1) International banks( as opposed to domestic banks):

a. arrange trade financing

b. conduct foreign exchange transactions and assist in hedging exchange rate risk

c. Speculate in foreign exchange transactions for the house

d. all of the above

2) The Eurocurency market:

a. consists of euros deposited in eurozone banks

b. consists of foreign exchange transactions involviing the euro only

c. consists of money deposited in international banks located in a country other than the country issuing the currency

d. consists of euros only deposited outside of the eurozone

3) The large international banks in the world will generally have a----------------------------banking relationship with other banks in the major financial centers in which they do not have their own banking operations.

4) A foreign branch bank is the samething as a subsidiary bank. T or F.

5) Edge Act banks are federally chartered subsidiaries of US banks that are physically located in the-------------------------and are allowed to engage in a full range of international banking activities.

6) In an offshore banking center:

a. offshore banks operate as branches or subsidiaries of a foreign parent bank

b. there is virtually total freedom from host country banking regulations

c. offshore banks primary activities are to seek deposits and grant loans in currencies other than that of the host country

d. all of the above

7) An international banking facility is a seperate set of asset and liability accounts that are segregated in the----------------------bank's books.

8) Bank capital adequacy refers to the amount of capital equity and other securities a bank holds as reserves against risky assets to reduce the probability of bank--------------.

9) A major risk that Eurobanks face is that in accepting Eurodeposits and extending Eurocredits the desired bid-ask spread will not be as desired on the settllement date. T or F.

10) If a Eurobank wants to hedge its interest rate risk on a Eurocredit and buys a forward rate agreement, it will receive from the seller the difference in the interest cost if the interest rate on the settlement date is less than the agreement rate. T or F.