13. In the currency markets, $1 = 0.75 British pound and 1 Euro = $1.25. Wolverine Cola produces cherry cola in England at a cost of 0.9 British pound per unit. The product is sold in France for 1.5 euros. In terms of U.S. dollars, how much profit is Wolverine realizing on each unit sold?
a. $0.37 b. $0.675 c. $0.875 d. $1.04
14. Which of the following statements is FALSE?
a. Any bond sold outside the country of the borrower is called an international bond.
b. Foreign bonds and Eurobonds are two important types of international bonds.
c. Foreign bonds are bonds sold by a domestic borrower but denominated in a different currency than the country in which the issue is sold.
d. The term Eurobond applies to any bonds that are denominated in a currency that differs from the country in which the issue is sold.
15. The US has a _________________ because we buy more foreign goods than foreigners buy of our goods.
- Capital Account Surplus
- Current Account Deficit
- Current Account Surplus
- Capital Account Deficit
16. The current spot price of the S&P is $1200. If the risk free rate is 5% and if owning the S&P would result in $20 of dividend income, then what should the futures price be?
a) $1200 b) $1225 c) $1240 d) $1280
17. ____________ involve two companies exchanging fixed-rate debt for floating-rate debt.
- Convertible Debt
- Currency Swap
- Stock Swap
- Interest Rate Swap
18. Which of the following statements about Futures contracts is FALSE?
a) Traded on an organized exchange
b) Profits and losses are marked to market
c) Actual delivery almost always occurs
d) All of the above are true
19. There are call options on the common stock of XYZ Corporation. Which of the following best describes the factors that affect call option values?
a. The price of the call options will rise if XYZ
13. In the currency markets, $1 = 0.75 British pound and 1 Euro = $1.25. Wolverine Cola produces cherry cola in England at a cost of 0.9 British pound per unit. The product is sold in France for 1.5 euros. In terms of U.S. dollars, how much profit is Wolverine realizing on each unit sold?
a. $0.37 b. $0.675 c. $0.875 d. $1.04
14. Which of the following statements is FALSE?
a. Any bond sold outside the country of the borrower is called an international bond.
b. Foreign bonds and Eurobonds are two important types of international bonds.
c. Foreign bonds are bonds sold by a domestic borrower but denominated in a different currency than the country in which the issue is sold.
d. The term Eurobond applies to any bonds that are denominated in a currency that differs from the country in which the issue is sold.
15. The US has a _________________ because we buy more foreign goods than foreigners buy of our goods.
- Capital Account Surplus
- Current Account Deficit
- Current Account Surplus
- Capital Account Deficit
16. The current spot price of the S&P is $1200. If the risk free rate is 5% and if owning the S&P would result in $20 of dividend income, then what should the futures price be?
a) $1200 b) $1225 c) $1240 d) $1280
17. ____________ involve two companies exchanging fixed-rate debt for floating-rate debt.
- Convertible Debt
- Currency Swap
- Stock Swap
- Interest Rate Swap
18. Which of the following statements about Futures contracts is FALSE?
a) Traded on an organized exchange
b) Profits and losses are marked to market
c) Actual delivery almost always occurs
d) All of the above are true
19. There are call options on the common stock of XYZ Corporation. Which of the following best describes the factors that affect call option values?
a. The price of the call options will rise if XYZ
