Question 1

International loans can be denominated in almost any major currency.

Accepted Answer

A) True 
 B)False

Question 2

Compare and contrast the strategies in reducing the risks of international lending.

Accepted Answer

There are three basic ways of reducing r...

Question 3

Sovereign risk is:

Accepted Answer

A)  the possibility that political factors may impair a borrower's ability to meet debt-servicing obligations.
B)  the risk resulting from changes in foreign exchange values that affect the return on loans or investments denominated in other currencies.
C)  the possibility that a sovereign country as a borrower may become unable or unwilling to service its foreign obligations or meet guarantees of nongovernmental or private borrowings.
D)  the possibility that a sovereign country as a borrower may become bankrupt.E) C) and D)
F) B) and D)

Question 4

Trade accounts are the simplest form of trade finance and involve the importer paying for the goods once title transfers.

Accepted Answer

A) True 
 B)False  False

Question 5

Explain what contagion risk is and how it affects the financial market.

Accepted Answer

Contagion risk is the risk of the effect...

Question 6

Customers of a foreign branch have access to the full range of the parent bank's services,and the value of these services is based on the worldwide value of the client relationship rather than just the local office relationship.

Accepted Answer

A) True 
 B)False

Question 7

The IMF's initial role was to:

Accepted Answer

A)  provide long-term finance for post-war reconstruction.
B)  promote free trade through tariff reduction.
C)  promote international monetary cooperation and foreign exchange stability in addition to facilitating the balanced growth of international trade.
D)  promote free trade through negotiation.E) A) and B)
F) None of the above

Question 8

International bank lending is characterised by all of the following except that loans:

Accepted Answer

A)  are unsecured.
B)  have floating rates.
C)  are made for relatively small amounts.
D)  are priced relative to the LIBOR.E) A) and C)
F) All of the above

Question 9

Most large international loans are negotiated and funded in:

Accepted Answer

A)  international bank market.
B)  the eurocurrency market.
C)  the United States.
D)  the IMF.E) A) and B)
F) None of the above

Question 10

Global financial risk is the risk of the effects of a financial crisis in one region or country spreading to another.

Accepted Answer

A) True 
 B)False

Question 11

Most eurocurrency loans are priced with respect to the average of the current interest rates prevailing in the UK and the US market.

Accepted Answer

A) True 
 B)False

Question 12

A shell branch is a foreign branch that has limited access to that country's domestic market.

Accepted Answer

A) True 
 B)False  False

Question 13

A sight draft is:

Accepted Answer

A)  a bank draft that requires payment when the goods are received.
B)  a bank draft that requires payment some time (usually 30,60 or 90 days) after the goods are received.
C)  short-term financing of importing and exporting activities across the globe.
D)  a bank draft that requires payment before the goods are delivered.E) None of the above
F) C) and D)

Question 14

Correspondent banking is a legal and operational part of a parent bank operating in a foreign country.

Accepted Answer

A) True 
 B)False

Question 15

In international lending,what are the risks that concern bankers the most?

Accepted Answer

There are three risks namely,credit risk...

Question 16

When lending abroad,bankers must take into account:

Accepted Answer

A)  government monetary and fiscal policy,bank regulations,foreign exchange controls and national and regional economic conditions.
B)  government monetary,fiscal policy and bank regulations.
C)  government monetary,fiscal policy and national and regional economic conditions.
D)  government monetary,fiscal policy,bank regulations,and foreign exchange controls.E) A) and B)
F) C) and D)

Question 17

Which of the following factors is an important consideration in international lending?

Accepted Answer

A)  credit risk
B)  country risk
C)  currency risk
D)  all of the aboveE) B) and D)
F) C) and D)

Question 18

Transfer risk is

Accepted Answer

A)  similar to contagion risk.
B)  the risk that domestic currency cannot be converted into foreign currency.
C)  the risk that the goods will not be delivered.
D)  similar to country risk.E) A) and C)
F) B) and C)

Question 19

International lending based on the LIBOR rate with a rollover-pricing feature protects the bank from:

Accepted Answer

A)  liquidity risk.
B)  interest rate risk.
C)  default risk.
D)  solvency risk.E) All of the above
F) B) and C) B

Question 20

There are a number of ways to deliver international banking services.Identify and explain one way of delivery.

Accepted Answer

The primary ways to deliver internationa...

Exam 16: International Banking

International loans can be denominated in almost any major currency.

Correct AnswerverifiedShow Answer

Compare and contrast the strategies in reducing the risks of international lending.

Correct AnswerverifiedThere are three basic ways of reducing r...View AnswerShow Answer

Sovereign risk is:

Correct AnswerverifiedShow Answer

Trade accounts are the simplest form of trade finance and involve the importer paying for the goods once title transfers.

Correct AnswerverifiedFalse

Explain what contagion risk is and how it affects the financial market.

Correct AnswerverifiedContagion risk is the risk of the effect...View AnswerShow Answer

Customers of a foreign branch have access to the full range of the parent bank's services,and the value of these services is based on the worldwide value of the client relationship rather than just the local office relationship.

Correct AnswerverifiedShow Answer

The IMF's initial role was to:

Correct AnswerverifiedShow Answer

International bank lending is characterised by all of the following except that loans:

Correct AnswerverifiedShow Answer

Most large international loans are negotiated and funded in:

Correct AnswerverifiedShow Answer

Global financial risk is the risk of the effects of a financial crisis in one region or country spreading to another.

Correct AnswerverifiedShow Answer

Most eurocurrency loans are priced with respect to the average of the current interest rates prevailing in the UK and the US market.

Correct AnswerverifiedShow Answer

A shell branch is a foreign branch that has limited access to that country's domestic market.

Correct AnswerverifiedFalse

A sight draft is:

Correct AnswerverifiedShow Answer

Correspondent banking is a legal and operational part of a parent bank operating in a foreign country.

Correct AnswerverifiedShow Answer

In international lending,what are the risks that concern bankers the most?

Correct AnswerverifiedThere are three risks namely,credit risk...View AnswerShow Answer

When lending abroad,bankers must take into account:

Correct AnswerverifiedShow Answer

Which of the following factors is an important consideration in international lending?

Correct AnswerverifiedShow Answer

Transfer risk is

Correct AnswerverifiedShow Answer

International lending based on the LIBOR rate with a rollover-pricing feature protects the bank from:

Correct AnswerverifiedB

There are a number of ways to deliver international banking services.Identify and explain one way of delivery.

Correct AnswerverifiedThe primary ways to deliver internationa...View AnswerShow Answer

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There are three basic ways of reducing r...
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False

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Contagion risk is the risk of the effect...
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False

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There are three risks namely,credit risk...
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B

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The primary ways to deliver internationa...
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