International Finance-MBA

The FOREX market is an

• Regulated Market

• Over-the-counter

• Listed Market

• None of the above

Types of Foreign Exchange Market are:

• Spot Market

• Future Market

• Forward Market

• All the above

Calculate Forward Premium if

•The ninety-day yen to dollar (¥ / $) forward exchange rate is 111.95.

•The spot rate ¥ / $ rate is = 111.68.

• 0.96%

• 0.096%

• 0.0096%

• 0.056%

In case of triangular arbitrage how many currencies are involved

• Two

• Three

• One home and one foreign currency

• None of the above

Functions the foreign exchange are:

• The foreign exchange rate is stabilized through the forward and spot market.

• Currency can be transferred from market to market as per the transactions made.

• The importers receive short-term credit, which helps facilitate a smooth flow of goods and services between many countries. 

• All the above

Types of exchange rate regimes

• Fixed Exchange

• Free-Floating

• Mixed-Exchange

• Only Fixed and Floating

Par Value System (1947-1971) is also known as

• Bretton Wood System

• Pegged Regime

• LERMS

• UERS

Calculate depreciation of the currency.

•Let the initial exchange rate be: $1.75/1€.

•Imagine the dollar depreciates to $1.25/1€.

• 25%

• 20%

• 50%

• 40%

Benefits of a Floating Exchange Rate

• Stability in the balance of payments (BOP)

• Foreign exchange is unrestricted

• Market efficiency enhances

• All the above

Limitations of a Floating Exchange Rate

• Large foreign exchange reserves not required

• Import inflation protected

• Restricted economic growth or recovery

• All the above