1. From the perspective of a bank that writes of a put option on €62,500. If the strike price is $1.25/€, and the option premium is $1,875, at what exchange rate do you start to lose money?
a. $1.22/€ b. $1.25/€ c. $1.28/€ d. None of the above
2. Bonds denominated in ________ and issued by ____________ at __________ rates make up the largest part of outstanding international bonds.
a. US dollars, financial institutions, fixed
b. US dollars, non-financial corporations, flexible
c. euros, non-financial corporations, flexible
d. euros, financial institutions, fixed
3. Under Basel 3: Select one:
a. There is no flexibility in the risk-based capital ratios that commercial banks must hold.
b. Banks had until 2015 to meet the higher minimum capital requirements.
c. Tier 2 capital reserves are reduced from 4% to 2% thereby putting more weight on Tier 1 reserves.
d. Tier 2 capital reserves are reduced from 4% to 2% thereby putting less weight on Tier 1 reserves.