TCQT1_Revision Fin. Markets

What is not the characteristics of foreign exchange market?

• Open daily

• Traded on an exchange

• Allows for exchange of currencies

• All are correct statements

Which market serves the immediate transaction of currency?

• Futures market
• Spot market
• Options market
• Derivatives market

_____ will tell you the price of agreeing today to take delivery of a Canadian dollar in 60 days from now

• the spot rate

• the forward rate

• the cross rate

• the LIBOR rate

1Which market facilitates the short-term capital?

•   International capital market

• International credit market

• International money market

• International stock market

What is not the characteristics of forward contract?

• It is traded on a central exchange floor

• Size of contract is tailored to customers' needs

• Used for hedging exchange rate risks

• Transactions take place in the future date

What is Surplus units?

• Those who have free cash flow

• Those who have difficulty in money

• Those are called the borrowers in the economy

• All are correct statements

What is Deficit Units in the market?

• Those are parties who have demand or shortage of capital

• Deficit units are only companies

• Those are called investors

• None is correct statement

On which condition of exchange rate movements companies who receive future payments in foreign currency will expose to the loss?

• If the exchange rate remains stable over time.
• If the foreign currency depreciates against the home currency.
• If the company converts the foreign currency immediately.
• If the foreign currency appreciates against the home currency.

Which agreement provides customers with the right to buy currency at the pre-determined rate?

• Forward contracts

• Futures contracts

• Options contracts

• Spot contracts