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WorksheetsFOREX (11-12)
Total questions: 20
Worksheet time: 10mins
The _______ is the rate at which a foreign exchange dealer converts one currency into another currency on a particular day.
Currency swap rate
Forward rate
Specific rate
Spot rate
A foreign exchange rate ___.
is an exchange rate which does not fluctuate
can involve a single currency
is the price of one currency expressed in terms of another currency
is the par value
A cross rate is an exchange rate between ___ and ___.
The US dollar and the Japanese yen
any two non-home currencies
the Mexican peso and the euro
the domestic currency and a foreign currency
The main objective of hedgers in currency futures markets is to .
make a profit
protect against exchange risk
make sure that foreign bills are collected
none of the above
A/An ________ is an agreement between a buyer and seller that a fixed amount of one currency will be delivered at a specified rate for some other currency.
Eurodollar transaction
import/export exchange
foreign exchange transaction
interbank market transaction
Because the market for foreign exchange is worldwide, the volume of foreign exchange currency transactions is level throughout the 24-hour day.
True
False
The primary motive of foreign exchange activities by most central banks is profit.
True
False
Which of the following does not impact future exchange rate movements?
A country's price inflation
A country's interest rate
Market Psychology
A country's arbitrage opportunities
In technical analysis, charts trends with the assumption that present trends and waves are reasonable predictions of future trends and waves.
True
False
Purchasing Power Parity (PPP) theory predicts that changes in relative prices will not result in a change in exchange rates.
True
False
An increase in the price of goods & services that is representative of the economy as a whole
Exchange Rates
Inflation
Fisher Effect
Deflation
One where information is quickly and accurately reflected in prices
Efficient Market
Inefficient Market
Fisher Effect
Law of one Price
The fundamental analysis is a technique that attempts to determine the actual value of a security by focusing on the underlying factors that affect the company's business
True
False
An inefficient market has no impediments to the free flow of goods and services, such as trade barriers
True
False
A currency is nonconvertible when non-residents can convert their holdings of domestic currency into a foreign currency, but when the ability of residents to convert currency is limited in some way.
True
False
A currency is freely convertible when a government of a country allows both residents and non-residents to purchase unlimited amounts of foreign currency with the domestic currency
True
False
There are three types of foreign exchange risk: Transaction, Transformation, Environment exposure.
True
False
It is concerned with the present measurement of past events.
Transformation Exposure
Transaction Exposure
Environment Exposure
Translation Exposure
To minimize transaction and translation exposure, firms can be done the following, except:
Buy Forward
Use swaps
Improve new products
Leading and lagging payables and receivables
Involves attempting to collect foreign currency receivables early when a foreign currency is expected to depreciate and paying foreign currency payables before they are due when a currency is expected to appreciate
