Exam 9: The Foreign Exchange Market

______________ is most likely to occur when the value of the domestic currency is depreciating rapidly because of hyperinflation.

The largest trading center in the foreign exchange market is __________.

A currency is said to be ______________ when only non-residents may convert it into a foreign currency without any limitations.

The _____________ is a market for converting the currency of one country into that of another.

An efficient market has significant impediments to the free flow of goods and services.

The PPP theory seems to best predict exchange rate changes for countries with what?

If an Canadian grain company exported corn to Russia,and instead of receiving nonconvertible Russian currency in exchange for the corn received Russian crude oil,that would be an example of ______________.

The rate at which one currency is converted into another is called the ___________.

Spot exchange rates change daily as determined by the relative demand and supply for difference currencies.

The _____________ states that in competitive markets free of transportation costs and barriers to trade,identical products sold in different countries must sell for the same price when their price is expressed in terms of the same currency.

The three factors that have the most important impact on future exchange rate movement include the country's price inflation,its market philosophy,and its ______________.

Arbitrage is the process of buying a currency high and selling it low.

The Canadian money supply is growing more rapidly than Canadian output.Dollars will be relatively more plentiful than the currencies of countries where monetary growth is closer to output growth.This is an example of

In essence,the _______________ theory predicts that changes in relative prices will result in a change in exchange rates.

A currency swap is the simultaneous purchase and sale of a given amount of foreign exchange for two different value dates.

Currency speculation typically involves the short-term movement of funds from one currency to another in the hopes of profiting from shifts in exchange rates.

When the dollar buys more yen on the spot market than the 30-day forward market,we say the dollars is selling at a ______________.Conversely,when the dollars buys fewer yen on the spot market than the 30-day forward market,we say the dollar is selling at a ______________.

A less extreme version of the PPP theory states that given ______________,that is,markets in which few impediments to international trade and investment exist-the price of a "basket of goods" should be roughly equivalent in each country.

A(n)______________ is purchase and sale of a given amount of foreign exchange for two different value dates,at the same time.

_____________ typically involves the short-term movement of funds from one currency to another in the hopes of profiting from shifts in exchange rates.