International Finance Exam
International finance
FIN 412
Exam #2
MC: Examples of "single-currency interest rate swap" and "cross-currency interest rate swap" are:
A. fixed-for-floating rate interest rate swap, where one counterparty exchanges the interest payments of a floating- rate debt obligations for fixed-rate interest payments of the other counter party
B. fixed-for-fixed rate debt service (currency swap), where one counterparty exchanges the debt service obligations of a bond denominated in one currency for the debt service obligations of the other counter party denominated in another currency
X- C. A & B
D. none of the above
MC: In the swap market, which position potentially carries greater risks, broker or dealer?
A. Broker
X- B. Dealer
C. They are the same swaps, therefore the same risks D. Not able to tell with given information
MC: Suppose the quote for a five-year swap with semiannual payments is 8.50—8.60 percent. This means…
A. The swap bank will pay semiannual fixed-rate dollar payments of 8.60 percent against receiving six-month dollar LIBOR
B. The swap bank will receive semiannual fixed-rate dollar payments of 8.50 percent against paying six-month dollar LIBOR
X- C. If the swap bank is successful in getting counterparties to both legs of the swap at these prices, he will have an annual profit of ten basis points
D. none of the above
MC: A swap bank has identified two companies with mirror-image financing needs they both want to borrow equivalent amounts for the same amount of time. Company X has agreed to one leg of the swap but company Y is "playing hard to get".
X- A. The swap bank could just sell the company X side of the swap
B. Company X should lobby Y to "get on board"
C. Company Y should calculate the QSD and subtract that from their best outside offer
D. None of the above
MC: In a currency swap:
A. It may be the case that two counterparties have equivalent credit ratings
B. It may be the case that firms have a
FIN 412
Exam #2
MC: Examples of "single-currency interest rate swap" and "cross-currency interest rate swap" are:
A. fixed-for-floating rate interest rate swap, where one counterparty exchanges the interest payments of a floating- rate debt obligations for fixed-rate interest payments of the other counter party
B. fixed-for-fixed rate debt service (currency swap), where one counterparty exchanges the debt service obligations of a bond denominated in one currency for the debt service obligations of the other counter party denominated in another currency
X- C. A & B
D. none of the above
MC: In the swap market, which position potentially carries greater risks, broker or dealer?
A. Broker
X- B. Dealer
C. They are the same swaps, therefore the same risks D. Not able to tell with given information
MC: Suppose the quote for a five-year swap with semiannual payments is 8.50—8.60 percent. This means…
A. The swap bank will pay semiannual fixed-rate dollar payments of 8.60 percent against receiving six-month dollar LIBOR
B. The swap bank will receive semiannual fixed-rate dollar payments of 8.50 percent against paying six-month dollar LIBOR
X- C. If the swap bank is successful in getting counterparties to both legs of the swap at these prices, he will have an annual profit of ten basis points
D. none of the above
MC: A swap bank has identified two companies with mirror-image financing needs they both want to borrow equivalent amounts for the same amount of time. Company X has agreed to one leg of the swap but company Y is "playing hard to get".
X- A. The swap bank could just sell the company X side of the swap
B. Company X should lobby Y to "get on board"
C. Company Y should calculate the QSD and subtract that from their best outside offer
D. None of the above
MC: In a currency swap:
A. It may be the case that two counterparties have equivalent credit ratings
B. It may be the case that firms have a