Question 1

A full-service facility operated by a bank away from its home office but is merely a local office that represents a single large financial-service corporation is known as a(n):

Accepted Answer

A branch office is a full-service facility operated by a bank away from its home office but is merely a local office that represents a single large financial-service corporation.

Question 2

The First National Bank of Summerville has opened an office in Turkey.This is a limited service office that can market services of the home office in Turkey and can identify Turkish customers but cannot take deposits or book loans.What type of office has the First National Bank of Summerville opened in Turkey?

Accepted Answer

The office described in the scenario is a representative office, which is a limited service office that functions as a marketing and liaison office for the parent company. Representative offices typically cannot take deposits or make loans but can identify potential customers and provide information about the services of the parent company.

Question 3

The State Bank of Virginia owns 55 percent of the shares of the Bank of Budapest.What type of arrangement is this?

Accepted Answer

The State Bank of Virginia owning 55 percent of the shares of the Bank of Budapest indicates a subsidiary arrangement, where the State Bank of Virginia has a controlling ownership stake in the Bank of Budapest.

Question 4

Suppose the international banks operating in Venezuela have to meet the same legal reserve requirements as domestic banks to avoid massive threats to economic health in the nation.This would be in support of which reason for regulating international banks?

Accepted Answer

Requiring international banks to meet the same legal reserve requirements as domestic banks promotes stable growth in money and credit in the nation. This is important to ensure that the economy is not negatively impacted by the actions of foreign banks.

Question 5

The Goudge Grilling Company has just ordered a shipment of grills from Frankfurt.Payment for the grills must be in euros when the grills are delivered.Euros have changed in value in the last 30 days.They have gone from $1.42 to $1.44.If this trend continues which of the following currency contracts can help the Goudge Grilling Company hedge their currency risk?

Accepted Answer

A long-hedge currency futures contract would be the best choice for the Goudge Grilling Company to hedge their currency risk. By taking a long position in a currency futures contract, they are locking in the exchange rate at the current rate, in this case, $1.44 per euro. If the euro continues to appreciate in value, the company will have already locked in the more favorable rate, mitigating their risk.

Question 6

The market for banking in China exhibits all of the following except:

Accepted Answer

The answer of The market for banking in China exhibits...

Question 7

The Third State Bank of Laramie has opened an office in Morocco.This office does not take deposits but makes commitments to make loans,issues letters of credit,and provides technical assistance to companies in Morocco.What type of office has the Third State Bank of Laramie opened in Morocco?

Accepted Answer

An agency office, like the one described, does not accept deposits but can make loan commitments, issue letters of credit, and provide technical assistance, aligning with the activities mentioned for the Third State Bank of Laramie's office in Morocco.

Question 8

The biggest problem for international banks at the beginning of the 21^stcentury is:

Accepted Answer

Non-performing loans refer to loans that are not being repaid on time or at all, and are a major problem for international banks. These loans can lead to significant financial losses for the bank, and can also negatively impact their reputation and ability to attract new customers. While the other options listed can also be challenges for international banks, non-performing loans are considered the biggest problem at the beginning of the 21st century.

Question 9

The primary source for international bank statistics is:

Accepted Answer

The primary source for international bank statistics is the Bank for International Settlements (BIS), which serves as a central bank for other central banks and provides data on international banking activity. The other options listed, such as the FDIC and OCC, are regulatory agencies specific to the United States, while the United Nations and ETC are not sources of bank statistics.

Question 10

The Second National Bank of Guthrie has opened an office in Chile.This office offers a full line of services and is not a separate legal entity from the Second National Bank of Guthrie.What type of office has the Second National Bank of Guthrie opened in Chile?

Accepted Answer

The Second National Bank of Guthrie has opened a branch office in Chile as it offers a full line of services and is not a separate legal entity from the parent company. A representative office typically performs marketing and liaison activities, an agency office provides limited services, a subsidiary is a separate legal entity with its own shareholders, and an export trading company is involved specifically in exporting goods.

Question 11

The Hagard Mercantile Company has made a $30 million investment in a mill in Germany and fears a substantial decline in the mark's current spot rate from $0.63 to $0.56 lowering the value of the company's investment in the mill.Which of the following currency contracts can help Hagard solve this problem?

Accepted Answer

By purchasing a put currency option, Hagard Mercantile Company can protect itself from the downside risk of a decline in the spot rate of the German mark. This contract will allow the company to sell the marks at a predetermined strike price, even if the market rate falls below that price. This way, the company can limit its losses on the investment in case the mark depreciates against the dollar. The other options (A, C, D) may also help to manage the currency risk, but the put currency option is the most suitable in this case, as it provides the most flexibility in terms of timing and amount.

Question 12

Suppose Bank of America holds assets denominated in yen of 150 million and liabilities denominated in yen of 90 million.They also have yen purchases of 70 million and yen sales of 50 million.What is Bank of America's net exposure to currency risk?

Accepted Answer

Bank of America's net exposure to currency risk can be calculated as follows:
Net yen assets = yen assets - yen liabilities
Net yen assets = 150 million - 90 million = 60 million yen
Net yen exposure = yen purchases - yen sales
Net yen exposure = 70 million - 50 million = 20 million yen
Thus, the net exposure to currency risk is +80 million yen.

Question 13

Suppose Brazil decides to restrict the export of the real by international banks so that the real does not leave the country and reduce currency reserves for repayment of Brazilian debt.This would be in support of which reason for regulating international banks?

Accepted Answer

Restricting the export of the real by international banks is a measure to control foreign currency, ensuring that the currency remains within the country to manage reserves and debt repayment.

Question 14

Suppose South Korea limits the amount of deposits made in South Korea that can be used to make loans in other countries.This would be in support of which reason for regulating international banks?

Accepted Answer

Limiting the amount of deposits that can be used for loans in other countries can help restrict the outflow of scarce capital from South Korea. This measure can be taken to prevent the depletion of domestic financial resources and maintain the availability of funds for domestic investment and economic growth. This regulation is a type of foreign exchange control that aims to manage the flow of capital across countries.

Question 15

Suppose India restricts entry of foreign banks until the end of the decade.This would be in support of which reason for regulating international banks?

Accepted Answer

Restricting entry of foreign banks can help protect domestic financial institutions from competition and potential threats to their stability. By limiting foreign banks' presence, a country can also regulate capital inflows and outflows, but this reason is not explicitly mentioned in the options. Protecting depositor funds and promoting stable growth are important reasons in regulating banks, but they do not necessarily require restricting foreign bank entry. Similarly, foreign currency controls can be achieved through other measures and are not mentioned as an explicit reason in the given options.

Question 16

The State Bank of Nebraska owns a company that has more than half of its income from activities associated with exporting goods and services from the U.S.This company offers export insurance coverage,transportation and warehousing in Europe,trade financing,and other services.What type of company does the State Bank of Nebraska own?

Accepted Answer

The company described is an export trading company, as it is involved in activities related to exporting goods and services from the U.S., including offering export insurance coverage, transportation, warehousing in Europe, trade financing, and other services.

Question 17

Which of the following is one of the customer services supplied by banks in international markets?

Accepted Answer

Helping customers hedge against foreign currency risk is a customer service supplied by banks in international markets. Underwriting notes and bond issues in the U.S. bond market is specific to the U.S. market, while helping customers market their products in the domestic market and making loans to domestic customers are services relevant to the bank's home country. Therefore, option C is the correct choice.

Question 18

As the text suggests,all of the following areas of the world have significant opportunities for foreign banks except:

Accepted Answer

The text suggests that all of the following areas of the world have significant opportunities for foreign banks: Asia, China, Russia, and South Korea. Therefore, the best choice is D, which is not mentioned as having significant opportunities.

Question 19

If Denmark requires that all foreign banks operating in Denmark have at least ten percent capital,what reason for regulating international banks is this action most likely in support of?

Accepted Answer

Requiring foreign banks to have a minimum capital of ten percent is a way to protect the safety of depositor funds. This regulation ensures that foreign banks have sufficient financial resources to protect their customers' deposits and repay them in case of insolvency or financial difficulties.

Question 20

Which of the following is a risk evaluation system in international lending today?

Accepted Answer

The answer of Which of the following is a risk...

Quiz 20: International Banking and the Future of Banking and Financial Services

A full-service facility operated by a bank away from its home office but is merely a local office that represents a single large financial-service corporation is known as a(n) :

The State Bank of Virginia owns 55 percent of the shares of the Bank of Budapest.What type of arrangement is this?

Suppose the international banks operating in Venezuela have to meet the same legal reserve requirements as domestic banks to avoid massive threats to economic health in the nation.This would be in support of which reason for regulating international banks?

The market for banking in China exhibits all of the following except:

The Third State Bank of Laramie has opened an office in Morocco.This office does not take deposits but makes commitments to make loans,issues letters of credit,and provides technical assistance to companies in Morocco.What type of office has the Third State Bank of Laramie opened in Morocco?

The biggest problem for international banks at the beginning of the 21^stcentury is:

The primary source for international bank statistics is:

The Second National Bank of Guthrie has opened an office in Chile.This office offers a full line of services and is not a separate legal entity from the Second National Bank of Guthrie.What type of office has the Second National Bank of Guthrie opened in Chile?

Suppose Bank of America holds assets denominated in yen of 150 million and liabilities denominated in yen of 90 million.They also have yen purchases of 70 million and yen sales of 50 million.What is Bank of America's net exposure to currency risk?

Suppose Brazil decides to restrict the export of the real by international banks so that the real does not leave the country and reduce currency reserves for repayment of Brazilian debt.This would be in support of which reason for regulating international banks?

Suppose South Korea limits the amount of deposits made in South Korea that can be used to make loans in other countries.This would be in support of which reason for regulating international banks?

Suppose India restricts entry of foreign banks until the end of the decade.This would be in support of which reason for regulating international banks?

Which of the following is one of the customer services supplied by banks in international markets?

As the text suggests,all of the following areas of the world have significant opportunities for foreign banks except:

If Denmark requires that all foreign banks operating in Denmark have at least ten percent capital,what reason for regulating international banks is this action most likely in support of?

Which of the following is a risk evaluation system in international lending today?

Quiz 20: International Banking and the Future of Banking and Financial Services

A full-service facility operated by a bank away from its home office but is merely a local office that represents a single large financial-service corporation is known as a(n) :

The State Bank of Virginia owns 55 percent of the shares of the Bank of Budapest.What type of arrangement is this?

Suppose the international banks operating in Venezuela have to meet the same legal reserve requirements as domestic banks to avoid massive threats to economic health in the nation.This would be in support of which reason for regulating international banks?

The market for banking in China exhibits all of the following except:

The Third State Bank of Laramie has opened an office in Morocco.This office does not take deposits but makes commitments to make loans,issues letters of credit,and provides technical assistance to companies in Morocco.What type of office has the Third State Bank of Laramie opened in Morocco?

The biggest problem for international banks at the beginning of the 21stcentury is:

The primary source for international bank statistics is:

The Second National Bank of Guthrie has opened an office in Chile.This office offers a full line of services and is not a separate legal entity from the Second National Bank of Guthrie.What type of office has the Second National Bank of Guthrie opened in Chile?

Suppose Bank of America holds assets denominated in yen of 150 million and liabilities denominated in yen of 90 million.They also have yen purchases of 70 million and yen sales of 50 million.What is Bank of America's net exposure to currency risk?

Suppose Brazil decides to restrict the export of the real by international banks so that the real does not leave the country and reduce currency reserves for repayment of Brazilian debt.This would be in support of which reason for regulating international banks?

Suppose South Korea limits the amount of deposits made in South Korea that can be used to make loans in other countries.This would be in support of which reason for regulating international banks?

Suppose India restricts entry of foreign banks until the end of the decade.This would be in support of which reason for regulating international banks?

Which of the following is one of the customer services supplied by banks in international markets?

As the text suggests,all of the following areas of the world have significant opportunities for foreign banks except:

If Denmark requires that all foreign banks operating in Denmark have at least ten percent capital,what reason for regulating international banks is this action most likely in support of?

Which of the following is a risk evaluation system in international lending today?

The biggest problem for international banks at the beginning of the 21^stcentury is: