Question 1

The interbank market in foreign exchange is where ________.

Accepted Answer

A)  electronic brokerage systems are required 
B)  banks trade currency with each other 
C)  reporting dealers set exchange terms 
D)  remittance payments are made 
A)  electronic brokerage systems are required 
B)  banks trade currency with each other 
C)  reporting dealers set exchange terms 
D)  remittance payments are made B

Question 2

Outright forward transactions involve the exchange of currency the second day after the date on which the two foreign exchange traders agree to the transaction.

Accepted Answer

A) True 
 B)False  False

Question 3

A speculator is someone who ________.

Accepted Answer

A)  trades foreign exchange illegally 
B)  deals in the black market in currency 
C)  takes positions in foreign exchange markets to earn a profit 
D)  works for OTC financial institutions rather than non-financial corporations 
A)  trades foreign exchange illegally 
B)  deals in the black market in currency 
C)  takes positions in foreign exchange markets to earn a profit 
D)  works for OTC financial institutions rather than non-financial corporations C

Question 4

If the forward rate for a foreign currency is less than the spot rate,the foreign currency is selling at a forward premium.

Accepted Answer

A) True 
 B)False

Question 5

A currency sells at a forward premium when the forward rate is greater than the spot rate.

Accepted Answer

A) True 
 B)False

Question 6

What is the Bank for International Settlements? What three categories does the BIS designate in the foreign exchange market? Briefly describe each category.

Accepted Answer

The foreign-exchange market is made up o

Question 7

In the spot market,the spread is the difference between the bid and offer rates and is the trader's profit margin.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following best explains the increase in trading activity in recent years?

Accepted Answer

A)  growing emphasis on hedge funds 
B)  availability of more global currencies 
C)  demands for immediate money access 
D)  advances in communication technology 
A)  growing emphasis on hedge funds 
B)  availability of more global currencies 
C)  demands for immediate money access 
D)  advances in communication technology

Question 9

What is currency speculation? Why is it risky?

Accepted Answer

Speculation is the buying or selling of

Question 10

What are the characteristics of the spot market? What institutions handle spot exchanges?

Accepted Answer

Most foreign currency transactions take

Question 11

Options are more flexible than forward contracts.

Accepted Answer

A) True 
 B)False

Question 12

The bid is the price at which the trader is willing to sell foreign currency.

Accepted Answer

A) True 
 B)False

Question 13

Ryan,a foreign exchange dealer,sold U.S. dollars for Swiss francs in the U.S.,then sold Swiss francs for Japanese yen in Switzerland,and then sold the Japanese yen for U.S. dollars in the U.S. Ryan hopes that he will end up with more U.S. dollars than when he began. Which term best describes Ryan's actions?

Accepted Answer

A)  arbitrage 
B)  speculation 
C)  spot transaction 
D)  outright forward 
A)  arbitrage 
B)  speculation 
C)  spot transaction 
D)  outright forward

Question 14

An exchange rate is the number of units that buys one unit of another currency.

Accepted Answer

A) True 
 B)False

Question 15

Arbitrage is the purchase of foreign currency on one market for immediate resale on a foreign market in order to profit from a price discrepancy.

Accepted Answer

A) True 
 B)False

Question 16

The top location for trading foreign exchange is ________.

Accepted Answer

A)  London 
B)  New York 
C)  Zurich 
D)  Tokyo 
A)  London 
B)  New York 
C)  Zurich 
D)  Tokyo

Question 17

Hong Kong is one of the top four largest markets in the world in foreign exchange trades and the largest in Asia.

Accepted Answer

A) True 
 B)False

Question 18

Although most foreign exchange activity takes place through big money center banks,the use of electronic trading has allowed even regional banks to deal directly in foreign exchange markets.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is NOT a reason a company would deal in foreign exchange?

Accepted Answer

A)  to pay or receive dividends in a foreign currency 
B)  to speculate on possible future movements in a currency 
C)  to buy and sell merchandise denominated in a foreign currency 
D)  to import merchandise denominated in its currency rather than the currency of the exporter 
A)  to pay or receive dividends in a foreign currency 
B)  to speculate on possible future movements in a currency 
C)  to buy and sell merchandise denominated in a foreign currency 
D)  to import merchandise denominated in its currency rather than the currency of the exporter

Question 20

Why is London most likely the top market for trading foreign exchange?

Accepted Answer

A)  The British pound is the world's top trading currency. 
B)  Most multinational firms are headquartered in London. 
C)  London is uniquely positioned geographically in terms of time zones. 
D)  British traders have always been the most sophisticated in the world. 
A)  The British pound is the world's top trading currency. 
B)  Most multinational firms are headquartered in London. 
C)  London is uniquely positioned geographically in terms of time zones. 
D)  British traders have always been the most sophisticated in the world.

The interbank market in foreign exchange is where ________.

Outright forward transactions involve the exchange of currency the second day after the date on which the two foreign exchange traders agree to the transaction.

A speculator is someone who ________.

If the forward rate for a foreign currency is less than the spot rate,the foreign currency is selling at a forward premium.

A currency sells at a forward premium when the forward rate is greater than the spot rate.

What is the Bank for International Settlements? What three categories does the BIS designate in the foreign exchange market? Briefly describe each category.

In the spot market,the spread is the difference between the bid and offer rates and is the trader's profit margin.

Which of the following best explains the increase in trading activity in recent years?

What is currency speculation? Why is it risky?

What are the characteristics of the spot market? What institutions handle spot exchanges?

Options are more flexible than forward contracts.

The bid is the price at which the trader is willing to sell foreign currency.

An exchange rate is the number of units that buys one unit of another currency.

Arbitrage is the purchase of foreign currency on one market for immediate resale on a foreign market in order to profit from a price discrepancy.

The top location for trading foreign exchange is ________.

Hong Kong is one of the top four largest markets in the world in foreign exchange trades and the largest in Asia.

Although most foreign exchange activity takes place through big money center banks,the use of electronic trading has allowed even regional banks to deal directly in foreign exchange markets.

Which of the following is NOT a reason a company would deal in foreign exchange?

Why is London most likely the top market for trading foreign exchange?

Globalization and International Business

The Cultural Environments Facing Business

The Political and Legal Environments Facing Business

The Economic Environments Facing Businesses

Globalization and Society

International Trade and Factor Mobility Theory

Governmental Influence on Trade

Cross-National Cooperation and Agreements

The Determination of Exchange Rates

The Strategy of International Business

Country Evaluation and Selection

Export and Import

Direct Investment and Collaborative Strategies

The Organization of International Business

Marketing Globally

Global Manufacturing and Supply Chain Management

International Accounting Issues

The Multinational Finance Function

International Human Resources

Filters

Exam 9: Global Foreign-Exchange Markets

The interbank market in foreign exchange is where ________.

Outright forward transactions involve the exchange of currency the second day after the date on which the two foreign exchange traders agree to the transaction.

A speculator is someone who ________.

If the forward rate for a foreign currency is less than the spot rate,the foreign currency is selling at a forward premium.

A currency sells at a forward premium when the forward rate is greater than the spot rate.

What is the Bank for International Settlements? What three categories does the BIS designate in the foreign exchange market? Briefly describe each category.

In the spot market,the spread is the difference between the bid and offer rates and is the trader's profit margin.

Which of the following best explains the increase in trading activity in recent years?

What is currency speculation? Why is it risky?

What are the characteristics of the spot market? What institutions handle spot exchanges?

Options are more flexible than forward contracts.

The bid is the price at which the trader is willing to sell foreign currency.

An exchange rate is the number of units that buys one unit of another currency.

Arbitrage is the purchase of foreign currency on one market for immediate resale on a foreign market in order to profit from a price discrepancy.

The top location for trading foreign exchange is ________.

Hong Kong is one of the top four largest markets in the world in foreign exchange trades and the largest in Asia.

Although most foreign exchange activity takes place through big money center banks,the use of electronic trading has allowed even regional banks to deal directly in foreign exchange markets.

Which of the following is NOT a reason a company would deal in foreign exchange?

Why is London most likely the top market for trading foreign exchange?

Globalization and International Business

The Cultural Environments Facing Business

The Political and Legal Environments Facing Business

The Economic Environments Facing Businesses

Globalization and Society

International Trade and Factor Mobility Theory

Governmental Influence on Trade

Cross-National Cooperation and Agreements

The Determination of Exchange Rates

The Strategy of International Business

Country Evaluation and Selection

Export and Import

Direct Investment and Collaborative Strategies

The Organization of International Business

Marketing Globally

Global Manufacturing and Supply Chain Management

International Accounting Issues

The Multinational Finance Function

International Human Resources

Filters