Foreign Exchange Quiz

Which of the following best describes a 'fixed exchange rate system'?

• Currency values fluctuate freely

• Currency values are pegged to a specific value

• Currency values are determined by supply and demand

• Currency values change based on political events

When did the most industrialized countries switch to a system of floating rates?

• 1944

• 1971

• 1973

• 1992

What happened in 2002 in relation to the European Union's currency?

• The gold standard was reintroduced

• The euro was introduced

• The US dollar became the official currency

• Fixed exchange rates were established

What percentage of daily forex turnover is from companies and governments for actual business transactions?

• 5%

• 30%

• 85%

• 95%

Which currency pair is an example of 'Majors'?

• USD/INR

• EUR/USD

• GBP/ZAR

• AUD/NZD

What is a 'freely floating exchange rate'?

• An exchange rate determined by government intervention

• An exchange rate that is fixed to the US dollar

• An exchange rate that fluctuates based on supply and demand

• An exchange rate tied to the price of gold

Which country's central bank lost over £5 billion attempting to protect its currency in 1992?

• The Federal Reserve

• The Bank of Japan

• The Bank of England

• The European Central Bank

How much of the foreign exchange market transactions involve trading of 'the Majors'?

• 50%

• 60%

• 85%

• 95%

What does the term 'over the counter' (OTC) mean in the context of Forex trading?

• Transactions occur on a centralized exchange

• Transactions are conducted between two counterparts directly

• Transactions involve physical currency exchange

• Transactions are regulated by the government

Which event marked the end of gold convertibility in the exchange rate system?

• 1944 Bretton Woods Agreement

• 1971 Nixon Shock

• 1973 Oil Crisis

• 1992 Black Wednesday