7.4 FOREX MARKET

Foreign exchange market is the market in which national currencies are bought and sold against one another.

• TRUE

• FALSE

Enabling international trade to be conducted using one common currency is an example of transfer of purchasing power.

• TRUE

• FALSE

Foreign exchange market is a source of credit where exchange risk is transferred to another party who is willing to carry the risk.

• TRUE

• FALSE

Central banks participate in foreign exchange market to facilitate international trade transactions on behalf of their customers.

• TRUE

• FALSE

Arbitrager seeks to make profit from the price different of currencies in different markets.

• TRUE

• FALSE

Forward contracts are used as a hedging mechanism in the trading of foreign currencies.

• TRUE

• FALSE

Commercial banks circulate money and engage in a wide range of international financial transactions

• TRUE

• FALSE

Letter of credit enables exporter to pay their purchases on credit to the banks.

• TRUE

• FALSE