Exam 6: The Foreign Exchange Market

Suppose the spot rate and forward rate for the British pound are 1.4248 and 1.4179 respectively. Assume the forward pound is selling at a 1.94% annualized discount, what is the number of days of the forward contract?

Risk that a central bank will not make the necessary transfer of foreign currency to complete a currency settlement is known as ________ risk.

Suppose the spot direct quotes for the Swedish krona and French franc are $.1395?99 and $.1130?33, respectively. What is the direct quote for the krona in Paris?

Hedgers, mostly _____________, engage in forward contracts on the foreign exchange markets to protect the home currency value of various foreign currency-denominated assets and liabilities on their balance sheets.

On December 3,2001, spot Japanese yen were sold at $0.008058. Suppose the 180-day forward Japanese yen was selling at a 1.91% annualized premium, what is the 180-day forward rate of the yen?

American terms refers to the

Suppose the spot direct quotes for the pound sterling and French franc are $1.3981?89 and $.1130?33, respectively. What is the direct quote for the pound in Paris?

The spot and 30?day forward rates for the Dutch guilder are $.3075 and $.3120, respectively. The guilder is said to be selling at a forward

Suppose sterling is quoted at $1.4419-36, and the Swiss franc is quoted at $0.6250-67. What is the direct quote for the pound in Zurich?

Suppose the following direct quotes are received for spot and one?month French francs in New York: .1260?684?Then the outright 30?day forward quote for the French is:

Suppose the pound sterling is selling for $1.62 and the buying rate for the Swiss franc is $0.71. Then the £/SFr cross rate is

The world's largest currency trading market is located in the city of

The spot and 180?day forward rates for the DM are $.3310 and $.3402, respectively. The DM is said to be selling at a forward

Suppose one observed the following direct spot quotations in New York and London, respectively: 1.2500?60 and .8000?50. Arbitrage profits per $1 million equal

Traders on the foreign exchange market use ___________ to eliminate or cover the risk of loss on export or import orders denominated in foreign currencies.

Suppose the Brazilian Real is quoted at $0.9455-9510, and the Thai baht is quoted at $25.2513-398What is the direct quote for the Real in Bangkok?

An American company that imports leather goods from England is most likely to be

If the direct price of the dollar is 2.5 in Frankfurt and transaction costs are .4% of the amount transacted, then the minimum? maximum direct quotes for the DM in New York are:

The overwhelming majority of foreign exchange transactions involve

Suppose the quote for DM is DM 2.9865?92. Then the percent spread is