Question 1

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

Accepted Answer

A)  Morgan Stanley 
B)  Deutsche Bank 
C)  Western Union 
D)  JP Morgan 
A)  Morgan Stanley 
B)  Deutsche Bank 
C)  Western Union 
D)  JP Morgan C

Question 2

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 B

Question 3

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 D

Question 4

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 5

Which of the following handles the majority of all foreign-exchange activities?

Accepted Answer

A)  multinational enterprises 
B)  commodities exchanges 
C)  commercial banks 
D)  regional banks 
A)  multinational enterprises 
B)  commodities exchanges 
C)  commercial banks 
D)  regional banks

Question 6

What is currency speculation? Why is it risky?

Accepted Answer

Speculation is the buying or selling of

Question 7

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 8

Outright forward transactions 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) True 
 B)False

Question 9

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

Accepted Answer

A)  reverse transaction 
B)  spot transaction 
C)  FX swap 
D)  outright forward transaction 
A)  reverse transaction 
B)  spot transaction 
C)  FX swap 
D)  outright forward transaction

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

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 12

What is the Bank for International Settlements? What three categories does the BIS designate in the foreign-exchange market? Briefly describe each category.

Accepted Answer

The foreign-exchange market is made up o

Question 13

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 14

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 15

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

Accepted Answer

A)  arbitrage 
B)  speculation 
C)  spot transaction 
D)  outright forward 
A)  arbitrage 
B)  speculation 
C)  spot transaction 
D)  outright forward

Question 16

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 17

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

Accepted Answer

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

Question 18

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 19

Which of the following best explains why migrant workers in Dubai send money back home?

Accepted Answer

A)  Non-citizens cannot purchase property. 
B)  Non-citizens have temporary visas. 
C)  Western Union offers low rates. 
D)  Labor demand is flexible. 
A)  Non-citizens cannot purchase property. 
B)  Non-citizens have temporary visas. 
C)  Western Union offers low rates. 
D)  Labor demand is flexible.

Question 20

What are the characteristics of the spot market? What institutions handle spot exchanges?

Accepted Answer

Most foreign currency transactions take

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

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

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.

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

Which of the following handles the majority of all foreign-exchange activities?

What is currency speculation? Why is it risky?

The interbank market in foreign exchange is where ________.

Outright forward transactions involve the exchange of currency the second day after the date on which the two foreign-exchange traders agree to the transaction.

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

Which of the following best describes arbitrage?

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

What is the Bank for International Settlements? What three categories does the BIS designate in the foreign-exchange market? Briefly describe each category.

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

As a center for foreign-exchange trading,London ________.

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.

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

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

Which of the following best explains why migrant workers in Dubai send money back home?

What are the characteristics of the spot market? What institutions handle spot exchanges?

Globalization and International Business

The Cultural Environments Facing Business

The Political and Legal Environments Facing Business

The Economic Environments Facing Businesses

International Trade and Factor-Mobility Theory

Governmental Influence on Trade

Cross-National Cooperation and Agreements

The Determination of Exchange Rates

Global Capital Markets

Globalization and Society

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 8: Global Foreign-Exchange Markets

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

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

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.

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

Which of the following handles the majority of all foreign-exchange activities?

What is currency speculation? Why is it risky?

The interbank market in foreign exchange is where ________.

Outright forward transactions involve the exchange of currency the second day after the date on which the two foreign-exchange traders agree to the transaction.

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

Which of the following best describes arbitrage?

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

What is the Bank for International Settlements? What three categories does the BIS designate in the foreign-exchange market? Briefly describe each category.

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

As a center for foreign-exchange trading,London ________.

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.

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

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

Which of the following best explains why migrant workers in Dubai send money back home?

What are the characteristics of the spot market? What institutions handle spot exchanges?

Globalization and International Business

The Cultural Environments Facing Business

The Political and Legal Environments Facing Business

The Economic Environments Facing Businesses

International Trade and Factor-Mobility Theory

Governmental Influence on Trade

Cross-National Cooperation and Agreements

The Determination of Exchange Rates

Global Capital Markets

Globalization and Society

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