BAFI 3200 - International Finance - Early Feedback Quiz

The most important foreign exchange market place in terms of trading volume is :

• A) New York

• B) Tokyo

• C) London

• D) Frankfurt

As a general rule, currencies bought and sold on the spot foreign exchange market are available :

• A) Immediately after the conclusion of the transaction

• B) 24 hours after the conclusion of the transaction

• C) 48 hours after the conclusion of the transaction

• D) 72 hours after the conclusion of the transaction

In order to trade in the foreign exchange market, forex traders must always deal with brokers.

• A) True

• B) False except when one of the two currencies is not directly quoted with a Major currency (US $, Euro, GBP, Yen).

• C) False

From a Canadian's point of view, which of each pair of quotes is the direct quote?

• CAD / GBP 2.31

• GBP / CAD 0.43

• USD /CAD 0.84

• CAD / USD 1.18

If the quotation of the euro in dollar is EUR/USD= 1.0610-1.0616, the quotation USD/EUR is equal to :

• A) USD 1 = EUR (1/1.0616)-(1/1.0610)

• B) USD 1 = EUR 1/1.0613

• C) USD 1 = EUR (1/1.0610)-(1/1.0616)

• D) USD 1 = EUR 1.0616-1.0610

On 17 December at 10 a.m. local time, a major American bank quoted the Euro against the US. Dollar with the following quotation: EUR/USD = 0.9791-0.9795 on the New York interbank market.

This quotation meant that this bank was ready:

• A) To buy Euro at a price of EUR 1 = USD 0.9791 and to sell it at a price of EUR 1 = USD 0.9795

• B) To buy euro at a price of EUR 1 = USD 0.9795 and to sell it at a price of EUR 1 = USD 0.9791

• C) To buy euro at a price of EUR 1 = USD 0.9795 and to sell it at a price of EUR 1 = USD 0.9795

• D) To buy euro at a price of EUR 1 = USD 0.9791 and to sell it at a price of EUR 1 = USD 0.9791

On 2 June at 10.35 a.m., the British Pound (GBP) is quoted against the Euro GBP/EUR= 1.6025. At the same time, the Swiss franc is quoted CHF/EUR= 0.6220. In the absence of arbitrage opportunities, the GBP/CHF is :

• A) GBP/CHF = 0.6220/1.6025

• B) GBP/CHF = 1.6025/0.6220

• C) GBP/CHF = 1.6025 × 0.6220

• D) None of the above answers is correct.

Arbitrageurs in foreign exchange markets:

• A) make their profits through the spread between bid and offer rates of exchange.

• B) take advantage of the small inconsistencies that develop between markets.

• C) attempt to make profits by outguessing the market.

• D) need foreign exchange in order to buy foreign goods.

You are given the following spot quote: EUR/GBP 1.5015-1.5040

The quotation is for which currency?

• GBP in terms of EUR

• EUR in terms of GBP

You are given the following spot quote: EUR/GBP 1.5015-1.5040

What is the bid price for EUR in terms of GBP?

• GBP/EUR 1.5015

• GBP/EUR 0.665 (1 / 1.5040)

• GBP/EUR 1.5040

• GBP/EUR 0.666 (1 / 1.5015)