International Financial Management 8E - Eun - TBChapter 14

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1、ExamName___________________________________MULTIPLECHOICE.Choosetheonealternativethatbestcompletesthestatementoranswersthequestion.1)Theterminterestrateswap1)A)canbe"fixed-for-floatingrate"or"fixed-for-fixedrate."B)involves"counterparties"whomakeacontr

2、actualagreementtoexchangecashflowsatperiodicintervals.C)referstoa"single-currencyinterestrateswap"shortenedto"interestrateswap."D)alloftheoptionsAnswer:DTopic:TypesofSwaps2)Examplesof"single-currencyinterestrateswap"and"cross-currencyinterestrateswap"2

3、)are:A)fixed-for-floatingrateinterestrateswap,whereonecounterpartyexchangestheinterestpaymentsofafloating-ratedebtobligationsforfixed-rateinterestpaymentsoftheothercounterparty,aswellasfixed-for-fixedratedebtservice(currencyswap),whereonecounterpartyex

4、changesthedebtserviceobligationsofabonddenominatedinonecurrencyforthedebtserviceobligationsoftheothercounterpartydenominatedinanothercurrency.B)fixed-for-floatingrateinterestrateswap,whereonecounterpartyexchangestheinterestpaymentsofafloating-ratedebto

5、bligationsforfixed-rateinterestpaymentsoftheothercounterparty.C)fixed-for-fixedratedebtservice(currencyswap),whereonecounterpartyexchangesthedebtserviceobligationsofabonddenominatedinonecurrencyforthedebtserviceobligationsoftheothercounterpartydenomina

6、tedinanothercurrency.D)noneoftheoptionsAnswer:ATopic:TypesofSwaps3)Theprimaryreasonsforacounterpartytouseacurrencyswapare3)A)toplayinthefuturesandforwardmarkets.B)toobtaindebtfinancingintheswappedcurrencyataninterestcostreductionbroughtaboutthroughcomp

7、arativeadvantageseachcounterpartyhasinitsnationalcapitalmarket,andthebenefitofhedginglong-runexchangerateexposure.C)tohedgeandtospeculate.D)tohedgeandtospeculate,aswellastoplayinthefuturesandforwardmarkets.Answer:BTopic:TypesofSwaps14)Thesizeoftheswapm

8、arket(asofmid-year2015)is4)A)measuredbynotationalprincipal.B)measuredbynotationalprincipalandover23trilliondollars.C)over23trilliondollars.D)noneoftheoptionsAnswer:BTopic:SizeoftheSwapMarket5)Whichcombinationofthefollowingstatementsistr