Exam 8: Foreign Exchange and International Financial Markets

Most developing countries have hard currencies.

The price of foreign exchange is set by demand and supply in the marketplace.

When an overseas banking operation is jointly owned by a parent bank and a local or foreign partner, what is it called?

A spot transaction ________.

The theory of ________ states that the prices of tradable goods, when expressed in a common currency, will tend to equalize across countries as a result of exchange rate changes.

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

The ________ represents the marketplace's aggregate prediction of the spot price of the currency rate in the future.

The ________ consists of foreign-exchange transactions that are to be consummated immediately.

How can firms obtain foreign exchange in the future?

The price of foreign exchange is set by ________.

The dominant currencies in the international bond market are the euro and the U.S. dollar.

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

Currency futures represent only 1 percent of the foreign-exchange market.

Why does arbitrage most likely exist?

Explain how the rising value of the Canadian dollar relative to the U.S. dollar affects Canadian consumers, Canadian visitors to the United States, and Canadian exporters to the United States.

Two-point arbitrage involves profiting from price differences in two geographically different markets.

A(n)________ shows the demand for a currency that is derived from foreigners' desire to acquire the country's goods, services, and assets.

Which form of arbitrage involves profiting from price differences in two distinct markets?

If a foreign currency is selling at a forward premium, the foreign exchange market believes that the currency will depreciate over time.