Exam 5: The Foreign Exchange Market

The primary motive of foreign exchange activities by most central banks is profit.

A foreign exchange ________ is the price of one currency expressed in terms of another currency.A foreign exchange ________ is a willingness to buy or sell at the announced rate.

Swap and forward transactions account for an insignificant portion of the foreign exchange market.

The low level of interest rates around the globe in recent years,combined with slowing economic growth and new debt issuances,has had a dampening impact on the swap market.

The four currencies that constitute about 80% of all foreign exchange trading are:

Currency trading is a service center rather than a profit center for commercial and investment banks.

Foreign exchange markets are a relatively recent phenomenon,beginning with the agreement at Bretton Woods.

TABLE 5.1 Use the table to answer following question(s). -Refer to Table 5.1.The current spot rate of dollars per pound as quoted in a newspaper is ________ or ________.

Which of the following is NOT true regarding the market for foreign exchange?

The following is an example of an American term foreign exchange quote:

________ make money on currency exchanges by the difference between the ________ price,or the price they offer to pay,and the ________ price,or the price at which they offer to sell the currency.

Because the market for foreign exchange is worldwide,the volume of foreign exchange currency transactions is level throughout the 24-hour day.

A common type of swap transaction in the foreign exchange market is the ________ where the dealer buys the currency in the spot market and sells the same amount back to the same bank in the forward market.

Define spot,forward,and swap transactions in the foreign exchange market and give an example of how each could be used.

Daily trading volume in the foreign exchange market was about ________ per ________ in 2013.

The European and American terms for foreign currency exchange are square roots of one another.

The greatest volume of daily foreign exchange transactions are:

The foreign exchange market provides the physical and institutional structure through which three typical functions are accomplish.List and explain three functions of the foreign exchange market.

A/An ________ is an agreement between a buyer and seller that a fixed amount of one currency will be delivered at a specified rate for some other currency.

The ________ is the mechanism by which participants transfer purchasing power between countries,obtain or provide credit for international trade transactions,and minimize exposure to the risks of exchange rate changes.