Exam 2: The Foreign Exchange Market

As a foreign exchange trade at Deutsche Bank,one of your customers would like a yen quote on Australian dollars.The current spot market rates are ¥101.37-85/U.S.$ and A$1.2924-44/U.S.$.What bid and ask yen cross rates would you quote on spot Australian dollars?

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Question 1

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By means of triangular arbitrage,you can calculate the market quotes for the Australian dollar in terms of yen as ¥78.31-81/A$.These prices can be found by conducting the following trades: For the yen bid price for the Australian dollar,you need to first sell Australian dollars for U.S.dollars and then sell the U.S.dollars for yen.It costs A$1.2924 to buy one U.S.dollar.With U.S.$ you can buy ¥101.37.Therefore,A$1.2944 = ¥101.37,or A4 = ¥78.31.This is the yen bid price for one Australian dollar.The yen ask price for the Australian dollar can be found by first selling yen for US$ and then using the US$ to buy Australian dollars.Given the quotes above,it costs ¥101.85 to buy one US$,which can be sold for A$1.2924 .Thus,A$1.2924 = ¥101.85 or A$ = ¥78.81 This is the yen ask price for the Australian dollar.

What is the name of the rate currency traders quote in the interbank market to sell foreign currencies?

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Question 2

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The broker at Deutsche Bank quotes bid-ask rates of ¥104.15-30/$.What would be its direct asking price for yen if the bank's €/$ ask rate is .6550?

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Question 3

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Which one of the following firms dominates the foreign exchange markets?

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Question 4

When an exchange rate is quoted by a dealer in country as the local currency price of one unit of foreign currency,he is quoting the ________.

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Question 5

Suppose Lufthansa receives the following indirect quotes in the currency markets of New York.They are €0.92-3/U.S.$.Given the quotes,there may or may not be arbitrage opportunities if you were a currency trader in Paris.What range of £/€ bid and ask quotes would motivate you to arbitrage the currencies? Explain.

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Question 6

When does delivery occur on a spot contract?

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Question 7

Which one of the following are the main participants in the global currency markets?

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Question 8

The ________ quote refers to the dollar price of a foreign currency.

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Question 9

Which one of the following features is not part of the interbank foreign exchange market?

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Question 10

What is the largest financial market in the world measured in dollar-volume trade?

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Question 11

What is the name of the computer network in which member banks globally send and receive messages pertaining to foreign exchange transactions?

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Question 12

What currency currently serves as the world's primary vehicle currency?

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Question 13

What is the name of the risk that a financial institution may not deliver the currency on one side of a completed currency transaction?

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Question 14

When it comes to currency transfers,what is the most important global interbank communications network?

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Question 15

The difference between the ask rate and the bid rate is known as the

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Question 16

What is a spot exchange-rate contract?

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Question 17

Which of the following markets is comprises the world's major banks and other financial institutions?

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Question 18

Which one of the following is not a characteristic of a liquid market?

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Question 19

When someone in the currency market can buy a currency at a low price and sell it for a higher price,it is known as ________.

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Question 20

Showing 1 - 20 of 32

As a foreign exchange trade at Deutsche Bank,one of your customers would like a yen quote on Australian dollars.The current spot market rates are ¥101.37-85/U.S.$ and A$1.2924-44/U.S.$.What bid and ask yen cross rates would you quote on spot Australian dollars?

What is the name of the rate currency traders quote in the interbank market to sell foreign currencies?

The broker at Deutsche Bank quotes bid-ask rates of ¥104.15-30/$.What would be its direct asking price for yen if the bank's €/$ ask rate is .6550?

Which one of the following firms dominates the foreign exchange markets?

When an exchange rate is quoted by a dealer in country as the local currency price of one unit of foreign currency,he is quoting the ________.

When does delivery occur on a spot contract?

Which one of the following are the main participants in the global currency markets?

The ________ quote refers to the dollar price of a foreign currency.

Which one of the following features is not part of the interbank foreign exchange market?

What is the largest financial market in the world measured in dollar-volume trade?

What is the name of the computer network in which member banks globally send and receive messages pertaining to foreign exchange transactions?

What currency currently serves as the world's primary vehicle currency?

What is the name of the risk that a financial institution may not deliver the currency on one side of a completed currency transaction?

When it comes to currency transfers,what is the most important global interbank communications network?

The difference between the ask rate and the bid rate is known as the

What is a spot exchange-rate contract?

Which of the following markets is comprises the world's major banks and other financial institutions?

Which one of the following is not a characteristic of a liquid market?

When someone in the currency market can buy a currency at a low price and sell it for a higher price,it is known as ________.

Globalization and the Multinational Corporation

Forward Markets and Transaction Exchange Risk

The Balance of Payments

Exchange Rate Systems

Interest Rate Parity

Speculation and Risk in the Foreign Exchange Market

Purchasing Power Parity and Real Exchange Rates

Measuring and Managing Real Exchange Risk

Exchange Rate Determination and Forecasting

International Debt Financing

International Equity Financing

International Capital Market Equilibrium

Country and Political Risk

International Capital Budgeting

Additional Topics in International Capital Budgeting

Risk Management and the Foreign Currency Hedging Decision

Financing International Trade

Managing Net Working Capital

Foreign Currency Futures and Options

Interest Rates and Foreign Currency Swaps

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