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.