rate and must be repaid the following day.

A

Overnight Repo

26
Q

What is an interest-bearing bank deposits that cannot be withdrawn without penalty before a specified date?

A

Time-deposits

27
Q

These agencies are responsible for overnight or administration of a specific sector, field, or area of study.

A

Government agency notes

28
Q

. Loans that extended from one bank to another with which it has no affiliation. Interbank loans may be made to ensure that banks meet their capital requirements at the end of each day.

A

Interbank loans

29
Q

This means any international commission, bureau, board, administrative agency or regulatory body responsible for measures to achieve objectives of the Convention.

A

International agency paper

30
Q

It refers to the network of corporations, financial institutions, investors and governments which deal with the flow of short-term capital.

A

Money Market

31
Q

This is any uncommitted cash is automatically “swept” into money-market funds or overnight investments at the end of each day, in order to earn the highest possible return.

A

Individual sweep accounts

32
Q

These reduces investors’ search costs and risks. These also able to perform the role of intermediation at much lower cost than banks, since it do not need to maintain branch offices, accept accounts with small balances and otherwise deal with the diverse demands of bank customers.

A

money market funds

33
Q

These are often unattractive to investors, because the high cost of learning about the financial status of a borrower can out weight the benefits of acquiring a security with a life span of six months.

A

short term instruments

34
Q

Can also lend directly to the money markets by providing credit to financial institutions at posted rates.

A

Central bank

35
Q

Was established decades ago as the interest rate charged by banks in the United States to their best corporate borrowers, and it receives a great deal of attention in the news media.

A

prime rate

36
Q

Rates paid on overnight bank deposits also receive close attention. In some countries this is known as the call rate

A

Overnight rates

37
Q

Passed on to homeowners within a matter of weeks and therefore have an almost immediate impact on the economy.

A

UK mortgage rates

38
Q

The obligation to repay a bond can be tied to a specific project or a particular government agency.

A

Controlling risk

39
Q

Bonds backed by the full faith and credit of national governments are called sovereigns.

A

National Governments

40
Q

I t means contract, agreement, or guarantee

A

Bonds

41
Q

Bonds offer a way of linking the repayment of borrowing for such projects to anticipated revenue.

A

Matching revenue and expenses

42
Q

These sorts of securities are assembled by an investment bank, and often do not represent the obligations of a particular issuer

A

Securitisation Vehicles

43
Q

They are issued by a business enterprise, whether owned by private investors or by a government.

A

Corporation bonds

44
Q

Also known as debentures, straight bonds are the basic fixed-income investment.

A

Straight bonds

45
Q

This meant that investors would purchase bonds at the time of issuance and hold the bonds until the principal was repaid.

A

The changing nature of the market

46
Q

In the past, bonds purchasers were given certificates as proof of their ownership.

A

No more coupons

47
Q

This is the date on which the bonds issuer will have repaid all of the principal and will redeem the bond

A

Maturity

48
Q

This is the stated annual interest rate as a percentage of the price at issuance

A

Coupon

49
Q

Is a contract in which two parties agree to exchange the risk that a borrower will default on its bonds or loans

A

Credit default swaps

50
Q

This is a bond that has been downgraded by a major rating agency and is headed toward junk-bond status

A

Fallen Angels

51
Q

Two sub-categories of High yield bonds

A

Fallen angels and Rising Stars

52
Q

A bonds issued outside the issuer’s home country and are denominated in the currency of the country where they are issued

A

Foreign bonds

53
Q

means the sale and purchase of products and services in a market that acts as a platform for several other markets

A

International Marketing

54
Q

are bonds denominated in neither the currency of the issuer’s home country nor that of the country of issue, and are generally subject to less regulation

A

Eurobonds

55
Q

It is the difference between the current yields of two bonds

A

Spread

56
Q

The principal reason for issuing bonds is to diversify sources of funding.

True
False

A

True

Financial Management (1 decks)

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