Question 1

Western Union's role in foreign-exchange trading is best described as ________.

Accepted Answer

A)  setting a fair exchange rate in multiple currencies 
B)  transferring currency from one country to another 
C)  transferring Mexican pesos from the United States to Mexico 
D)  handling all money transfers that occur between North and South America 
A)  setting a fair exchange rate in multiple currencies 
B)  transferring currency from one country to another 
C)  transferring Mexican pesos from the United States to Mexico 
D)  handling all money transfers that occur between North and South America

Question 2

Which term refers to money denominated in the currency of another nation or group of nations?

Accepted Answer

A)  foreign exchange 
B)  foreign subsidy 
C)  export tariff 
D)  quota 
A)  foreign exchange 
B)  foreign subsidy 
C)  export tariff 
D)  quota

Question 3

________ 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)  Spot transactions 
B)  Outright forward transactions 
C)  FX swaps 
D)  Reverse transactions 
A)  Spot transactions 
B)  Outright forward transactions 
C)  FX swaps 
D)  Reverse transactions

Question 4

An exchange rate is the number of units that buys one unit of another currency.

Accepted Answer

A) True 
 B)False

Question 5

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 6

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

Accepted Answer

A) True 
 B)False

Question 7

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 8

A document requesting payment 30 days after delivery is known as 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 9

Options are more flexible than forward contracts.

Accepted Answer

A) True 
 B)False

Question 10

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?

Accepted Answer

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

Question 11

How does arbitrage differ from speculation?

Accepted Answer

A)  Speculation, unlike arbitrage, is never used to protect against risk. 
B)  A speculator buys or sells foreign currency with the hope that that currency will either weaken or strengthen in the future, resulting in a profit. 
C)  Speculation is the purchase of foreign currency on one market for the immediate resale on another market. 
D)  Arbitrage is another way to speculate for profit or protect against risk. 
A)  Speculation, unlike arbitrage, is never used to protect against risk. 
B)  A speculator buys or sells foreign currency with the hope that that currency will either weaken or strengthen in the future, resulting in a profit. 
C)  Speculation is the purchase of foreign currency on one market for the immediate resale on another market. 
D)  Arbitrage is another way to speculate for profit or protect against risk.

Question 12

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 13

A speculator is someone who ________.

Accepted Answer

A)  trades foreign exchange illegally 
B)  deals in the black market in currency 
C)  takes positions in foreign-exchange markets to earn a profit 
D)  works for OTC financial institutions rather than nonfinancial corporations 
A)  trades foreign exchange illegally 
B)  deals in the black market in currency 
C)  takes positions in foreign-exchange markets to earn a profit 
D)  works for OTC financial institutions rather than nonfinancial corporations

Question 14

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

Accepted Answer

A foreign currency futures contract rese

Question 15

According to 2010 surveys,the most frequently traded currency pair is the U.S.dollar and Japanese yen.

Accepted Answer

A) True 
 B)False

Question 16

An American investing in a London-based company is an example of interest arbitrage.

Accepted Answer

A) True 
 B)False

Question 17

In a short essay,discuss how companies use foreign exchange.

Accepted Answer

There are a number of reasons why compan

Question 18

Outright forward transactions involve the exchange of currency on a future date beyond two business days at a fixed exchange rate,known as the ________.

Accepted Answer

A)  spot rate 
B)  forward rate 
C)  option rate 
D)  reverse transaction rate 
A)  spot rate 
B)  forward rate 
C)  option rate 
D)  reverse transaction rate

Question 19

In 2010,what was the top remittance-receiving country in the world?

Accepted Answer

A)  Brazil 
B)  Mexico 
C)  India 
D)  China 
A)  Brazil 
B)  Mexico 
C)  India 
D)  China

Question 20

The U.S.dollar is so widely traded partially because the New York Stock Exchange is the biggest foreign-exchange center in the world.

Accepted Answer

A) True 
 B)False

Western Union's role in foreign-exchange trading is best described as ________.

Which term refers to money denominated in the currency of another nation or group of nations?

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

An exchange rate is the number of units that buys one unit of another currency.

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

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

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

A document requesting payment 30 days after delivery is known as a ________.

Options are more flexible than forward contracts.

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?

How does arbitrage differ from speculation?

Why are options most likely so attractive to companies?

A speculator is someone who ________.

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

According to 2010 surveys,the most frequently traded currency pair is the U.S.dollar and Japanese yen.

An American investing in a London-based company is an example of interest arbitrage.

In a short essay,discuss how companies use foreign exchange.

Outright forward transactions involve the exchange of currency on a future date beyond two business days at a fixed exchange rate,known as the ________.

In 2010,what was the top remittance-receiving country in the world?

The U.S.dollar is so widely traded partially because the New York Stock Exchange is the biggest foreign-exchange center in the world.

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

Western Union's role in foreign-exchange trading is best described as ________.

Which term refers to money denominated in the currency of another nation or group of nations?

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

An exchange rate is the number of units that buys one unit of another currency.

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

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

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

A document requesting payment 30 days after delivery is known as a ________.

Options are more flexible than forward contracts.

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?

How does arbitrage differ from speculation?

Why are options most likely so attractive to companies?

A speculator is someone who ________.

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

According to 2010 surveys,the most frequently traded currency pair is the U.S.dollar and Japanese yen.

An American investing in a London-based company is an example of interest arbitrage.

In a short essay,discuss how companies use foreign exchange.

Outright forward transactions involve the exchange of currency on a future date beyond two business days at a fixed exchange rate,known as the ________.

In 2010,what was the top remittance-receiving country in the world?

The U.S.dollar is so widely traded partially because the New York Stock Exchange is the biggest foreign-exchange center in the world.

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