Exam 8: Foreign Exchange and International Financial Markets

Why would an MNC most likely use an offshore financial center?

Delivery takes place at two different points in time with a swap transaction.

What is the primary transaction currency for the foreign exchange market? What are the dominant currencies in the international bond market?

The ________ consists of foreign-exchange transactions that are to occur sometime in the future.

If the British pound is selling at $1.5212 spot on September 3, and at a 90-day forward rate of $1.5203, then ________.

The currencies of countries enjoying BOP trade surpluses or low inflation rates are more likely to sell at a ________.

What is three-point arbitrage?

Apex Enterprises wants the right to buy a foreign currency at a specified price at any time up to a specified date. Apex most likely needs a ________.

The primary purpose of the foreign-exchange market is to ________.

Why are arbitrage activities important to the international monetary system?

A call option ________.

In the world of spot markets, what is the meaning of immediately?

A ________ is a contract for a standard amount on a standard delivery date.

The equilibrium point between the quantity of a currency supplied and the quantity of the currency demanded is the exchange rate.

Carol, an American banker, received a quote between the U.S. dollar and the Japanese yen of $.00924/¥1. Carol most likely received a(n) ________ quote.

The short-term interest rate differential between two countries is a good indicator of the forward premium on the currencies, but not the forward discount.

The Eurocurrency market is limited to exchanges that include the euro.

Which of the following would most likely help international businesspeople to forecast future changes in exchange rates?

Spot transactions account for 38 percent of all foreign exchange transactions.

Ross Manufacturing wants to sell foreign exchange on a spot basis and contracts with an international bank to handle the transaction. What is the most likely reason that Ross uses an international bank in this case?