Post Session Quiz - Fundamentals Of Foreign Exchange Products

6 Questions | Total Attempts: 38

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Questions and Answers
  • 1. 
    If a privately negotiated contract contains a promise that a specified amount of foreign currency will be delivered on the specified date in the future, this is:
    • A. 

      A forward contract

    • B. 

      A foreign exchange option.

    • C. 

      A spot contract.

    • D. 

      A swap

  • 2. 
    The U.S. dollar will appreciate if:
    • A. 

      The U.S. inflation rate falls

    • B. 

      The Euro interest rate rises

    • C. 

      The U.S. dollar is expected to deprciate

    • D. 

      The U.S. inflation rate rises

  • 3. 
    The forex market is highly liquid, often exceeding _________ USD a day in total trading
    • A. 

      $500 billion

    • B. 

      $4 trillion

    • C. 

      $100 million

    • D. 

      $300 million

  • 4. 
    Which of the following increases the demand for sterling on the foreign exchange market?
    • A. 

      UK tourists going on holiday

    • B. 

      Boeing (US aircraft manufacturer) buying engines from Rolls-Royce in the UK

    • C. 

      A UK speculator buying shares on the New York Stock Exchange

    • D. 

      ICI (a UK firm) buying raw materials from overseas

  • 5. 
    If the GBP was depreciating against USD rapidly and the Bank of England wanted to intervene, then what would they do?
    • A. 

      Sell USD and buy Sterlings in the open market

    • B. 

      Build up foreign exchange reserves

    • C. 

      Increase government expenditure and cut taxation

    • D. 

      Buy USD and Sell Sterlings in the Open Market

  • 6. 
    Call option gives the option buyer ---------------- in the future
    • A. 

      Right to buy

    • B. 

      Right to Sell

    • C. 

      Obligation to Buy

    • D. 

      Obligation to Sell

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