International Financial Management 8thEdition By Cheol Eun – Test Bank

Chapter 11 International Banking and Money Market

1) Edge Act banks are not prohibited from owning equity in business corporations, unlike domestic commercial banks.

2) An Edge Act bank is typically located in a state different from that of its parent in order to get around the prohibition on interstate branch banking.

3) International banks are different from domestic banks in what way(s)?
A) International banks can arrange trade financing.
B) International banks can arrange for foreign exchange transactions.
C) International banks can assist their clients in hedging exchange rate risk.
D) all of the options

4) Major distinguishing features between domestic banks and international banks are
A) the types of deposits they accept.
B) the types of loans and investments they make.
C) membership in loan syndicates.
D) all of the options

5) Since international banks have the facilities to trade foreign exchange,
A) they generally also make a market as a dealer in foreign exchange.
B) they generally also make a market as a dealer in foreign exchange derivatives.
C) they generally also trade foreign exchange products for their own account.
D) none of the options

6) Banks that both perform traditional commercial banking functions and engage in investment banking activities are often called
A) international service banks.
B) investment banks.
C) commercial banks.
D) merchant banks.

7) Merchant banks are different from traditional commercial banks in what way(s)?
A) Merchant banks can engage in investment banking activities.
B) Merchant banks can arrange for foreign exchange transactions.
C) Merchant banks can assist their clients in hedging exchange rate risk.
D) all of the options

8) By far the most important international finance centers are
A) New York and London.
B) New York, London, and Tokyo.
C) New York, London, Tokyo, Paris, and Zurich.
D) New York, London, Tokyo, Paris, Zurich, and Frankfurt.

9) Multinational banks are often not subject to the same regulations as domestic banks.
A) There may be increased need to publish adequate financial information.
B) There may be reduced need to publish adequate financial information.
C) The requirements to publish adequate financial information are the same.
D) none of the options

10) A domestic bank that follows a multinational client abroad to preserve that banking relationship
A) is playing the role of the desperate housewife in this relationship.
B) is pursuing a wholesale defensive strategy.
C) is pursuing a retail defensive strategy.
D) none of the options