Eurocurrencies and Eurocurrency Interest Rates
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Questions and Answers

Which of the following best describes Eurocurrencies?

  • Foreign currencies on deposit in the country of origin
  • Domestic currencies on deposit in the country of origin
  • Foreign currencies on deposit in a domestic country
  • Domestic currencies on deposit in a foreign country (correct)

    • What are the two valuable purposes served by the Eurocurrency markets?

  • Holding excess corporate liquidity and financing government projects
  • Facilitating international trade and providing short-term bank loans for individuals
  • Providing efficient money market device for holding excess corporate liquidity and financing corporate working capital needs (correct)
  • Providing short-term bank loans for individuals and financing government projects

    • What is the interest rate referred to as in the Eurocurrency market?

  • L I B O R (correct)
  • S T R A D E
  • C O M P E T E
  • M A R K E T

    • Which of the following is assumed in the theory of comparative advantage?

    <p>Free trade</p> Signup and view all the answers

    What type of regulation and interference is the Eurocurrency market relatively free from?

    <p>Governmental regulation and interference</p> Signup and view all the answers

    Which of the following best describes Eurocurrencies?

    <p>Currencies deposited in a foreign country</p> Signup and view all the answers

    What is the primary function of Eurocurrency deposits?

    <p>Holding excess corporate liquidity</p> Signup and view all the answers

    What is the major source of short-term bank loans in the Eurocurrency market?

    <p>Corporate working capital needs</p> Signup and view all the answers

    What interest rate is commonly used in the Eurocurrency market?

    <p>LIBOR</p> Signup and view all the answers

    What conditions are assumed in the theory of comparative advantage?

    <p>Free trade and perfect competition</p> Signup and view all the answers

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