Hi, I am taking International Financial Markets. These are some of my homework questions, do you have the answers for this course? What is meant by the term “global payment system”?
A) the system through which central banks conduct their transactions
a system through which individuals, firms and governments make their payments
C) a system which enables banks in different countries to transact
D) any system available to banks or firms conducting large transactions globally
2) Which of the following is NOT an electronic payment system?
3) Which of the following is not risk inherent in global payment systems?
A) credit risk
B) system risk
C) liquidity risk
4) Which of the following would be effective at reducing the amount of Herstatt risk in a payment system?
A) having managers double check transactions entered by employees at the end of each day
B) limiting the countries allowed to use the payment system
C) limiting the firms allowed to use the payment system through credit checks
D) having the system open 24-7-365
5) Which of the following is the best definition of financial crisis?
A) a situation when the banking system within an economy shuts down
a time in an economy when financial instability is so severe that the financial system fails to operate
C) a time when the global payment systems fail to process payments
D) a time when a government does not have enough domestic currency to operate
6) Which of the following is NOT part of a country’s “economic fundamentals”?
A) the amount of speculation conducted with a nation’s currency
B) policies pursued by the nation’s government
C) the national currency’s exchange rate
D) policies pursued by the nation’s central bank
7) Why would a country’s currency come under a speculative attack?
A) A country raises its interest rate too high attracting currency investors.
B) A country announces a poor monetary policy decision.
C) A country has nearly exhausted its foreign currency reserves.
D) A country changes its monetary regime unexpectedly.
8) A contagion effect is
A) when speculators perceive that a problem in one nation is likely to repeat itself in another.
B) when policymakers in one country mimic the actions of another country.
C) when two countries with fixed exchange rates conduct joint monetary policy.
D) when a country runs out of foreign exchange reserves.
9) In regulating banks, most goals are satisfied by the implementation of
A) economic fundamentals.
B) capital requirements.
C) reserve requirements.
D) risk limitations.
10) Bank regulators hope to achieve ________ through their regulating efforts.
A) limits to insolvency
B) bank liquidity
C) efficiency in the banking system.
D) all of the above
11) A bank’s activities that earn income without expanding the bank’s balance sheet, such as derivative trading, is known as
A) risk-adjusting assets.
B) off-balance-sheet banking.
C) core capital expansion.
D) supplementary capital investment.
12) The administrative body overseeing capital requirement regulation is
A) the Bank for International Settlements in Basel, Switzerland.
B) the Bank for International Agreements in New York, NY.
C) the World Bank in Washington, DC.
D) the Bank for International Negotiations in Geneva, Switzerland.
13) What is a fiscal agent?
A) a bank that issues, services, and redeems government debt
B) an organization that oversees fiscal spending in an economy
C) a bank that represents a government in foreign trading transactions
D) an organization set up by a government to secure financing for fiscal transactions
14) Which of the following are characteristics of market based regulations?
A) regulatory tripwires
B) monitoring the value of a bank’s subordinated debt instruments
C) Market traders must have good information about depository institution risk.
D) all of the above
15) Which of the following is a central bank asset?
A) government deposits
B) currency notes
C) bank reserve deposits
D) domestic securities and bills
16) What roles do central banks play in an economy?
A) Central banks are government depositories.
B) Central banks lobby for regulation on behalf of the banking industry.
C) Central banks monitor fiscal agents in the economy.
D) none of the above
17) A lender of the last resort refers to
A) a reason for regulating banks.
B) a role for the government to ensure that the central bank has adequate reserves.
C) a role of the central bank to prevent bank runs for temporary problems of liquidity.
D) the need for market based regulations in the banking industry.
18) When the actions of a central bank induce actions from other banks in the country
A) the other banks are acting as fiscal agents
B) the other banks are concerned about a penalty rate.
C) the other banks are acting to prevent liquidity problems.
D). the other banks are reacting to an announcement effect.
19) When the IMF requires a country to implement policy changes in order to receive a loan
A) most countries reject the loans.
B) it is called IMF conditionality.
C) it means that the IMF will lower that country’s quota.
D) the IMF must be using one of its financing facilities.
20) The World Bank primarily issues loans in order to
A) promote long-term development and growth in a developing nation.
B) ensure long term stability within a banking system.
C) be the global lender of the last resort in the case of financial crisis.
D) maintain the IMF conditionality rules.