Question 1

In an FX swap,one currency is swapped for another on one date and then swapped back on a future date.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A)  establish fair currency trading policies 
B)  facilitate regular business transactions 
C)  establish a global market presence 
D)  diversify their hedge funds 
A)  establish fair currency trading policies 
B)  facilitate regular business transactions 
C)  establish a global market presence 
D)  diversify their hedge funds

Question 3

How is foreign exchange traded? What methods are available?

Accepted Answer

Foreign exchange is traded using electro

Question 4

Gomez Enterprises,a firm based in Mexico City,exported 1,000 circuit boards to Taylor Industries,a firm based in Chicago.Taylor received a document from Gomez that requests immediate payment for the goods.Gomez has most likely sent 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 5

When selecting a commercial and/or investment bank to deal in foreign exchange,corporations are most likely to use ________.

Accepted Answer

A)  the exchange-based market rather than the over-the-counter market 
B)  more than one bank to meet different needs 
C)  banks located in the home country 
D)  investment banks only 
A)  the exchange-based market rather than the over-the-counter market 
B)  more than one bank to meet different needs 
C)  banks located in the home country 
D)  investment banks only

Question 6

A tariff is the price of a currency.

Accepted Answer

A) True 
 B)False

Question 7

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 8

Which of the following best explains the increase in trading activity in recent years?

Accepted Answer

A)  growing emphasis on hedge funds 
B)  availability of more global currencies 
C)  demands for immediate money access 
D)  advances in communication technology 
A)  growing emphasis on hedge funds 
B)  availability of more global currencies 
C)  demands for immediate money access 
D)  advances in communication technology

Question 9

Why would companies become involved in arbitrage? What is the difference between arbitrage and interest arbitrage?

Accepted Answer

As with most types of foreign exchange a

Question 10

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 11

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 12

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 13

EBS and Reuters provide customers with electronic foreign-exchange services as well as current market data.

Accepted Answer

A) True 
 B)False

Question 14

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

Question 15

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 16

Most foreign exchange is handled through voice brokers.

Accepted Answer

A) True 
 B)False

Question 17

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 18

Albert,an employee at Morgan Stanley,has been given the task of handling the foreign exchange for a customer who is moving from Brazil to Switzerland in one week.Which of the following should Albert most likely use when exchanging the client's Brazilian real for Swiss francs?

Accepted Answer

A)  spot rate 
B)  cross rate 
C)  currency option 
D)  current U.S. rate 
A)  spot rate 
B)  cross rate 
C)  currency option 
D)  current U.S. rate

Question 19

If a company from Country A decides to sell merchandise to a company from Country B,then the company from Country A ________.

Accepted Answer

A)  will denominate the sale in its own currency since it is too hard to convert foreign currency 
B)  will denominate the sale in the currency of the buyer since it is too hard for them to convert foreign currency 
C)  can denominate the sale in either currency and use the foreign-exchange market to convert currency 
D)  can use the OTC market to convert receipts in the future and the exchange markets to convert receipts in the spot market 
A)  will denominate the sale in its own currency since it is too hard to convert foreign currency 
B)  will denominate the sale in the currency of the buyer since it is too hard for them to convert foreign currency 
C)  can denominate the sale in either currency and use the foreign-exchange market to convert currency 
D)  can use the OTC market to convert receipts in the future and the exchange markets to convert receipts in the spot market

Question 20

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

Accepted Answer

A) True 
 B)False

In an FX swap,one currency is swapped for another on one date and then swapped back on a future date.

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

How is foreign exchange traded? What methods are available?

Gomez Enterprises,a firm based in Mexico City,exported 1,000 circuit boards to Taylor Industries,a firm based in Chicago.Taylor received a document from Gomez that requests immediate payment for the goods.Gomez has most likely sent a ________.

When selecting a commercial and/or investment bank to deal in foreign exchange,corporations are most likely to use ________.

A tariff is the price of a currency.

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

Which of the following best explains the increase in trading activity in recent years?

Why would companies become involved in arbitrage? What is the difference between arbitrage and interest arbitrage?

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

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

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

EBS and Reuters provide customers with electronic foreign-exchange services as well as current market data.

Which of the following is NOT one of the top four locations for trading foreign exchange?

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

Most foreign exchange is handled through voice brokers.

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)________.

Albert,an employee at Morgan Stanley,has been given the task of handling the foreign exchange for a customer who is moving from Brazil to Switzerland in one week.Which of the following should Albert most likely use when exchanging the client's Brazilian real for Swiss francs?

If a company from Country A decides to sell merchandise to a company from Country B,then the company from Country A ________.

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

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

In an FX swap,one currency is swapped for another on one date and then swapped back on a future date.

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

How is foreign exchange traded? What methods are available?

Gomez Enterprises,a firm based in Mexico City,exported 1,000 circuit boards to Taylor Industries,a firm based in Chicago.Taylor received a document from Gomez that requests immediate payment for the goods.Gomez has most likely sent a ________.

When selecting a commercial and/or investment bank to deal in foreign exchange,corporations are most likely to use ________.

A tariff is the price of a currency.

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

Which of the following best explains the increase in trading activity in recent years?

Why would companies become involved in arbitrage? What is the difference between arbitrage and interest arbitrage?

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

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

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

EBS and Reuters provide customers with electronic foreign-exchange services as well as current market data.

Which of the following is NOT one of the top four locations for trading foreign exchange?

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

Most foreign exchange is handled through voice brokers.

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)________.

Albert,an employee at Morgan Stanley,has been given the task of handling the foreign exchange for a customer who is moving from Brazil to Switzerland in one week.Which of the following should Albert most likely use when exchanging the client's Brazilian real for Swiss francs?

If a company from Country A decides to sell merchandise to a company from Country B,then the company from Country A ________.

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

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