Davidson; Management - 3rd Australasian Edition



1.
All but one of the following is directly related to the level of loan rate charged on an international loan?
A.
The cost of gathering information about the borrower.
B.
The level of country risk.
C.
The size of the borrowing business.
D.
The credit risk of the borrower.


2.
A foreign subsidiary bank is
A.
part of correspondent bank.
B.
shell branching.
C.
a form of bank holding companies.
D.
separately incorporated bank owned entirely or in part by a domestic bank


3.
Contagion risk is
A.
diversifiable risk
B.
default risk by international borrowers
C.
similar to financial crises such as the 1997 Asian financial crisis.
D.
is the risk of the effects of a financial crisis in one region or country spreading to another.
E.
c and d


4.
Which of the following forms of international banking organization is associated with interbank money market transactions?
A.
representative office
B.
shell branch
C.
foreign branch
 
international banking facility


5.
Which of the following forms of international banking organization is associated with providing a complete range of international banking services associated with foreign trade to domestic banks.
A.
international banking facility
B.
shell branch
C.
correspondent bank
 
Foreign branches


6.
Which of the following forms of international banking organization is an extension of a domestic bank but is located in a foreign country?
A.
foreign branch
B.
shell branch
C.
representative office
 
international banking facility


7.
All of the following are risk reduction techniques which reduces the impact of risk-taking except
A.
foreign government guarantees of loans to private corporations.
B.
pooling risk through syndication with other banks.
C.
loan sales, which removes the troubled loans from the balance sheet.
 
diversification.


8.
International participation loans is a method of reducing the _________ risk of a international lender?
A.
credit
B.
currency
C.
interest rate
D.
country


9.
International bank lending is characterized by all of the following except that loans
A.
are unsecured.
B.
have floating rates.
C.
are made for relatively small amounts.
 
are priced relative to the LIBOR.


10.
A representative office
A.
can assist the parent bank's customer only in that country and cannot accept deposits or make loans.
B.
can only accept deposits and cannot make loans.
C.
can both accept deposits and make loans.
D.
can engage only in money market transactions


11.
Political risk in international banking includes
A.
civil unrest
B.
political turmoil
C.
corruption and government nationalization
D.
all of the above


12.
International lending based from the LIBOR rate with a rollover-pricing feature protects the bank from
A.
liquidity risk.
B.
interest rate risk.
C.
default risk.
 
solvency risk.


13.
A loan syndication is similar to
A.
loan securitization.
B.
investment banking underwriting syndicates.
C.
defaulting on a loan.
 
having a mortgage on specific asset to support the loan.


14.
An international lender's concern about the changing tax rate on interest income from an international loan is an example of
A.
credit risk.
B.
country risk.
C.
foreign exchange risk.
 
reinvestment risk.


15.
All but one of the following is an example of country or sovereign risk in international lending?
A.
profit controls
B.
loan default by borrower
C.
nationalization of borrower
 
a new political party now controls the government


16.
Money laundering
A.
transfer for funds between different group of people.
B.
is illegal
C.
a financial criminal activity
D.
both b and c


17.
Which of the following factors is an important consideration in international lending?
A.
credit risk
B.
country risk
C.
currency risk
 
all of the above


18.
The International Finance Corporation (IFC), a unit of the World Bank
A.
provides discount loans to developing countries.
B.
provides syndicated demand deposits to developing countries
C.
creates loan syndications to private borrowers in developing countries
D.
writes off developing countries bad debts


19.
The Eurocurrency markets fund include
A.
euronotes
B.
eurocommerical
C.
euro-medium-term notes
D.
eurobonds
E.
all of the above



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