Exam 8: Foreign Exchange and International Financial Markets

The forward price of a foreign currency is typically the same as its spot price.

The currency option requires a firm to buy or sell a specified amount of a foreign currency at a specified price any time up to a specified date.

What percentage of all foreign exchange transactions take place in the spot market?

Which of the following would be considered a soft currency?

Two-point arbitrage is also known as ________.

International bankers can customize currency options for their commercial clients.

A person normally purchases items using the indirect exchange rate.

What percentage of all foreign-exchange trading involves the U.S. dollar?

The Japanese yen makes up the largest portion of the international bond market.

The ________ is an exchange rate between two currencies calculated through the use of a third currency.

Briefly discuss the different categories of clients that are serviced by foreign exchange departments of banks?

________ attempt to exploit small differences in the price of a currency between markets by buying currencies in lower-priced markets and selling in higher-priced markets.

Foreign exchange speculation is not attractive to investors because of its low risk nature.

What kind of arbitrage occurs when the difference between two countries' interest rates is not equal to the forward discount/premium on their currencies?

Tyler, a U.S. citizen, received a quote on the dollar/yen relationship of ¥108.21/$1. Tyler most likely received a(n) ________ quote.

________ focus on offering banking and other financial services to nonresident customers.

Swap transactions are the only mechanism for obtaining foreign exchange in the future.

What is the difference between a Eurobond, a global bond, and a foreign bond?

What does the difference between the spot and forward prices of a country's currency most likely suggest?

Why are the interest rates often low on international bonds?