Please answer all questions. These are mcq questions. I only need answers. If yo
ID: 2773432 • Letter: P
Question
Please answer all questions. These are mcq questions. I only need answers. If you didn't answer completely, I will not just give negative rating but ensure that you are removed off the platform.
The U.S. bookbuilding method of underwriting is used in the Euromarket but with some important differences:
The market does not require any waiting period while registration procedures are completed
The lead manager is unable to rely upon the pre-pricing order book as much as in the United States
It is more difficult to maintain a fixed offering price during the underwriting period, as some underwriters will sell their unsold shares in the interdealer market
None of the above
All of the above
Issuers use the Euro-equity market because:
They want to tap a different investor base
They want to tap a larger investor base
Their domestic markets may be insufficient for their needs
They want to avoid domestic regulations and expenses
All of the above
The world equity markets are not nearly so well integrated as the debt markets because:
Debt issues are “commodities” defined by quality, maturity, and the yield curve
Swap markets permit arbitrage activity that eliminates price differences for the same commodity in other markets
Equities are different because each stock is different
A, B and C
A and B
Issuers may tap equity markets in other countries through ________________ to supplement domestic investor interest
An international tranche
A consensus agreement
An underwritten agreement
B and C
A and B
From the issuer’s point of view, the negatives associated with the U.S. underwriting procedures are:
The market risk stays with the seller of the shares while the issue is prepared for the market
The result of an underwriting is not assured and the seller must rely on the underwriter’s best efforts in distributing the shares
Underwriting procedures are designed to obtain the highest price for the seller of the securities
A and B
B and C
A Eurobond is:
Not necessarily issued in euros
Not necessarily issued in Europe
Issued by the European Central Bank
Held mostly by foreign banks operating in Europe
A and B
When foreigners issue yen-denominated bonds registered with the Japanese Ministry of Finance they are called:
Imperial bonds
Tokyo bonds
Samurai bonds
Foreign bonds
Asian bonds
The Eurobond market is:
A very traditional market
Highly regulated
Mostly for European companies
Over 100 years old
Highly innovative
Eurobonds and foreign bonds together are referred to as:
International bonds
Global bonds
Worldwide bonds
Flexible bonds
Transfer bonds
The Eurobond market is:
Virtually unregulated
Subject to self-imposed standards of practice
Listed on the London and Luxembourg stock exchange
All of the above
A and C
The risks of derivate include:
Counterparty, risk, liquidity risk, market risk
Operational risk, settlement risk, systemic risk
Unsystematic risk, operational risk, settlement risk
A and B
A and C
Currency swaps:
Involve only the contractual exchange of interest payment obligations
Are mutual obligations to exchange principal and interest payment obligations
Involve only the exchange of principal obligations
Are always exercised on the first day of the month
Are always exercised on the last day of the month
Credit default swaps (CDSs) are essentially:
Fixed rate obligations
Floating rate obligations
Insurance policies
Forward rate agreements
All of the above
Banks use swaps:
To lower their cost of funds, improve lending profits, and manage funding gaps
For swapping opportunities from their loan book
To satisfy requirements of clients
All of the above
None of the above
Competitors in the market for swaps and other derivatives include:
Banks and investment banks
Finance companies and insurance companies
Dealers from the U.S., U.K., continental Europe, and Asia
A and C
A, B and C
Explanation / Answer
Solution.
1. All of the above
2. All of the above
3. A and B
4. An underwritten agreement
5. A and B
6. A and B
7. Samurai bonds
8. Highly regulated
9. Worldwide bonds
10. Listed on the London and Luxembourg stock exchange
11. A and B
12. Are mutual obligations to exchange principal and interest payment obligations.
13. Fixed rate obligations
14. To lower their cost of funds, improve lending profits, and manage funding gaps
15. A and C