Exam 9: Global Foreign-Exchange Markets

A speculator is someone who ________.

The pound-dollar forward rate for pounds is $1.9068, and the spot rate is $1.9100.Pounds are selling at a ________.

What is currency speculation? Why is it risky?

Options are more flexible than forward contracts.

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

If a foreign currency is quoted in American terms (the direct quote)and the forward rate is greater than the spot rate, the foreign currency is selling at a ________.

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

Companies most likely use the foreign-exchange market to ________.

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

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.

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 handles the majority of all foreign-exchange activities?

A tariff is the price of a currency.

Which of the following would have the LEAST influence on price setting in the foreign-exchange market?

Anita, an employee at ABX Partners, a hedge fund firm, has purchased euros because she believes that the euro will strengthen against other currencies.Which term best describes Anita's activities?

In which of the following transactions is a currency switched with another on one date and then switched back on a future date?

In foreign-exchange markets, reporting dealers trade more foreign exchange with other reporting dealers than with any other category of users.

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

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

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