Exam 6: The Foreign Exchange Market

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If the direct quote for a U.S.investor for British pounds is $1.43/£,then the indirect quote for the U.S.investor would be ________ and the direct quote for the British investor would be ________.

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

(True/False)
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Most foreign exchange transactions are through the U.S.dollar.If the transaction is expressed as the foreign currency per dollar this is known as ________ whereas ________ are expressed as dollars per foreign unit.

(Multiple Choice)
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Swap and forward transactions account for an insignificant portion of the foreign exchange market.

(True/False)
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American and British meanings differ for the word billion.Therefore,when traders refer to an American billion,they call it a/an ________.

(Multiple Choice)
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Which of the following may be participants in the foreign exchange markets?

(Multiple Choice)
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In the foreign exchange market,________ seek all of their profit from exchange rate changes while ________ seek to profit from simultaneous exchange rate differences in different markets.

(Multiple Choice)
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What are some of the reasons central banks and treasuries enter the foreign exchange markets,and in what important ways are they different from other foreign exchange participants?

(Essay)
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From the viewpoint of a British investor,which of the following would be a direct quote in the foreign exchange market?

(Multiple Choice)
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Which of the following is NOT true regarding the market for foreign exchange?

(Multiple Choice)
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Major exceptions to using European terms in foreign exchange include

(Multiple Choice)
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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.

(Multiple Choice)
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Which of the following is NOT a motivation identified by the authors as a function of the foreign exchange market?

(Multiple Choice)
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Identify and explain the three functions of the foreign exchange market.

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

(True/False)
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Dealers sometimes use brokers in the foreign exchange market because the dealers desire

(Multiple Choice)
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Given the following exchange rates,which of the following choices represents a potentially profitable intermarket arbitrage opportunity? ¥129.87/$ Euro 1.1226/$ Euro 0.00864/¥

(Multiple Choice)
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