10 Questions
What impact does the increasing importance of international stock markets have on financial capital flow?
It facilitates the flow of financial capital to its most productive use
How do movements of stock prices across countries tend to behave as a result of the increased interdependence in the global economy?
They tend to become more similar
What happens when the Federal Reserve raises U.S. interest rates by 1⁄2 of a percentage point?
The dollar appreciates
What does the covered interest arbitrage parity indicate about investor behavior between domestic and foreign investments?
Investors are indifferent between domestic and foreign investments under certain conditions
How does the higher U.S. interest rate impact the demand for pounds in the spot market?
Increases the demand for pounds
What are the three components that gross international bank lending can be divided into?
Domestic bank loans in domestic currency to nonresidents, domestic bank loans in foreign currency to nonresidents, and domestic bank loans in domestic currency to domestic residents
What gives U.S. exporters the ability to leave dollars in an account in a foreign bank?
Eurodollar deposits
What is the significance of Eurodollar markets on the international financial system?
Increased international mobility of financial capital
What is the amount that will be paid to the lender when a bond matures?
Face value
How have countries' interest rates been affected by the increasing importance of international bond markets?
Moved toward each other
Explore the components of gross international bank lending, including domestic bank loans in domestic and foreign currencies to nonresidents, as well as loans in foreign currency to domestic residents. Learn about Eurodollar deposits and the impact on banking balance sheets.
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