Question 1

Swap and forward transactions account for an insignificant portion of the foreign exchange market.

Accepted Answer

A) True 
 B)False

Question 2

________ are agents who facilitate trading between dealers without themselves becoming principals in the transaction.

Accepted Answer

A)  Central banks 
B)  Foreign exchange brokers 
C)  Arbitrageurs 
D)  Foreign exchange dealers 
A)  Central banks 
B)  Foreign exchange brokers 
C)  Arbitrageurs 
D)  Foreign exchange dealers

Question 3

Foreign exchange ________ earn a profit by a bid-ask spread on currencies they purchase and sell.Foreign exchange ________,on the other hand,earn a profit by bringing together buyers and sellers of foreign currencies and earning a commission on each sale and purchase.

Accepted Answer

A)  central banks; treasuries 
B)  dealers; brokers 
C)  brokers; dealers 
D)  speculators; arbitrageurs 
A)  central banks; treasuries 
B)  dealers; brokers 
C)  brokers; dealers 
D)  speculators; arbitrageurs

Question 4

The U.S.dollar suddenly changes in value against the euro moving from an exchange rate of 0.8909/€ to $0.8709/€.Thus,the dollar has ________ by ________.

Accepted Answer

A)  appreciated; 2.30% 
B)  depreciated; 2.30% 
C)  appreciated; 2.24% 
D)  depreciated; 2.24% 
A)  appreciated; 2.30% 
B)  depreciated; 2.30% 
C)  appreciated; 2.24% 
D)  depreciated; 2.24%

Question 5

The low level of interest rates around the globe in recent years,combined with slowing economic growth and new debt issuances,has had a dampening impact on the swap market.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is NOT true regarding nondeliverable forward (NDF)contracts?

Accepted Answer

A)  NDFs are used primarily for emerging market currencies. 
B)  Pricing of NDFs reflects basic interest rate differentials plus an additional premium charged for dollar settlement. 
C)  NDFs can only be traded by central banks. 
D)  All of the above are true. 
A)  NDFs are used primarily for emerging market currencies. 
B)  Pricing of NDFs reflects basic interest rate differentials plus an additional premium charged for dollar settlement. 
C)  NDFs can only be traded by central banks. 
D)  All of the above are true.

Question 7

The greatest volume of daily foreign exchange transactions are:

Accepted Answer

A)  spot transactions. 
B)  forward transactions. 
C)  swap transactions. 
D)  This question is inappropriate because the volume of transactions are approximately equal across the three categories above. 
A)  spot transactions. 
B)  forward transactions. 
C)  swap transactions. 
D)  This question is inappropriate because the volume of transactions are approximately equal across the three categories above.

Question 8

The United Kingdom and United States together make up nearly ________ of daily currency trading.

Accepted Answer

A)  30% 
B)  40% 
C)  50% 
D)  60% 
A)  30% 
B)  40% 
C)  50% 
D)  60%

Question 9

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

Accepted Answer

A)  the transfer of purchasing power between countries 
B)  obtaining or providing credit for international trade transactions 
C)  minimizing the risks of exchange rate changes 
D)  All of the above were identified as functions of the foreign exchange market. 
A)  the transfer of purchasing power between countries 
B)  obtaining or providing credit for international trade transactions 
C)  minimizing the risks of exchange rate changes 
D)  All of the above were identified as functions of the foreign exchange market.

Swap and forward transactions account for an insignificant portion of the foreign exchange market.

________ are agents who facilitate trading between dealers without themselves becoming principals in the transaction.

Foreign exchange earn a profit by a bid-ask spread on currencies they purchase and sell.Foreign exchange ,on the other hand,earn a profit by bringing together buyers and sellers of foreign currencies and earning a commission on each sale and purchase.

The U.S.dollar suddenly changes in value against the euro moving from an exchange rate of 0.8909/€ to $0.8709/€.Thus,the dollar has by .

The low level of interest rates around the globe in recent years,combined with slowing economic growth and new debt issuances,has had a dampening impact on the swap market.

Which of the following is NOT true regarding nondeliverable forward (NDF)contracts?

The greatest volume of daily foreign exchange transactions are:

The United Kingdom and United States together make up nearly ________ of daily currency trading.

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

Multinational Financial Management: Opportunities and Challenges

The International Monetary System

The Balance of Payments

Financial Goals and Corporate Governance

International Parity Conditions

Foreign Currency Derivatives: Futures and Options

Interest Risk and Swaps

Foreign Exchange Rate Determination

Transaction Exposure

Translation Exposure

Operating Exposure

The Global Cost and Availability of Capital

Raising Equity and Debt Globally

Multinational Tax Management

International Trade Finance

Foreign Direct Investment and Political Risk

Multinational Capital Budgeting and Cross-Border Acquisitions

Filters

Exam 5: The Foreign Exchange Market

Swap and forward transactions account for an insignificant portion of the foreign exchange market.

________ are agents who facilitate trading between dealers without themselves becoming principals in the transaction.

Foreign exchange ________ earn a profit by a bid-ask spread on currencies they purchase and sell.Foreign exchange ________,on the other hand,earn a profit by bringing together buyers and sellers of foreign currencies and earning a commission on each sale and purchase.

The U.S.dollar suddenly changes in value against the euro moving from an exchange rate of 0.8909/€ to $0.8709/€.Thus,the dollar has ________ by ________.

The low level of interest rates around the globe in recent years,combined with slowing economic growth and new debt issuances,has had a dampening impact on the swap market.

Which of the following is NOT true regarding nondeliverable forward (NDF)contracts?

The greatest volume of daily foreign exchange transactions are:

The United Kingdom and United States together make up nearly ________ of daily currency trading.

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

Multinational Financial Management: Opportunities and Challenges

The International Monetary System

The Balance of Payments

Financial Goals and Corporate Governance

International Parity Conditions

Foreign Currency Derivatives: Futures and Options

Interest Risk and Swaps

Foreign Exchange Rate Determination

Transaction Exposure

Translation Exposure

Operating Exposure

The Global Cost and Availability of Capital

Raising Equity and Debt Globally

Multinational Tax Management

International Trade Finance

Foreign Direct Investment and Political Risk

Multinational Capital Budgeting and Cross-Border Acquisitions

Filters

Foreign exchange earn a profit by a bid-ask spread on currencies they purchase and sell.Foreign exchange ,on the other hand,earn a profit by bringing together buyers and sellers of foreign currencies and earning a commission on each sale and purchase.

The U.S.dollar suddenly changes in value against the euro moving from an exchange rate of 0.8909/€ to $0.8709/€.Thus,the dollar has by .