Exam 11: Foreign Exchange

Table 11.4.Forward Exchange Rates -Refer to Table 11.4.Comparing the franc's forward rates against the franc's spot rate,the exchange market's consensus is that over the period of a forward contract,the franc's spot rate will:

Concerning foreign exchange trading,bank purchases from and sales to their customers are classified as retail transactions when the amount involved

If a household purchases small amounts of foreign currency from an automated teller machine (ATM),typically imposes an additional service charge for the transaction.

Swap transactions among commercial banks involve the conversion of one currency to another at one point with an agreement to reconvert it back into the original currency at some point in the future.

A put option provides an options holder

If it takes $0.18544 to purchase 1 French franc,it takes 5.3926 francs to purchase $1.

Suppose that real incomes increase more rapidly in the United States than in Mexico.In the United States,this situation would likely result in a (an):

Movements along the demand schedule for pounds are caused by changes in the pound's exchange rate.

A (An) ____ is an arrangement by which two parties exchange one currency for another and agree that the exchange will be reversed at a stipulated date in the future:

Concerning foreign exchange trading,a "forward contract"

Which of the following tends to cause the U.S.dollar to appreciate in value?

If you have a commitment to pay a friend in Britain 1,000 pounds in 30 days,you could remove the risk of loss due to the appreciation of the pound by:

When you arrive at Heathrow Airport in London and go to the foreign exchange kiosk to exchange dollars for pounds,you are trading in the

Which method of trading currencies involves the conversion of one currency into another at one point in time with an agreement to reconvert it back to the original currency at some point in the future?

Most foreign exchange trading is carried out in the forward market.

Suppose that Sears owes 1 million yen to a Japanese electronics manufacturer in 3 months.It could hedge against the risk of a depreciation of the dollar against the yen by contracting to purchase 1 million yen in the forward market,at today's forward rate,for delivery in 3 months.

The pound shows a forward discount against the dollar (the forward rate is less than the spot rate) when

-In the table above,a change in the ______ will result in a movement along the supply schedule of pounds

Concerning foreign exchange trading,a "futures contract" is characterized by

Assume you are an American exporter and expect to receive 50 pounds sterling at the end of 60 days.You can remove the risk of loss due to a devaluation of the pound sterling by: