International Finance And Treasury - Study Mode

[#501] Eurobonds are admired because
Correct Answer

(C) of absence of government regulation

Explanation

Solution: Eurobonds are admired because of absence of government regulation. A Eurobond is a debt instrument that's denominated in a currency other than the home currency of the country or market in which it is issued. Eurobonds are important because they help organizations raise capital while having the flexibility to issue them in another currency.

[#502] When earnings are reinvested instead of payments of dividends then capital gains
Correct Answer

(B) must decreases

Explanation

Solution: When earnings are reinvested instead of payments of dividends then capital gains must decreases.

[#503] Consider buying call option, if price of stock rises then buyer of call option has
Correct Answer

(C) high potential of profit

Explanation

Solution: Consider buying call option, if price of stock rises then buyer of call option has high potential of profit. Call options are financial contracts that give the option buyer the right, but not the obligation, to buy a stock, bond, commodity or other asset or instrument at a specified price within a specific time period. The stock, bond, or commodity is called the underlying asset.

[#504] Intrinsic value of call option is considered as in money if
Correct Answer

(A) stock price > exercise price

Explanation

Solution: Intrinsic value of call option is considered as in money if stock price > exercise price. The intrinsic value of both call and put options is the difference between the underlying stock's price and the strike price.

[#505] Call option considering interest rates and have multiple exercise dates is classified as
Correct Answer

(B) cap

Explanation

Solution: Call option considering interest rates and have multiple exercise dates is classified as cap. A cap is a package of interest rate options whereby, at each of a series of future fixing dates, if an agreed reference rate such as LIBOR is higher than the strike rate, the option buyer receives the difference between them, calculated on an agreed notional principal amount for the period until the next fixing date.