Question 1

In foreign exchange markets,reporting dealers are ________.

Accepted Answer

A)  financial institutions that actively participate in local and global foreign exchange markets 
B)  located primarily in New York City since U.S. dollars are the most widely traded currency 
C)  controlled by the Bank for International Settlements located in Switzerland 
D)  hedge funds and pension funds monitored by the World Bank 
A)  financial institutions that actively participate in local and global foreign exchange markets 
B)  located primarily in New York City since U.S. dollars are the most widely traded currency 
C)  controlled by the Bank for International Settlements located in Switzerland 
D)  hedge funds and pension funds monitored by the World Bank

Question 2

A(n)________ is the right but not the obligation to buy or sell a foreign currency within a certain time period or on a specific date at a specific exchange rate.

Accepted Answer

A)  forward rate 
B)  bid 
C)  offer 
D)  option 
A)  forward rate 
B)  bid 
C)  offer 
D)  option

Question 3

________ 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)  Spot transactions 
B)  Outright forward transactions 
C)  FX swaps 
D)  Reverse transactions 
A)  Spot transactions 
B)  Outright forward transactions 
C)  FX swaps 
D)  Reverse transactions

Question 4

A major challenge faced by Western Union in wiring money between the United States and Mexico is that ________.

Accepted Answer

A)  it can only transfer funds in one direction 
B)  it is facing competition from some commercial banks 
C)  Mexican citizens do not like to use its services because it does not have strong ties with Mexican banks 
D)  Mexican citizens trust the banks but do not trust Western Union due to its heritage as a Western bank 
A)  it can only transfer funds in one direction 
B)  it is facing competition from some commercial banks 
C)  Mexican citizens do not like to use its services because it does not have strong ties with Mexican banks 
D)  Mexican citizens trust the banks but do not trust Western Union due to its heritage as a Western bank

Question 5

Which of the following is NOT one of the top four locations for trading foreign exchange?

Accepted Answer

A)  London 
B)  New York 
C)  Tokyo 
D)  Hong Kong 
A)  London 
B)  New York 
C)  Tokyo 
D)  Hong Kong

Question 6

When selecting a commercial and/or investment bank to deal in foreign exchange,corporations are most likely to use ________.

Accepted Answer

A)  the exchange-based market rather than the over-the-counter market 
B)  more than one bank to meet different needs 
C)  banks located in the home country 
D)  investment banks only 
A)  the exchange-based market rather than the over-the-counter market 
B)  more than one bank to meet different needs 
C)  banks located in the home country 
D)  investment banks only

Question 7

Gomez Enterprises,a firm based in Mexico City,exported 1,000 circuit boards to Taylor Industries,a firm based in Chicago. Taylor received a document from Gomez that requests immediate payment for the goods. Gomez has most likely sent a ________.

Accepted Answer

A)  time draft 
B)  sight draft 
C)  spot draft 
D)  futures draft 
A)  time draft 
B)  sight draft 
C)  spot draft 
D)  futures draft

Question 8

Which of the following is the price at which the trader is willing to sell foreign currency?

Accepted Answer

A)  offer 
B)  bid 
C)  spread 
D)  cross rate 
A)  offer 
B)  bid 
C)  spread 
D)  cross rate

Question 9

An offer is the right but not the obligation to buy or sell foreign currency.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following best describes arbitrage?

Accepted Answer

A)  using foreign exchange to fund new foreign direct investments 
B)  purchasing foreign currency in anticipation of long term trends 
C)  using foreign exchange instruments to speculate for profit 
D)  purchasing foreign currency on one market for immediate resale on another market 
A)  using foreign exchange to fund new foreign direct investments 
B)  purchasing foreign currency in anticipation of long term trends 
C)  using foreign exchange instruments to speculate for profit 
D)  purchasing foreign currency on one market for immediate resale on another market

Question 11

As a trading currency,the euro is ________.

Accepted Answer

A)  more widely traded than the U.S. dollar in seven of the top ten currency markets in the world 
B)  widely traded in London but not in any other major foreign exchange markets in the world 
C)  becoming more popular than the U.S. dollar because of its global acceptance 
D)  gaining ground against the U.S. dollar in Eastern European countries 
A)  more widely traded than the U.S. dollar in seven of the top ten currency markets in the world 
B)  widely traded in London but not in any other major foreign exchange markets in the world 
C)  becoming more popular than the U.S. dollar because of its global acceptance 
D)  gaining ground against the U.S. dollar in Eastern European countries

Question 12

Why would companies become involved in arbitrage? What is the difference between arbitrage and interest arbitrage?

Accepted Answer

As with most types of foreign exchange a

Question 13

The Chicago Mercantile Exchange and NASDAQ are part of the OTC market.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is LEAST relevant to being designated by Euromoney magazine as a top foreign-exchange dealer?

Accepted Answer

A)  capability of handling specific currencies 
B)  capability of assessing cultural risk 
C)  capability of handling derivatives 
D)  capability of engaging in analytics 
A)  capability of handling specific currencies 
B)  capability of assessing cultural risk 
C)  capability of handling derivatives 
D)  capability of engaging in analytics

Question 15

How is foreign exchange traded? What methods are available?

Accepted Answer

Foreign exchange is traded using electro

Question 16

The relationship between the value of the Brazilian and Chinese currencies is known as the ________.

Accepted Answer

A)  stock price 
B)  exchange rate 
C)  foreign-exchange market 
D)  purchasing power parity 
A)  stock price 
B)  exchange rate 
C)  foreign-exchange market 
D)  purchasing power parity

Question 17

Outright forward transactions involve the exchange of currency on a future date beyond two business days at a fixed exchange rate,known as the ________.

Accepted Answer

A)  spot rate 
B)  forward rate 
C)  option rate 
D)  reverse transaction rate 
A)  spot rate 
B)  forward rate 
C)  option rate 
D)  reverse transaction rate

Question 18

Trading activity has increased in recent years due to the growing importance of foreign exchange as an alternative asset and the expanded emphasis on hedge funds.

Accepted Answer

A) True 
 B)False

Question 19

One reason that companies use the foreign exchange market is to diversify their expenses from other sources.

Accepted Answer

A) True 
 B)False

Question 20

An irrevocable letter of credit ________.

Accepted Answer

A)  is issued by a global credit agency 
B)  is the basis for multilateral credit netting 
C)  can be amended only if all parties involved agree 
D)  obligates the exporter's bank to pay interest to the importer 
A)  is issued by a global credit agency 
B)  is the basis for multilateral credit netting 
C)  can be amended only if all parties involved agree 
D)  obligates the exporter's bank to pay interest to the importer

In foreign exchange markets,reporting dealers are ________.

A(n)________ is the right but not the obligation to buy or sell a foreign currency within a certain time period or on a specific date at a specific exchange rate.

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

A major challenge faced by Western Union in wiring money between the United States and Mexico is that ________.

Which of the following is NOT one of the top four locations for trading foreign exchange?

When selecting a commercial and/or investment bank to deal in foreign exchange,corporations are most likely to use ________.

Gomez Enterprises,a firm based in Mexico City,exported 1,000 circuit boards to Taylor Industries,a firm based in Chicago. Taylor received a document from Gomez that requests immediate payment for the goods. Gomez has most likely sent a ________.

Which of the following is the price at which the trader is willing to sell foreign currency?

An offer is the right but not the obligation to buy or sell foreign currency.

Which of the following best describes arbitrage?

As a trading currency,the euro is ________.

Why would companies become involved in arbitrage? What is the difference between arbitrage and interest arbitrage?

The Chicago Mercantile Exchange and NASDAQ are part of the OTC market.

Which of the following is LEAST relevant to being designated by Euromoney magazine as a top foreign-exchange dealer?

How is foreign exchange traded? What methods are available?

The relationship between the value of the Brazilian and Chinese currencies is known as the ________.

Outright forward transactions involve the exchange of currency on a future date beyond two business days at a fixed exchange rate,known as the ________.

Trading activity has increased in recent years due to the growing importance of foreign exchange as an alternative asset and the expanded emphasis on hedge funds.

One reason that companies use the foreign exchange market is to diversify their expenses from other sources.

An irrevocable letter of credit ________.

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

In foreign exchange markets,reporting dealers are ________.

A(n)________ is the right but not the obligation to buy or sell a foreign currency within a certain time period or on a specific date at a specific exchange rate.

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

A major challenge faced by Western Union in wiring money between the United States and Mexico is that ________.

Which of the following is NOT one of the top four locations for trading foreign exchange?

When selecting a commercial and/or investment bank to deal in foreign exchange,corporations are most likely to use ________.

Gomez Enterprises,a firm based in Mexico City,exported 1,000 circuit boards to Taylor Industries,a firm based in Chicago. Taylor received a document from Gomez that requests immediate payment for the goods. Gomez has most likely sent a ________.

Which of the following is the price at which the trader is willing to sell foreign currency?

An offer is the right but not the obligation to buy or sell foreign currency.

Which of the following best describes arbitrage?

As a trading currency,the euro is ________.

Why would companies become involved in arbitrage? What is the difference between arbitrage and interest arbitrage?

The Chicago Mercantile Exchange and NASDAQ are part of the OTC market.

Which of the following is LEAST relevant to being designated by Euromoney magazine as a top foreign-exchange dealer?

How is foreign exchange traded? What methods are available?

The relationship between the value of the Brazilian and Chinese currencies is known as the ________.

Outright forward transactions involve the exchange of currency on a future date beyond two business days at a fixed exchange rate,known as the ________.

Trading activity has increased in recent years due to the growing importance of foreign exchange as an alternative asset and the expanded emphasis on hedge funds.

One reason that companies use the foreign exchange market is to diversify their expenses from other sources.

An irrevocable letter of credit ________.

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