Team Forward! Foreign Exchange Test

24 Questions | Total Attempts: 296

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Questions and Answers
  • 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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