Question 1

Which of the following is a foreign exchange hedging instrument?

Accepted Answer

A)  Non- AUD forward foreign exchange. 
B)  AUD swap foreign exchange. 
C)  AUD forward foreign exchange. 
D)  All of the above. 
A)  Non- AUD forward foreign exchange. 
B)  AUD swap foreign exchange. 
C)  AUD forward foreign exchange. 
D)  All of the above.

Question 2

A___________ occurs when the company has assets or liabilities denominated in foreign currencies.

Accepted Answer

A)  translation exposure 
B)  foreign exchange exposure 
C)  credit exposure 
D)  transaction exposure 
A)  translation exposure 
B)  foreign exchange exposure 
C)  credit exposure 
D)  transaction exposure

Question 3

There is a small percentage of corporates that engage in active management.

Accepted Answer

A) True 
 B)False

Question 4

Using natural hedges is equivalent to using forward contracts - they do not provide any kind of windfall.

Accepted Answer

A) True 
 B)False

Question 5

At the maturity of the debt and swap, the principal amounts will be re- exchanged at the rate established at the commencement of the swap.

Accepted Answer

A) True 
 B)False

Question 6

It is not necessary to have a benchmark in order to measure treasury performance.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is an active risk- management technique?

Accepted Answer

A)  A 'covering everything' approach. 
B)  A 'selective hedging' approach. 
C)  A 'do nothing' approach. 
D)  None of the above. 
A)  A 'covering everything' approach. 
B)  A 'selective hedging' approach. 
C)  A 'do nothing' approach. 
D)  None of the above.

Question 8

Currency swaps are the most frequently used foreign exchange hedging vehicle in Australia.

Accepted Answer

A) True 
 B)False

Question 9

The corporate treasurer is judged against the budgeted exchange rate, which is the current spot rate.

Accepted Answer

A) True 
 B)False

Question 10

One of the problems using options to hedge forex exposure is:

Accepted Answer

A)  the cost. 
B)  it is risky. 
C)  unavailable. 
D)  it does not work. 
A)  the cost. 
B)  it is risky. 
C)  unavailable. 
D)  it does not work.

Which of the following is a foreign exchange hedging instrument?

A___________ occurs when the company has assets or liabilities denominated in foreign currencies.

There is a small percentage of corporates that engage in active management.

Using natural hedges is equivalent to using forward contracts - they do not provide any kind of windfall.

At the maturity of the debt and swap, the principal amounts will be re- exchanged at the rate established at the commencement of the swap.

It is not necessary to have a benchmark in order to measure treasury performance.

Which of the following is an active risk- management technique?

Currency swaps are the most frequently used foreign exchange hedging vehicle in Australia.

The corporate treasurer is judged against the budgeted exchange rate, which is the current spot rate.

One of the problems using options to hedge forex exposure is:

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

The Foreign Exchange Market

Listed Securities

Fixed Rate Derivatives

Options

Global Financial Crisis

Managing Interest Rate Risk

Filters

Exam 13: Managing Foreign Exchange Risk

Which of the following is a foreign exchange hedging instrument?

A___________ occurs when the company has assets or liabilities denominated in foreign currencies.

There is a small percentage of corporates that engage in active management.

Using natural hedges is equivalent to using forward contracts - they do not provide any kind of windfall.

At the maturity of the debt and swap, the principal amounts will be re- exchanged at the rate established at the commencement of the swap.

It is not necessary to have a benchmark in order to measure treasury performance.

Which of the following is an active risk- management technique?

Currency swaps are the most frequently used foreign exchange hedging vehicle in Australia.

The corporate treasurer is judged against the budgeted exchange rate, which is the current spot rate.

One of the problems using options to hedge forex exposure is:

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

The Foreign Exchange Market

Listed Securities

Fixed Rate Derivatives

Options

Global Financial Crisis

Managing Interest Rate Risk

Filters