Reading 69: Forward Markets and Contracts-LOS e 习题精选 2011, statements, following, regarding, deposits

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Session 17: Derivatives
Reading 69: Forward Markets and Contracts

LOS e: Describe the characteristics of the Eurodollar time deposit market, and define LIBOR and Euribor.

 

 

Which of the following statements regarding Eurodollar time deposits is NOT correct?

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

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

C) They are available in Switzerland.

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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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Eurodollar time deposits are:

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

B) priced at a discount.

C) actively traded in the secondary market.

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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.

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Which of the following statements regarding Eurodollar time deposits is NOT correct?

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

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

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

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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.

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The offer rate on U.S. dollar (USD) denominated loans between large banks in London is called:

A) London Interbank Offered Rate (LIBOR).

B) Eurobor.

C) the Exchequer rate.

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The rate on USD denominated loans between large banks in London is the LIBOR.

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If 60-day London Interbank Offered Rate (LIBOR) is 6 percent, the interest on a 60-day LIBOR-based Eurodollar deposit of $990,000 is:

A) $9,900.

B) $10,000.

C) $59,400.

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0.06 × (60/360) × 990,000 = $9,900.

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Euribor is:

A) the same as EuroLIBOR.

B) published by the European Central Bank.

C) the rate on U.S. dollar deposits in continental Europe.

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Euribor is the interbank lending rate for Euro denominated loans, published by the European Central Bank, and compiled in Frankfurt.

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If the U.S. discount rate is 2.5% and the London Interbank Offered Rate (LIBOR) is +7.5%, the add-on interest that must be paid on a 60-day, $250 million loan is closest to:

A) $4.17 million.

B) $3.08 million.

C) $3.13 million.

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Add-on interest = LIBOR × (60/360) × $250 million
Interest = 7.5% × (1/6) × $250 million = $3.125 million

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Which of the following is least likely a characteristic of London Interbank Offered Rate (LIBOR)?

A) Adjusted daily.

B) Paid on loans denominated in U.S. dollars.

C) Set by the European Central Bank.

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LIBOR is published by the British Bankers Association based upon quotes from a number of large banks. The rate is determined on a daily basis. LIBOR can apply to loans in U.S. dollars, as well as a variety of other major currencies.

luqian55

thanks a lot