Question 1

A(n)________ is the price of a currency.

Accepted Answer

A) tariff 
B) quota 
C) exchange rate 
D) subsidy 
A) tariff 
B) quota 
C) exchange rate 
D) subsidy

Question 2

The U.S.dollar is most likely traded widely because it is ________.

Accepted Answer

A) a reserve currency held by many central banks 
B) one of the oldest and most stable currencies in the world 
C) monitored by the Bank of International Settlements and the U.S. Federal Reserve 
D) based on prices of the NYSE, which is the world's largest foreign-exchange center 
A) a reserve currency held by many central banks 
B) one of the oldest and most stable currencies in the world 
C) monitored by the Bank of International Settlements and the U.S. Federal Reserve 
D) based on prices of the NYSE, which is the world's largest foreign-exchange center

Question 3

Commercial banks look at foreign-exchange trading as a service extended primarily to important customers, not as a major business activity of its own.

Accepted Answer

A) True 
 B)False

Question 4

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

Question 5

What is a futures contract? What institutions handle futures contracts?

Accepted Answer

A foreign currency futures contract rese

Question 6

In a ________, one party directs another party to make payment.

Accepted Answer

A) reverse letter of credit 
B) commercial bill of exchange 
C) commercial bill of trade 
D) confirmed irrevocable foreign-exchange transaction 
A) reverse letter of credit 
B) commercial bill of exchange 
C) commercial bill of trade 
D) confirmed irrevocable foreign-exchange transaction

Question 7

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 8

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

Accepted Answer

A) True 
 B)False

Question 9

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 10

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 11

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

Accepted Answer

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

Question 12

An irrevocable letter of credit is the basis for multilateral netting.

Accepted Answer

A) True 
 B)False

Question 13

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 14

If Toranaga-san, who works for a Japanese trading company that operates in Japanese yen, wanted to purchase Spanish castanets from a company in Barcelona and needed euros to complete the transaction, he would use the ________ to gain access to spot euros.

Accepted Answer

A) stock market 
B) foreign-exchange market 
C) New York Stock Exchange 
D) international export market 
A) stock market 
B) foreign-exchange market 
C) New York Stock Exchange 
D) international export market

Question 15

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 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

What are the two major segments of the foreign-exchange market? What types of foreign-exchange instruments are traded within these markets?

Accepted Answer

The foreign-exchange market has two majo

Question 18

What are the characteristics of the forward market? Why do companies participate in the forward market? Provide an example to illustrate your answer.

Accepted Answer

The spot market is for foreign-exchange

Question 19

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.

Question 20

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

A(n)________ is the price of a currency.

The U.S.dollar is most likely traded widely because it is ________.

Commercial banks look at foreign-exchange trading as a service extended primarily to important customers, not as a major business activity of its own.

The interbank market in foreign exchange is where ________.

What is a futures contract? What institutions handle futures contracts?

In a ________, one party directs another party to make payment.

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

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

Which of the following is most likely true regarding options?

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

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

An irrevocable letter of credit is the basis for multilateral netting.

As a trading currency, the euro is ________.

If Toranaga-san, who works for a Japanese trading company that operates in Japanese yen, wanted to purchase Spanish castanets from a company in Barcelona and needed euros to complete the transaction, he would use the ________ to gain access to spot euros.

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

Why are options most likely so attractive to companies?

What are the two major segments of the foreign-exchange market? What types of foreign-exchange instruments are traded within these markets?

What are the characteristics of the forward market? Why do companies participate in the forward market? Provide an example to illustrate your answer.

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

Which of the following is NOT one of the top four locations 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

Global Capital Markets

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 and Finance Issues

International Human Resource Management

Filters

Exam 9: Global Foreign-Exchange Markets

A(n)________ is the price of a currency.

The U.S.dollar is most likely traded widely because it is ________.

Commercial banks look at foreign-exchange trading as a service extended primarily to important customers, not as a major business activity of its own.

The interbank market in foreign exchange is where ________.

What is a futures contract? What institutions handle futures contracts?

In a ________, one party directs another party to make payment.

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

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

Which of the following is most likely true regarding options?

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

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

An irrevocable letter of credit is the basis for multilateral netting.

As a trading currency, the euro is ________.

If Toranaga-san, who works for a Japanese trading company that operates in Japanese yen, wanted to purchase Spanish castanets from a company in Barcelona and needed euros to complete the transaction, he would use the ________ to gain access to spot euros.

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

Why are options most likely so attractive to companies?

What are the two major segments of the foreign-exchange market? What types of foreign-exchange instruments are traded within these markets?

What are the characteristics of the forward market? Why do companies participate in the forward market? Provide an example to illustrate your answer.

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

Which of the following is NOT one of the top four locations 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

Global Capital Markets

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 and Finance Issues

International Human Resource Management

Filters