Question 1

The US and sixteen member states of the European union are participating in the common Euro currency.

Accepted Answer

A) True 
 B)False  False

Question 2

Which of the following is NOT true?

Accepted Answer

A)  The FX market provides participants with an alternative source of credit. 
B)  Foreign exchange is traded in a single location in each country. 
C)  Importers and exporters are frequent users of FX. 
D)  An official FX dealer must be licensed by the RBA. 
A)  The FX market provides participants with an alternative source of credit. 
B)  Foreign exchange is traded in a single location in each country. 
C)  Importers and exporters are frequent users of FX. 
D)  An official FX dealer must be licensed by the RBA. B

Question 3

Sterilised intervention by the RBA in the FX market is the sale (purchase) of FX which is offset by an equivalent purchase (sale) of government securities so there is no change in the money base.

Accepted Answer

A) True 
 B)False  True

Question 4

The country with the highest weight in Australia's trade- weighted index is the US.

Accepted Answer

A) True 
 B)False

Question 5

Under an adjustable peg exchange rate regime, the authorities intervene in the FX market to try to influence the exchange rate towards a target value.

Accepted Answer

A) True 
 B)False

Question 6

The exchange rate AUD/USD 0.5439 is interpreted as one Australian dollar equals 0.5439 US dollars.

Accepted Answer

A) True 
 B)False

Question 7

The international 3- digit code for the Swiss Franc is SWF.

Accepted Answer

A) True 
 B)False

Question 8

When the USD is worth less forward than it is worth spot, we say that the USD is trading at a 'premium'.

Accepted Answer

A) True 
 B)False

Question 9

Suppose the US interest rate is 6% and the Australian rate is 8%. If interest rate parity (IRP) holds, then the differential suggests the market expects the AUD to depreciate against the USD 1% per annum.

Accepted Answer

A) True 
 B)False

Question 10

In order to obtain a licence to deal in FX, applicants must hold a minimum of A$1 million in capital at all times.

Accepted Answer

A) True 
 B)False

Question 11

Explain the meaning and use of forward exchange rates.

Accepted Answer

Transactions that are settled in three o

Question 12

When the RBA intervenes in the FX market using a buy/sell swap, it will sell AUD in the spot market and buy it in the forward market.

Accepted Answer

A) True 
 B)False

Question 13

Globalisation is widely recognised as counteracting the propagation of financial crises across borders.

Accepted Answer

A) True 
 B)False

Question 14

Discuss the aims and methods of central bank intervention in the FX market.

Accepted Answer

The central bank intervention in the for

Question 15

Which of the following best describes the 'commodity' currency in an FX quote?

Accepted Answer

A)  The currency in whose terms the quote is being expressed. 
B)  The currency whose price is given in the exchange rate. 
C)  The currency that is actually going to be exchanged. 
D)  None of the above. 
A)  The currency in whose terms the quote is being expressed. 
B)  The currency whose price is given in the exchange rate. 
C)  The currency that is actually going to be exchanged. 
D)  None of the above.

Question 16

If the spot exchange rate is 0.5650 and the forward quote is 10- 20 basis points, then the forward exchange rate is:

Accepted Answer

A)  0.5640 - 0.5660. 
B)  0.5640 - 0.5670. 
C)  0.5660 - 0.5670. 
D)  0.5640 - 0.5630. 
A)  0.5640 - 0.5660. 
B)  0.5640 - 0.5670. 
C)  0.5660 - 0.5670. 
D)  0.5640 - 0.5630.

Question 17

The Euro became legal tender in the participating countries in 1980.

Accepted Answer

A) True 
 B)False

Question 18

Suppose an Australian importer buys manufacturing equipment from France worth 50 million Euros at an exchange rate of AUD/EUR of 0.9622. Suppose that the exchange rate depreciates a week later to AUD/EUR = 0.9582. Then the AUD value of the import bill has:

Accepted Answer

A)  remained unchanged. 
B)  risen. 
C)  fallen. 
D)  Without more information we cannot determine. 
A)  remained unchanged. 
B)  risen. 
C)  fallen. 
D)  Without more information we cannot determine.

Question 19

An exchange rate defined as the price of one unit of the home currency in terms of the overseas currency is known as a(n) quote.

Accepted Answer

A)  terms 
B)  inverse 
C)  direct 
D)  indirect 
A)  terms 
B)  inverse 
C)  direct 
D)  indirect

Question 20

The 'law of one price' says that products will have the same price in different countries when the exchange rates between various countries are allowed for.

Accepted Answer

A) True 
 B)False

The US and sixteen member states of the European union are participating in the common Euro currency.

Which of the following is NOT true?

Sterilised intervention by the RBA in the FX market is the sale (purchase) of FX which is offset by an equivalent purchase (sale) of government securities so there is no change in the money base.

The country with the highest weight in Australia's trade- weighted index is the US.

Under an adjustable peg exchange rate regime, the authorities intervene in the FX market to try to influence the exchange rate towards a target value.

The exchange rate AUD/USD 0.5439 is interpreted as one Australian dollar equals 0.5439 US dollars.

The international 3- digit code for the Swiss Franc is SWF.

When the USD is worth less forward than it is worth spot, we say that the USD is trading at a 'premium'.

Suppose the US interest rate is 6% and the Australian rate is 8%. If interest rate parity (IRP) holds, then the differential suggests the market expects the AUD to depreciate against the USD 1% per annum.

In order to obtain a licence to deal in FX, applicants must hold a minimum of A$1 million in capital at all times.

Explain the meaning and use of forward exchange rates.

When the RBA intervenes in the FX market using a buy/sell swap, it will sell AUD in the spot market and buy it in the forward market.

Globalisation is widely recognised as counteracting the propagation of financial crises across borders.

Discuss the aims and methods of central bank intervention in the FX market.

Which of the following best describes the 'commodity' currency in an FX quote?

If the spot exchange rate is 0.5650 and the forward quote is 10- 20 basis points, then the forward exchange rate is:

The Euro became legal tender in the participating countries in 1980.

Suppose an Australian importer buys manufacturing equipment from France worth 50 million Euros at an exchange rate of AUD/EUR of 0.9622. Suppose that the exchange rate depreciates a week later to AUD/EUR = 0.9582. Then the AUD value of the import bill has:

An exchange rate defined as the price of one unit of the home currency in terms of the overseas currency is known as a(n) quote.

The 'law of one price' says that products will have the same price in different countries when the exchange rates between various countries are allowed for.

Financial Markets

Debt Securities and Markets

Introduction to Financial Calculations

Banks and Other Deposit Taking Institutions

The Payments System

Managed and Superannuation Funds

Interest Rates, the Yield Curve and Monetary Policy

Listed Securities

Fixed Rate Derivatives

Options

Global Financial Crisis

Managing Foreign Exchange Risk

Managing Interest Rate Risk

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Exam 8: The Foreign Exchange Market

The US and sixteen member states of the European union are participating in the common Euro currency.

Which of the following is NOT true?

Sterilised intervention by the RBA in the FX market is the sale (purchase) of FX which is offset by an equivalent purchase (sale) of government securities so there is no change in the money base.

The country with the highest weight in Australia's trade- weighted index is the US.

Under an adjustable peg exchange rate regime, the authorities intervene in the FX market to try to influence the exchange rate towards a target value.

The exchange rate AUD/USD 0.5439 is interpreted as one Australian dollar equals 0.5439 US dollars.

The international 3- digit code for the Swiss Franc is SWF.

When the USD is worth less forward than it is worth spot, we say that the USD is trading at a 'premium'.

Suppose the US interest rate is 6% and the Australian rate is 8%. If interest rate parity (IRP) holds, then the differential suggests the market expects the AUD to depreciate against the USD 1% per annum.

In order to obtain a licence to deal in FX, applicants must hold a minimum of A$1 million in capital at all times.

Explain the meaning and use of forward exchange rates.

When the RBA intervenes in the FX market using a buy/sell swap, it will sell AUD in the spot market and buy it in the forward market.

Globalisation is widely recognised as counteracting the propagation of financial crises across borders.

Discuss the aims and methods of central bank intervention in the FX market.

Which of the following best describes the 'commodity' currency in an FX quote?

If the spot exchange rate is 0.5650 and the forward quote is 10- 20 basis points, then the forward exchange rate is:

The Euro became legal tender in the participating countries in 1980.

Suppose an Australian importer buys manufacturing equipment from France worth 50 million Euros at an exchange rate of AUD/EUR of 0.9622. Suppose that the exchange rate depreciates a week later to AUD/EUR = 0.9582. Then the AUD value of the import bill has:

An exchange rate defined as the price of one unit of the home currency in terms of the overseas currency is known as a(n) quote.

The 'law of one price' says that products will have the same price in different countries when the exchange rates between various countries are allowed for.

Financial Markets

Debt Securities and Markets

Introduction to Financial Calculations

Banks and Other Deposit Taking Institutions

The Payments System

Managed and Superannuation Funds

Interest Rates, the Yield Curve and Monetary Policy

Listed Securities

Fixed Rate Derivatives

Options

Global Financial Crisis

Managing Foreign Exchange Risk

Managing Interest Rate Risk

Filters