Hi.

1. Suppose Citibank holds assets denominated in euros of 120 million and liabilities denominated in euros of 180 million. They also have euro purchases of 40 million and euro sales of 70 million. When would Citibank experience a loss in the currency market?

A.

When the euro declines in value relative to the dollar

B.

When the dollar increases in value relative to the euro

C.

When the yen increases in value

D.

When the euro increases in value relative to the dollar

E.

None of the options is correct.

2. Suppose a U.S. bank borrows money in London while a British company borrows money in New York. At the end of the loan period the U.S. company needs pounds to repay their loan and the British company needs dollars to repay their loan. Which of the following might be a good tool for these companies to reduce their currency risk?

A.

Currency futures contract

B.

Currency option contract

C.

Interest rate futures contract

D.

Interest rate swap contract

E.

Currency swap contract

3. Which of the following is a reason for the growth of the currency swap market in recent years?

A.

It has helped thousands of businesses and governments hedge currency risk.

B.

It has provided central banks with a new instrument to trade.

C.

It has helped shape money and credit conditions in various countries.

D.

It has helped strengthen home nations' economies.

E.

All of the options are reasons for the growth of the currency swap market in recent years.

4. A multinational company raises short-term credit through London's financial district. They are most likely using:

A.

Eurocommercial paper (ECP)

B.

Depository receipt (DR)

C.

Note issuance facility

D.

Currency swap

E.

None of the options is correct.

5. Suppose the Bank of America provides a 5 year credit guarantee for Dillard's Department Stores. Dillard's Department Stores periodically issues short term notes with due dates of 90 days after they are issued in the international market. Bank of American has most likely provided a(n):

A.

Eurocommercial paper (ECP)

B.

Depository receipt (DR)

C.

Note issuance facility

D.

Currency swap

E.

None of the options is correct.

6. A broker has purchased stock in Sony Corporation and has asked Citibank to act as a custodian of this stock. Citibank has issued a negotiable instrument representing ownership interest in the stock of the Japanese company. These negotiable instruments are denominated in dollars and not in yen. This is an example of a(n):

A.

Eurocommercial paper (ECP).

B.

Depository receipt (DR).

C.

Note issuance facility.

D.

Currency swap.

E.

None of the options is correct