A. Swap
B. foreign exchange arbitrage
C. foreign exchange option
D. futures market contract
Foreign Exchange
The fall in value of one currency relative to another is ?
A. a depreciation of a currency
B. a strengthening of a currency
C. a floating of a currency
D. an appreciation of a currency
Currency speculation is _____ if speculators bet against market forces that cause exchange fluctuations, thus moderating such fluctuations ?
A. destabilizing
B. stabilizing
C. inflationary
D. deflationary
In 1971, most countries ?
A. adopted a new system of fixed exchange rates
B. gave up trying to fix exchange rates formally and began allowing them to be determined essentially by supply and demand
C. adopted single internationally accepted currency whose use is limited to international transactions
D. returned to the gold standard
The least common type of transaction in the foreign exchange is a ?
A. forward transaction
B. spot transaction
C. swap transaction
D. None of the above
Expansionary monetary policy ?
A. tends to lead to an appreciation of a nation’s currency
B. tends to lead to a depreciation of a nation’s currency
C. usually has no effect on a currency’s exchange value
D. tends to lead to a depreciation of the currencies of other nations
A difference between forward and futures contracts is that ?
A. forward contracts occur in a specific locations-for example, the Chicago Mercantile Exchange
B. futures contracts have negotiable delivery dates
C. forward contracts can be tailored in amount and delivery date to the need of importers of exporters
D. futures contracts involve no brokerage fees or other transactions costs
The reduction or covering of foreign exchange risk is called ?
A. hedging
B. speculation
C. intervention
D. arbitrage
Investor engage in _____ when they move funds into foreign currencies in order to take advantage to interest rates abroad that are higher than domestic interest rates ?
A. currency arbitrage
B. interest arbitrage
C. short positions
D. long positions
If the bank is selling francs for $0.45, then what is the implied franc price of the dollar ?
A. 2.0
B. 1.999
C. 2.323
D. 2.222