1.

____________ and _____________ are sold to investors in a capital market other than the country that issued the denominating currency.

Select one or more:

a. Dim sum bond

b. Masala bond

c. Yankee bond

d. Bulldogs bond

e. Foreign bond

2.

Borrow the currency denominating the receivables, convert it to the local currency and invest it. Then pay off the loan with cash inflows from the receivables. This technique for hedging transaction exposure is called:

Select one:

a. money market hedge

b. futures hedge

c. forward hedge

d. currency options hedge

e. None of these

3.

__________ of Forward is ______________ and futures is _______________.

Select one:

a. Size of contract, tailored to individual needs, standardised

b. Size of contract, standardised, tailored to individual needs

c. Delivery date, standardised, tailored to individual needs

d. Liquidation, very few by delivery, most settled by actual delivery

e. All of these

4.

_________ strategy is used by a multinational company to stall payments, normally in response to exchange rate projections.

Select one:

a. Lagging

b. Leading

c. Optimal hedging

d. Overhedging

e. None of these

5.

The of triangular arbitrage ensures that:

Select one:

a. quoted exchange rates are similar across banks at different locations

b. cross exchange rates are properly set

c. forward exchange rates are properly set

d. None of these

e. The foreign currency will appreciate or depreciate against the home currency

6.

Viner Co., an Australian company, has developed the following probability distribution for the spot rate of the Chinese yuan (CNY) against the Australian dollar (A$) in six months to buy put options on CNY1.79 million with an exercise price of A$0.3118 and a premium of A$0.0347.

A$0.2153 [39 per cent probability]

A$0.4976 [38 per cent probability]

A$0.5192 [(100-39-38) per cent probability]

What is the expected value of the cash to be received in A$ from the put option hedge? (enter the whole number without sign and symbol)

7.

As an investor from Australia, what factors would you consider before investing in emerging markets?

Select one or more:

a. Potential for diversification

b. The quality of corporate governance in the country

c. Direct purchases of foreign stocks

d. Investment in MNC stocks

e. International mutual funds

8.

______________ and _____________ are offered by a foreign borrower to investors in a national capital market denominated in the nation's currency.

Select one or more:

a. Samurai bond

b. Kangaroo bond

c. Eurobond

d. Dim sum bond

e. Masala bond

9.

Arbitrage strategy is:

Select one:

a. Action to capitalise on a discrepancy in quoted price

b. Buying currency at a low price from one location and sell it immediately at a higher price in another location

c. Making profit after transaction cost

d. None of these

e. Investing money at higher interest rate to make a profit

10. Coleman Co., an Australian company, will pay 1.26 million Malaysian ringgit (MYR) to its Malaysian supplier in one-year. To avoid transaction exposure, the company wants to take the money market hedge strategy using the spot rate A$0.4453/MYR and 5.79% deposit rate of MYR. What is the cost of money market hedge for Coleman Co. with 4.03% borrowing rate of A$? (enter the whole number without sign or symbol).

11. Austal Ship plans to borrow 2.29 million Australian dollars (A$) for three years. It obtains a floating rate loan from a bank at the interest rate equal to the LIBOR + 2.61 (%). Austal Ship also forecasts 3.56%, 4.40%, and 4.86% LIBOR in year1, year2, and year3, respectively. How much total interest Austal Ship needs to pay for A$2.29 millions in three years of the loan period? (enter the whole number without sign or symbol)