Explain what Eurocurrencies are and why they are significant
What will be an ideal response?
Eurocurrencies are offshore currency deposits denominated in a currency other than that of the country in which the bank resides. This currency is significant because of the rapid expansion of international trade and increased multinational nature of corporations' activities.
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If the value of a cable TV franchise is uncertain, too much may be bid for the franchise. This is an example of
a. moral hazard b. an authority relation c. the winner's curse d. the principal-agent problem e. adverse selection
If real interest rates in the United States fell and real interest rates in England rose, we would expect people to: a. increase their demand for British pounds. b. borrow more from U.S. sources
c. buy relatively more British assets. d. all of the above