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Reading 71: Forward Markets and Contracts - LOS e, (Part

1.Which of the following statements regarding Eurodollar time deposits is FALSE?

A)   U.S. dollar (USD) denominated deposits at large banks in London are Eurodollar accounts.

B)   Euro denominated deposits at large banks in the U.S. are Eurodollar accounts.

C)   USD denominated deposits in large banks in Tokyo are Eurodollar accounts.

D)   Eurodollar deposit rates are quoted as an add-on yield.

2.Eurodollar time deposits are:

A)   denominated in U.S. dollars (USD).

B)   priced at a discount.

C)   actively traded in the secondary market.

D)   usually for periods greater than one year.

3.Which of the following statements regarding Eurodollar time deposits is FALSE?

A)   Rates are quoted as an add-on yield.

B)   Rates are based on a 360-day year.

C)   They are available in Switzerland.

D)   Sometimes the best rates are available in New York City.

答案和详解如下:

1.Which of the following statements regarding Eurodollar time deposits is FALSE?

A)   U.S. dollar (USD) denominated deposits at large banks in London are Eurodollar accounts.

B)   Euro denominated deposits at large banks in the U.S. are Eurodollar accounts.

C)   USD denominated deposits in large banks in Tokyo are Eurodollar accounts.

D)   Eurodollar deposit rates are quoted as an add-on yield.

The correct answer was B)

Eurodollar deposits are USD denominated deposits in large banks held outside the United States. By convention, the rates are quoted as an add-on yield. Following this convention, euro-denominated deposits held outside of the euro-block countries would be “Euroeuro” deposits.

2.Eurodollar time deposits are:

A)   denominated in U.S. dollars (USD).

B)   priced at a discount.

C)   actively traded in the secondary market.

D)   usually for periods greater than one year.

The correct answer was A)

Eurodollar time deposits are USD denominated deposits with large banks outside the U.S. They are usually short term and not traded in a secondary market.

3.Which of the following statements regarding Eurodollar time deposits is FALSE?

A)   Rates are quoted as an add-on yield.

B)   Rates are based on a 360-day year.

C)   They are available in Switzerland.

D)   Sometimes the best rates are available in New York City.

The correct answer was D)

Eurodollar time deposits are U.S. dollar denominated deposits outside the United States. Rates are quoted as an annualized add-on yield, based on a 360-day year.

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