Question 1

Which of the following market participants tend to keep exchange rates the same in all the world markets?

Accepted Answer

A)  Forward markets 
B)  Foreign exchange counter trades 
C)  Futures markets 
D)  Arbitrageurs 
A)  Forward markets 
B)  Foreign exchange counter trades 
C)  Futures markets 
D)  Arbitrageurs

Question 2

The estimates of FX trading occurring worldwide daily are:

Accepted Answer

A)  USD 100 billion to USD 500 billion. 
B)  USD 500 billion to USD 1000 billion. 
C)  USD 1500 billion to USD 2000 billion. 
D)  USD 2000 billion to USD 4000 billion. 
A)  USD 100 billion to USD 500 billion. 
B)  USD 500 billion to USD 1000 billion. 
C)  USD 1500 billion to USD 2000 billion. 
D)  USD 2000 billion to USD 4000 billion.

Question 3

If the spot rate is AUD/USD 0.5510-0.5515,and the six-month forward points are 48 to 53,the six-month outright forward rate would be:

Accepted Answer

A)  AUD/USD 0.5462-0.5462 
B)  AUD/USD 0.5563-0.5558 
C)  AUD/USD 0.5558-0.5563 
D)  AUD/USD 0.5558-0.5568 
A)  AUD/USD 0.5462-0.5462 
B)  AUD/USD 0.5563-0.5558 
C)  AUD/USD 0.5558-0.5563 
D)  AUD/USD 0.5558-0.5568

Question 4

A USD/YEN quote means the price of USD1 in terms of YEN.

Accepted Answer

A) True 
 B)False

Question 5

The difference between the spot rate and the forward rate quotation is the:

Accepted Answer

A)  exchange rate arbitrage. 
B)  forward points. 
C)  interest rate parity. 
D)  indirect exchange rate. 
A)  exchange rate arbitrage. 
B)  forward points. 
C)  interest rate parity. 
D)  indirect exchange rate.

Question 6

Given the following rates,what arbitrage profit may be made with respect to the Australian dollar?
USD 1 = AUD 1.70
USD 1 = SGD 1.70
AUD 1 = SGD 0.96

Accepted Answer

A)  0.1753 cents 
B)  0.5882 cents 
C)  1.7526 cents 
D)  5.882 cents 
A)  0.1753 cents 
B)  0.5882 cents 
C)  1.7526 cents 
D)  5.882 cents

Question 7

The principle of interest rate parity asserts that the:

Accepted Answer

A)  relative spot exchange rates determine the relativity between the forward exchange rates and spot rates. 
B)  relativity between spot and forward exchange rates reflects the interest rate differentials between countries. 
C)  relative forward exchange rates determine the relativity between the spot exchange rates and the forward interest rate. 
D)  relative forward exchange rates determine the relativity between the forward exchange rates and forward interest rates. 
A)  relative spot exchange rates determine the relativity between the forward exchange rates and spot rates. 
B)  relativity between spot and forward exchange rates reflects the interest rate differentials between countries. 
C)  relative forward exchange rates determine the relativity between the spot exchange rates and the forward interest rate. 
D)  relative forward exchange rates determine the relativity between the forward exchange rates and forward interest rates.

Question 8

In the FX markets a/an _____ quote is where the USD is the terms currency and the other currency is the unit of the quotation.

Accepted Answer

A)  cross rate 
B)  direct 
C)  American 
D)  indirect 
A)  cross rate 
B)  direct 
C)  American 
D)  indirect

Question 9

In relation to exchange rates,discuss a managed float regime,a crawling peg regime and a pegged exchange rate.

Accepted Answer

Countries that operate a managed float r

Question 10

Discuss how the way a currency is quoted affects how cross rates are calculated.

Accepted Answer

The way a currency is quoted can affect

Question 11

Given the 3 month forward rate exchange between the USA and Switzerland is USD/CHF 1.1589 this suggests:

Accepted Answer

A)  that interest rates in the USA are higher than in Switzerland. 
B)  the 3 month forward rate is at a premium. 
C)  that interest rates in the USA are lower than in Switzerland. 
D)  a person requires more data before making a conclusion. 
A)  that interest rates in the USA are higher than in Switzerland. 
B)  the 3 month forward rate is at a premium. 
C)  that interest rates in the USA are lower than in Switzerland. 
D)  a person requires more data before making a conclusion.

Question 12

The _______ quote is the number of units of foreign currency an Australian FX dealer is willing to give,in order to buy the unit of the quotation,that of AUD 1.

Accepted Answer

A)  direct 
B)  indirect 
C)  bid 
D)  offer 
A)  direct 
B)  indirect 
C)  bid 
D)  offer

Question 13

The central bank resources made up of foreign currencies,gold and international drawing rights are called:

Accepted Answer

A)  central bank capital. 
B)  official reserve assets. 
C)  central bank floats. 
D)  official bank assets. 
A)  central bank capital. 
B)  official reserve assets. 
C)  central bank floats. 
D)  official bank assets.

Question 14

The value of FX daily transactions in the global FX markets is estimated to be:

Accepted Answer

A)  USD 2000 billion. 
B)  USD 3000 billion. 
C)  USD 4000 billion. 
D)  USD 5000 billion. 
A)  USD 2000 billion. 
B)  USD 3000 billion. 
C)  USD 4000 billion. 
D)  USD 5000 billion.

Question 15

The institutions that transact between the foreign exchange (FX)dealers in banks and act as principals in the FX market are called the:

Accepted Answer

A)  foreign-currency dealer houses. 
B)  currency syndicates. 
C)  foreign-exchange brokers. 
D)  inter-bank currency clearinghouses. 
A)  foreign-currency dealer houses. 
B)  currency syndicates. 
C)  foreign-exchange brokers. 
D)  inter-bank currency clearinghouses.

Question 16

The theory that the annual percentage differential in the forward market for a currency quoted in terms of another currency is equal to the approximate difference in the interest rates between two countries is known as:

Accepted Answer

A)  covered interest arbitrage. 
B)  the Fisher equation. 
C)  a forward rate agreement. 
D)  interest rate parity. 
A)  covered interest arbitrage. 
B)  the Fisher equation. 
C)  a forward rate agreement. 
D)  interest rate parity.

Question 17

A bank has been asked to provide a three-month forward AUD/USD 'buy' quote for a corporate client.The following information is available to the FX dealer at the bank:
Spot rate:AUD/USD 0.7654-0.7659
US interest rates:7.73% per annum
Australian interest rates:8.64% per annum
Estimate the three-month forward 'buy' rate.

Accepted Answer

A)  0.7637 
B)  0.7639 
C)  0.7642 
D)  0.7644 
A)  0.7637 
B)  0.7639 
C)  0.7642 
D)  0.7644

Question 18

A student researching the AUD/USD exchange rate on a particular day is confused to find the following two quotations:
i.AUD/USD 0.5825-30
ii.USD/AUD 1.7152-67
Which of the following statements is correct?

Accepted Answer

A)  Quote i is the convention adopted in Australia and is a direct quote 
B)  Quote ii is the convention adopted in Australia and is a direct quote. 
C)  Quote i is the convention adopted in Australia and is an indirect quote. 
D)  Quote ii is the convention adopted in Australia and is an indirect quote. 
A)  Quote i is the convention adopted in Australia and is a direct quote 
B)  Quote ii is the convention adopted in Australia and is a direct quote. 
C)  Quote i is the convention adopted in Australia and is an indirect quote. 
D)  Quote ii is the convention adopted in Australia and is an indirect quote.

Question 19

The financial institution responsible for monetary policy in the European Union is called the:

Accepted Answer

A)  Bundesbank. 
B)  European Parliament. 
C)  Bank for International Settlements. 
D)  European Central Bank. 
A)  Bundesbank. 
B)  European Parliament. 
C)  Bank for International Settlements. 
D)  European Central Bank.

Question 20

For currency transactions,the spot exchange rate is the rate _______,and the forward exchange rate is the rate _______.

Accepted Answer

A)  on that day; today 
B)  at some specified future date; today 
C)  today; on that date 
D)  on that date; at some specified future date 
A)  on that day; today 
B)  at some specified future date; today 
C)  today; on that date 
D)  on that date; at some specified future date

Which of the following market participants tend to keep exchange rates the same in all the world markets?

The estimates of FX trading occurring worldwide daily are:

If the spot rate is AUD/USD 0.5510-0.5515,and the six-month forward points are 48 to 53,the six-month outright forward rate would be:

A USD/YEN quote means the price of USD1 in terms of YEN.

The difference between the spot rate and the forward rate quotation is the:

Given the following rates,what arbitrage profit may be made with respect to the Australian dollar? USD 1 = AUD 1.70 USD 1 = SGD 1.70 AUD 1 = SGD 0.96

The principle of interest rate parity asserts that the:

In the FX markets a/an _____ quote is where the USD is the terms currency and the other currency is the unit of the quotation.

In relation to exchange rates,discuss a managed float regime,a crawling peg regime and a pegged exchange rate.

Discuss how the way a currency is quoted affects how cross rates are calculated.

Given the 3 month forward rate exchange between the USA and Switzerland is USD/CHF 1.1589 this suggests:

The _______ quote is the number of units of foreign currency an Australian FX dealer is willing to give,in order to buy the unit of the quotation,that of AUD 1.

The central bank resources made up of foreign currencies,gold and international drawing rights are called:

The value of FX daily transactions in the global FX markets is estimated to be:

The institutions that transact between the foreign exchange (FX)dealers in banks and act as principals in the FX market are called the:

The theory that the annual percentage differential in the forward market for a currency quoted in terms of another currency is equal to the approximate difference in the interest rates between two countries is known as:

A student researching the AUD/USD exchange rate on a particular day is confused to find the following two quotations: i.AUD/USD 0.5825-30 ii.USD/AUD 1.7152-67 Which of the following statements is correct?

The financial institution responsible for monetary policy in the European Union is called the:

For currency transactions,the spot exchange rate is the rate _,and the forward exchange rate is the rate _.

A Modern Financial System: An Overview

Commercial Banks

Non-Bank Financial Institutions

The Share Market and the Corporation

Corporations Issuing Equity in the Share Market

Investors in the Share Market

Forecasting Share Price Movements

Mathematics of Finance: An Introduction to Basic Concepts and Calculations

Short-Term Debt

Medium-To-Long-Term Debt

International Debt Markets

Government Debt, monetary Policy and the Payments System

An Introduction to Interest Rate Determination and Forecasting

Interest Rate Risk

Foreign Exchange: Factors That Influence the Exchange Rate

Foreign Exchange: Risk Identification and Management

An Introduction to Risk Management and Derivatives

Future Contracts and Forward Rate Agreements

Options

Interest Rate Swaps, Cross-Currency Swaps and Credit Default

Filters

Exam 15: Foreign Exchange: The Structure and Operation of the Fx Market

Which of the following market participants tend to keep exchange rates the same in all the world markets?

The estimates of FX trading occurring worldwide daily are:

If the spot rate is AUD/USD 0.5510-0.5515,and the six-month forward points are 48 to 53,the six-month outright forward rate would be:

A USD/YEN quote means the price of USD1 in terms of YEN.

The difference between the spot rate and the forward rate quotation is the:

Given the following rates,what arbitrage profit may be made with respect to the Australian dollar? USD 1 = AUD 1.70 USD 1 = SGD 1.70 AUD 1 = SGD 0.96

The principle of interest rate parity asserts that the:

In the FX markets a/an _____ quote is where the USD is the terms currency and the other currency is the unit of the quotation.

In relation to exchange rates,discuss a managed float regime,a crawling peg regime and a pegged exchange rate.

Discuss how the way a currency is quoted affects how cross rates are calculated.

Given the 3 month forward rate exchange between the USA and Switzerland is USD/CHF 1.1589 this suggests:

The _______ quote is the number of units of foreign currency an Australian FX dealer is willing to give,in order to buy the unit of the quotation,that of AUD 1.

The central bank resources made up of foreign currencies,gold and international drawing rights are called:

The value of FX daily transactions in the global FX markets is estimated to be:

The institutions that transact between the foreign exchange (FX)dealers in banks and act as principals in the FX market are called the:

The theory that the annual percentage differential in the forward market for a currency quoted in terms of another currency is equal to the approximate difference in the interest rates between two countries is known as:

A student researching the AUD/USD exchange rate on a particular day is confused to find the following two quotations: i.AUD/USD 0.5825-30 ii.USD/AUD 1.7152-67 Which of the following statements is correct?

The financial institution responsible for monetary policy in the European Union is called the:

For currency transactions,the spot exchange rate is the rate _______,and the forward exchange rate is the rate _______.

A Modern Financial System: An Overview

Commercial Banks

Non-Bank Financial Institutions

The Share Market and the Corporation

Corporations Issuing Equity in the Share Market

Investors in the Share Market

Forecasting Share Price Movements

Mathematics of Finance: An Introduction to Basic Concepts and Calculations

Short-Term Debt

Medium-To-Long-Term Debt

International Debt Markets

Government Debt, monetary Policy and the Payments System

An Introduction to Interest Rate Determination and Forecasting

Interest Rate Risk

Foreign Exchange: Factors That Influence the Exchange Rate

Foreign Exchange: Risk Identification and Management

An Introduction to Risk Management and Derivatives

Future Contracts and Forward Rate Agreements

Options

Interest Rate Swaps, Cross-Currency Swaps and Credit Default

Filters

For currency transactions,the spot exchange rate is the rate _,and the forward exchange rate is the rate _.