Chapter-5-Practice-questions-and-answer-keys
Lecture #3 – Practice Questions – International Financial Management 456
Chapter 5 – The Market for Foreign Exchange
1.Most foreign exchange transactions are for
A. intervention by central banks.
B. interbank trades between international banks or nonbank dealers.
C. retail trade.
D. purcha of hard currencies.
2.The difference between a broker and a dealer is
A. dealers ll drugs; brokers ll hous.
B. brokers bring together buyers and llers, but carry no inventory; dealers stand ready to buy and ll from their inventory.
C. brokers transact in stocks and bonds; currency is bought and sold through dealers.
D. none of the above
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3.自己编一个童话故事 Intervention in the foreign exchange market is the process of
A. a central bank requiring the commercial banks of that country to trade at a t price level.
B. commercial banks in different countries coordinating efforts in order to stabilize one or more currencies.
C. a central bank buying or lling its currency in order to influence its value.
D. the government of a country prohibiting transactions in one or more currencies.
4.The spot market
A. involves the almost-immediate purcha or sale of foreign exchange.
B. involves the sale of futures, forwards, and options on foreign exchange.
C. takes place only on the floor of a physical exchange.
D. all of the above.
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5.
Using the table shown, what is the most current spot exchange rate shown for British pounds? U a direct quote from a U.S. perspective.
A. $1.61 = £1.00
B. $1.60 = £1.00
C. $1.00 = £0.625
D. $1.72 = £1.00
6.Suppo that the current exchange rate is €0.80 = $1.00. The direct quote, from th
e U.S. perspective is
旅游绿道A. €1.00 = $1.25.
B. €0.80 = $1.00.
C. £1.00 = $1.80.
D. None of the above
7.Suppo that the current exchange rate is €1.00 = $1.60. The indirect quote, from the U.S. perspective is
网球比赛规则A. €1.00 = $1.60.
B. €0.6250 = $1.00.
C. €1.60 = $1.00.
D. None of the above
8.The Bid price
A. is the price that the dealer has just paid for something, his historical cost of the most recent trade.
B. is the price that a dealer stands ready to pay.
C. refers only to auctions like eBay, not over the counter transactions with dealers.
D. is the price that a dealer stands ready to ll at.
9.Suppo the spot ask exchange rate, Sa($|£), is $1.90 = £1.00 and the spot bid exchange rate, Sb($|£), is $1.89 = £1.00. If you were to buy $10,000,000 worth of British pounds and then ll them five minutes later, how much of your $10,000,000 would be "eaten" by the bid-ask spread?
A. $1,000,000
B. $52,910.05
C. $100,000
D. $52,631.58
10.If the $/€ bid and ask prices are $1.50/€ and $1.51/€, respectively, the corresponding €/$ bid and ask prices are
A. €0.6667 and €0.6623.
杰夫刘易斯B. $1.51 and $1.50.
C. €0.6623 and €0.6667.
D. cannot be determined with the information given.
上官婉儿诗11.In the Interbank market, the standard size of a trade among large banks in the major currencies is
A. for the U.S.-dollar equivalent of $10,000,000,000.
B. for the U.S.-dollar equivalent of $10,000,000.
C. for the U.S.-dollar equivalent of $100,000.
D. for the U.S.-dollar equivalent of $1,000.
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12.The dollar-euro exchange rate is $1.25 = €1.00 and the dollar-yen exchange rate is ¥100 = $1.00. What is the euro-yen cross rate?
A. ¥125 = €1.00
B. ¥1.00 = €125
C. ¥1.00 = €0.80
D. None of the above
