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Exam 17: International Banking: Reserves, Debt, and Risk

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Question 41

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Which of the following is not a condition of the international gold standard? That a nation must:

A) Convert gold into paper currency,and vice versa,at a stipulated rate
B) Permit gold to be freely imported and exported
C) Tolerate wide fluctuations in its exchange rate
D) Define its monetary unit in terms of a stipulated amount of gold

E) None of the above
F) B) and D)

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Question 42

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Gold is currently the most widely used asset in the international monetary system.

A) True
B) False

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Question 43

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Swap agreements are generally conducted by the:

Which of the following constitute(s) the largest component of the world's international reserves?

Concerning international lending risk,country risk refers to the risk that part or all of the interest or principal of a loan will not be repaid.

Under a system of fixed exchange rates,international reserves are needed to bridge the gap between monetary receipts and monetary payments.

All of the following are major goals of the International Monetary Fund except:

"Country risk" analysis is concerned with all of the following except:

Concerning international lending risk,credit risk refers to the probability that part or all of the interest rate or principal of a loan will not be repaid.

The value of the SDR is tied to a currency basket consisting of the U.S.dollar,German mark,Japanese yen,French franc,and British pound.

"Owned" international reserves consist of:

To the extent that adjustments in prices,interest rates,and income levels promote balance-of-payments equilibrium,the demand for international reserves decreases.

Which international reserve asset was officially phased out of the international monetary system by the United States in the early 1970s?

Concerning international lending risk of commercial banks,____ is associated with possible changes in the exchange value of a nation's currency.

There exists a direct relationship between the degree of exchange rate flexibility and the need for international reserves.

Under a debt-for-debt swap,a commercial bank sells its loans at a discount to a developing country government for local currency which it then uses to finance an equity investment in the debtor country.

With floating exchange rates,countries require sizable amounts of international reserves for the stabilization of exchange rates.

Which of the following is a main central bank function of the International Monetary Fund?

All of the following exchange-rate systems require international reserves to finance balance-of-payments disequilibriums except:

The main purpose of the International Monetary Fund is to grant long-term loans to developing nations to help them finance the development of infrastructure such as roads,dams,and bridges.