Question 1

The U.S. dollar is important as a vehicle for foreign exchange transactions between two countries other than the United States.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is most likely true regarding options?

Accepted Answer

A)  An option can only be purchased from a commercial bank. 
B)  Options are never used with foreign currency. 
C)  An option is a right to sell foreign currency. 
D)  Options do not provide firms with flexibility. 
A)  An option can only be purchased from a commercial bank. 
B)  Options are never used with foreign currency. 
C)  An option is a right to sell foreign currency. 
D)  Options do not provide firms with flexibility.

Question 3

A document requesting payment 30 days after delivery is known as 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 4

The U.S. dollar is so widely traded partially because the New York Stock Exchange is the biggest foreign exchange center in the world.

Accepted Answer

A) True 
 B)False

Question 5

A tariff is the price of a currency.

Accepted Answer

A) True 
 B)False

Question 6

An investor sells Japanese yen which is yielding a low interest rate and uses the proceeds to buy Swiss francs that yield a higher interest rate. Which term best describes the investor's actions?

Accepted Answer

A)  forward discount spread 
B)  interbank transaction 
C)  strike price option 
D)  carry trade 
A)  forward discount spread 
B)  interbank transaction 
C)  strike price option 
D)  carry trade

Question 7

The pound-dollar forward rate for pounds is $1.9068,and the spot rate is $1.9059. Pounds are selling at a ________.

Accepted Answer

A)  discounted premium 
B)  backward discount 
C)  forward premium 
D)  forward discount 
A)  discounted premium 
B)  backward discount 
C)  forward premium 
D)  forward discount

Question 8

In the foreign exchange market,the bid is the rate at which ________.

Accepted Answer

A)  the trader is willing to sell foreign exchange 
B)  the buyer is willing to swap foreign exchange 
C)  the trader is willing to buy foreign exchange 
D)  the trader earns a profit 
A)  the trader is willing to sell foreign exchange 
B)  the buyer is willing to swap foreign exchange 
C)  the trader is willing to buy foreign exchange 
D)  the trader earns a profit

Question 9

Companies use the foreign exchange market to convert money for use in financial transactions.

Accepted Answer

A) True 
 B)False

Question 10

What is remittance income? What institutions in Mexico can handle remittance accounts? Why are some institutions used more frequently than others?

Accepted Answer

Remittance income refers to money that a

Question 11

Western Union's role in foreign exchange trading is best described as ________.

Accepted Answer

A)  setting a fair exchange rate in multiple currencies 
B)  transferring currency from one country to another 
C)  transferring Mexican pesos from the United States to Mexico 
D)  handling all money transfers that occur North and South America 
A)  setting a fair exchange rate in multiple currencies 
B)  transferring currency from one country to another 
C)  transferring Mexican pesos from the United States to Mexico 
D)  handling all money transfers that occur North and South America

Question 12

A foreign exchange contract that is an agreement between two parties to buy or sell a particular currency at a particular price at a particular date in the future as specified in a standardized contract to all participants in the specified market is known as a(n)________.

Accepted Answer

A)  spot contract 
B)  forward contract 
C)  futures contract 
D)  equity currency contract 
A)  spot contract 
B)  forward contract 
C)  futures contract 
D)  equity currency contract

Question 13

An American investing in a London-based company is an example of interest arbitrage.

Accepted Answer

A) True 
 B)False

Question 14

A confirmed letter of credit may obligate the exporter's bank to honor a draft presented to it.

Accepted Answer

A) True 
 B)False

Question 15

An example of an electronic brokerage system used to trade foreign exchange is ________.

Accepted Answer

A)  Reuters 
B)  Interbank Traders Ltd. 
C)  Bank for International Settlements 
D)  the reporting dealers clearing house 
A)  Reuters 
B)  Interbank Traders Ltd. 
C)  Bank for International Settlements 
D)  the reporting dealers clearing house

Question 16

Why are options most likely so attractive to companies?

Accepted Answer

A)  The writer of the option does not charge the company any fee for writing the option. 
B)  Options provide companies with more flexibility than a forward contract. 
C)  Options are usually cheaper than forward contracts. 
D)  Options can be used for only foreign exchange deals. 
A)  The writer of the option does not charge the company any fee for writing the option. 
B)  Options provide companies with more flexibility than a forward contract. 
C)  Options are usually cheaper than forward contracts. 
D)  Options can be used for only foreign exchange deals.

Question 17

Which of the following is the largest source of foreign-exchange income in Mexico?

Accepted Answer

A)  FDI 
B)  tourism 
C)  foreign aid 
D)  remittance income 
A)  FDI 
B)  tourism 
C)  foreign aid 
D)  remittance income

Question 18

The largest market in foreign exchange is in London.

Accepted Answer

A) True 
 B)False

Question 19

As a center for foreign exchange trading,London ________.

Accepted Answer

A)  actually trades more U.S. dollars than are traded in the United States 
B)  usually opens up for business as trades are winding down in the United States 
C)  deals primarily in European currencies and is not as active in trading U.S. dollars 
D)  deals primarily in spot rather than forward trades 
A)  actually trades more U.S. dollars than are traded in the United States 
B)  usually opens up for business as trades are winding down in the United States 
C)  deals primarily in European currencies and is not as active in trading U.S. dollars 
D)  deals primarily in spot rather than forward trades

Question 20

Companies most likely use the foreign exchange market to ________.

Accepted Answer

A)  diversify their expenses from other sources 
B)  convert money for use in financial transactions 
C)  increase their presence on the black market 
D)  acquire currency from emerging markets 
A)  diversify their expenses from other sources 
B)  convert money for use in financial transactions 
C)  increase their presence on the black market 
D)  acquire currency from emerging markets

The U.S. dollar is important as a vehicle for foreign exchange transactions between two countries other than the United States.

Which of the following is most likely true regarding options?

A document requesting payment 30 days after delivery is known as a ________.

The U.S. dollar is so widely traded partially because the New York Stock Exchange is the biggest foreign exchange center in the world.

A tariff is the price of a currency.

An investor sells Japanese yen which is yielding a low interest rate and uses the proceeds to buy Swiss francs that yield a higher interest rate. Which term best describes the investor's actions?

The pound-dollar forward rate for pounds is $1.9068,and the spot rate is $1.9059. Pounds are selling at a ________.

In the foreign exchange market,the bid is the rate at which ________.

Companies use the foreign exchange market to convert money for use in financial transactions.

What is remittance income? What institutions in Mexico can handle remittance accounts? Why are some institutions used more frequently than others?

Western Union's role in foreign exchange trading is best described as ________.

A foreign exchange contract that is an agreement between two parties to buy or sell a particular currency at a particular price at a particular date in the future as specified in a standardized contract to all participants in the specified market is known as a(n)________.

An American investing in a London-based company is an example of interest arbitrage.

A confirmed letter of credit may obligate the exporter's bank to honor a draft presented to it.

An example of an electronic brokerage system used to trade foreign exchange is ________.

Why are options most likely so attractive to companies?

Which of the following is the largest source of foreign-exchange income in Mexico?

The largest market in foreign exchange is in London.

As a center for foreign exchange trading,London ________.

Companies most likely use the foreign exchange market to ________.

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 U.S. dollar is important as a vehicle for foreign exchange transactions between two countries other than the United States.

Which of the following is most likely true regarding options?

A document requesting payment 30 days after delivery is known as a ________.

The U.S. dollar is so widely traded partially because the New York Stock Exchange is the biggest foreign exchange center in the world.

A tariff is the price of a currency.

An investor sells Japanese yen which is yielding a low interest rate and uses the proceeds to buy Swiss francs that yield a higher interest rate. Which term best describes the investor's actions?

The pound-dollar forward rate for pounds is $1.9068,and the spot rate is $1.9059. Pounds are selling at a ________.

In the foreign exchange market,the bid is the rate at which ________.

Companies use the foreign exchange market to convert money for use in financial transactions.

What is remittance income? What institutions in Mexico can handle remittance accounts? Why are some institutions used more frequently than others?

Western Union's role in foreign exchange trading is best described as ________.

A foreign exchange contract that is an agreement between two parties to buy or sell a particular currency at a particular price at a particular date in the future as specified in a standardized contract to all participants in the specified market is known as a(n)________.

An American investing in a London-based company is an example of interest arbitrage.

A confirmed letter of credit may obligate the exporter's bank to honor a draft presented to it.

An example of an electronic brokerage system used to trade foreign exchange is ________.

Why are options most likely so attractive to companies?

Which of the following is the largest source of foreign-exchange income in Mexico?

The largest market in foreign exchange is in London.

As a center for foreign exchange trading,London ________.

Companies most likely use the foreign exchange market to ________.

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