Team Forward! Foreign Exchange Test
- 1.Balance sheet hedging opportunities may arise from which of the following:
- A.
FX translation gains / losses in earnings
- B.
Non-functional currency intercompany or third-party payables or receivables
- C.
Non-functional currency cash balances (parent or subsidiary)
- D.
All of the above
- E.
None of the above
- 2.A client who is long CAD versus USD would benefit from which of the following?
- A.
Appreciation of the CAD against the USD
- B.
Depreciation of the CAD against the USD
- C.
Depreciation of the USD against the EUR
- D.
Appreciation of the USD against the EUR
- E.
None of the above
- 3.Which of the following is NOT a currency risk factor in an international acquisition?
- A.
Risk that the deal does not close after hedging the purchase price
- B.
A rise in the USD equivalent purchase price due to currency volatility
- C.
The creation of non-functional currency exposures
- D.
The potential currency risk created from a cross border inter-company loan
- E.
All of the above are currency risk factors
- 4.Which of the below statements are false?
- A.
CBForex is the FX Online trading system used for FCA and FX transactions
- B.
CBForex allows users to access their USD accounts held with RBS Citizens, N.A.
- C.
CBForex allows clients to choose one or two users to process and approve trades
- D.
Clients can set authorization limits for each user in CBForex
- 5.A purchased FX Option (call / put) gives the client:
- A.
The right but not the obligation to buy / sell a specified amount of currency for another (on a specific date at a fixed exchange rate)
- B.
Inflexibility with regard to the client’s ability to choose the details of the trade
- C.
The obligation to buy / sell a specified amount of currency for another (on a specific date at a fixed exchange rate)
- D.
Partial flexibility depending on where the fixed exchange rate is set
- E.
None of the above
- 6.The price of an option (in the form of a paid premium or embedded in the trade to effectively produce a "zero-cost" option) is based upon a number of market factors, including:
- A.
Spot and forward rates
- B.
Interest rates
- C.
Expiration date and strike price
- D.
Volatility of the exchange rate
- E.
All of the above
- 7.A prospect that banks with a smaller regional bank or community bank likely:
- A.
Has no opportunity in foreign exchange, thus why they are with a smaller bank
- B.
Has not had a review of their potential FX needs or where FX transactions could help their business
- C.
Is better off doing their FX transactions at the kiosk of an international airport
- D.
Is not sophisticated enough to consider FX transactions
- E.
None of the above
- 8.The owner of a specialty printing company that is purchasing a new Heidelberg Press from a German distributor should consider:
- A.
Using ACH versus wire to send US dollars to save money on the wire fees
- B.
Asking for a quote in German Deutschmarks despite Germany's adoption of the Euro in 2002
- C.
Using an interest rate derivative to lock in the price of the press
- D.
Asking the Heidelberg rep what the cost of the press would be in Euros in addition to USD
- E.
Delaying investment in the press to avoid interest expense and currency conversion fees
- 9.XYZ Manufacturing is likely to move forward with a number of multi-million equipment purchases in Europe and China over the next three years. What should the CFO consider in planning for these purchases?
- A.
Currency fluctuations could significantly change the final price paid for the equipment
- B.
The CFO should consider a credit default swap to help pay for the equipment over time
- C.
This could be an ideal use of forward currency contracts
- D.
All of the above
- E.
A and C only
- 10.FX opportunity exists with companies that:
- A.
Have large amounts of cash in overseas subsidiaries
- B.
Purchase inventory from foreign suppliers
- C.
Are considering doing acquisitions outside the US
- D.
All of the above
- E.
A and C only
- 11.Clients who do business only in US Dollars with all of their suppliers and all of their customers incur no foreign currency risk no matter where their business partners are.
- A.
True
- B.
False
- 12.What's the number one FX-related question to ask when meeting every client or prospect?
- A.
Do you have an office in Russia?
- B.
Are you receiving routine payments in Indian Rupee?
- C.
Who do you buy from? Where do you sell to?
- D.
Would you like to learn how to hedge Brazilian Reals?
- 13.Clients who both pay in and receive a specific foreign currency and who wish to save on FX fees have which of the following options available to them?
- A.
A Foreign Currency Account in the US
- B.
A local currency account in the country of the currency
- C.
Doing business in US Dollars only
- D.
All of the above
- E.
A and B only
- 14.Until recently, RBS Citizens RMs have been asked to steer clear of a certain country's currency. However, we have recently made changes to allow RBS Citizens to be very competitive in:
- A.
Mexican Peso (MXN)
- B.
Euro (EUR)
- C.
Chinese Renminbi (RMB)
- D.
South African Rand (ZAR)
- 15.Foreign currency contracts are utilized when a company needs to:
- A.
Lower the exchange rate
- B.
Exchange cash flows
- C.
Lock in the exchange rate
- D.
Hold the spot rate constant
- E.
None of the above
- 16.A proper T&C should include FX Credit Equivalent Exposure (CEE) approval, which is meant to measure:
- A.
FX Market Risk / Replacement Risk
- B.
Settlement Risk
- C.
Tenor Risk
- D.
All of the above
- 17.Cash Letters and Direct Collection are ways of:
- A.
Making and receiving cross-border payments
- B.
Depositing checks in a foreign currency
- C.
Managing a client's payables
- D.
AccessXCHANGE
- E.
None of the above
- 18.Which of the following are opportunities for RBS Citizens FX Solutions to be introduced?
- A.
International Wire
- B.
International Letter of Credit
- C.
Foreign currency Lease (asset purchase or sale)
- D.
Corporate with foreign earnings
- E.
All of the above
- 19.Which of the following is true about Transaction & Savings Foreign Currency Accounts?
- A.
Transaction accounts offer interest
- B.
Savings accounts have unlimited deposits and withdrawals
- C.
Savings accounts offer interest
- D.
Transaction accounts have a limit of 10 withdrawals per month
- 20.Which Founding Father is currently featured in the Citizens Bank / Charter One commercials?
- A.
Abraham Lincoln
- B.
Ward Cleaver
- C.
George William Frederick (George III)
- D.
Alexander Hamilton
- E.
Cliff Huxtable
- 21.Which of the following is NOT a means of initiating an FX transaction with RBS Citizens?
- A.
By phone
- B.
Online with CBForex
- C.
Through accessMOBILE
- D.
Via the wire room
- E.
Online with MMGPS
- 22.Futures and exchange-traded options offered through exchanges have less counterparty risk due to the fact that:
- A.
There is risk that one party to the transaction may not live up to the contractual obligations
- B.
The counterparty is the exchange itself, rather than a single party
- C.
The exchange is ultimately guaranteed by the Federal Reserve
- D.
One large financial institution could hold an abnormally high percentage of one side of the contract
- E.
None of the above
- 23.How many available currencies does RBS Citizens FX team have capabilities in?
- A.
130
- B.
95
- C.
175
- D.
115
- E.
None of the above
- 24.If a US importer hedges foreign product purchases with a buy-and-hold (set-and-forget) hedging program, which of the following is true about the hedge?
- A.
Smooths out volatility
- B.
Outperforms when the currency being purchased is appreciating
- C.
Adjusts for forecast error
- D.
Utilizes dollar cost averaging
- E.
None of the above
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