SUBJECTS
|
BROWSE
|
CAREER CENTER
|
POPULAR
|
JOIN
|
LOGIN
Business Skills
|
Soft Skills
|
Basic Literacy
|
Certifications
About
|
Help
|
Privacy
|
Terms
|
Email
Search
Test your basic knowledge |
Foreign Exchange Essentials
Start Test
Study First
Subjects
:
business-skills
,
industries
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Direct quote- _____________=USD
This means 1 Euro measured against US Dollars is worth $1.40
interest rate differential
foreign currency* rate
direct
2. What rate is used on the balance sheet?
Hedging allows us to provide stable earnings - makes planning simpler - and allows for longer lead time for marketing
End of Period Rate (SCO-4 rate)
currency options and forward
There are FOUR
3. What currencies use Direct method of quoting?
two business days
British Pound - Australian Dollar - New Zealand Dollar - Euro
Mitigates risks by using hedging techniques
Process to revalue the monetary BS accounts from: entered rate to B/S rate - prior month's B/S rate to current month's BS rates
4. If you are an American planning a trip to Europe - which exchange rate would you rather have to convert your US Dollars to Euro? 1.40 or 1.60?
1.40 - Because I would be able to buy more euros
Indirect quote
There are FOUR
financial risk
5. What are some of the reason not hedge at all or partially hedge in a few countries?
Government regulation and cost of hedging
functional currency
The calculation is the same - but instead of adding forward points you subtract
actual weighted average contract rate
6. How is the price of the forward contract determined?
BS account balances
Used to hedge against variability in expected future cash flows
Current market price - spot - plus or minus the difference between the interest rates of the two countries
financial strength
7. Revaluation can be hedged - while ___________ cannot be hedged
Currency of the respective operating unit's country
Accounts that are carried at historical rates at which they were booked (fixed assets - inventory)
Hedging allows us to provide stable earnings - makes planning simpler - and allows for longer lead time for marketing
translation
8. A Spot happens in...
two business days
12%
actual weighted average contract rate
allow FX rate
9. The currency ticker for the Sweden Kroner is?
F&O account 87503
SEK
Current market price - spot - plus or minus the difference between the interest rates of the two countries
Process to revalue the monetary BS accounts from: entered rate to B/S rate - prior month's B/S rate to current month's BS rates
10. Give some examples of countries where its hard to hedge?
China - Malaysia - Colombia - Chile - Argentina
AUD
21%
12%
11. What does it mean to hedge?
SFAS 52 - FX Translation - SFAS 133 - Accounting for Derivative Instruments & Hedging - SFAS 157 - Fair Value Measurement - SFAS 161 - Disclosures about Derivative Instruments & Hedging
weakens
Hedging protects the value of a future event by executing a trade that changes value in the opposite direction as the future event.
12%
12. Give an example of one way to hedge a price increase in gas prices...
Buy a stock in an Oil Company. Stock price increases when oil goes up and offset for your expenses in filling up tank
Accounts that are carried at historical rates at which they were booked (fixed assets - inventory)
B/S rate
adverse fluctuations
13. We do not speculate on Foreign Exchange - 10-K says it is to reduce the impact of...
21%
Pound strengthens
MXN - EUR - CHF
adverse fluctuations
14. What is Revaluation?
Warning
: Invalid argument supplied for foreach() in
/var/www/html/basicversity.com/show_quiz.php
on line
183
15. Functional currency of an entity is determined by Treasury Accounting based on ______ requirements
SFAS 52
5%
300 billion
valuable
16. ____________ booked a hedge rate is trued up to the EHR each month during the quarter
average rate
B/S rate
P&L activity
currency options and forward
17. What are monetary accounts?
financial strength
Accounts that revalue every month to the balance sheet rate. (cash - A/are)
spot price x interest differential
exchange one currency for another
18. In a EUR-USD relationship - when arrow is going down - means Euro weakens and US Dollar...
Current market price - spot - plus or minus the difference between the interest rates of the two countries
15 months in advance - layering on hedges through time
Hedging allows us to provide stable earnings - makes planning simpler - and allows for longer lead time for marketing
strengthens
19. If you execute an FX trade to _______________ using the current market price - the trade will typically settle in two business days
more
Accounts that revalue every month to the balance sheet rate. (cash - A/are)
exchange one currency for another
financial strength
20. USD-JPY account for ____ of trading FX volume
SFAS 52
13%
direct
financial risk
21. Hedging instrument used in cash flow program is...
30%
directly or indirectly
SFAS 52
currency options and forward
22. Treasury is responsible for banking requirements - funding for the business and managing...
F&O account 87503
1 share = 1/3 case
financial risk
less
23. In a downward slope that represents USD-JPY relationship a _____________ means that if you bough Japanese Yen at point A you made money at point B
300 billion
downward slope
value
90%
24. GBP-USD account for ____ of trading FX volume
1 share = 1/3 case
Currency of the respective operating unit's country
12%
P&L activity
25. Hedging instrument used in Fair Value Hedge program is...
fx forward
AUD
interest rate differential
15 months in advance - layering on hedges through time
26. If 1 case = 30 USD and 1 pizza = 15 USD - then What is 1 case = ?
30%
1 Case = 2 pizzas
3 -210 billion (3 trillion)
directly or indirectly
27. The difference in interest rate is referred to as...
Forward Points
300 billion
an estimate of aggregate rate
21%
28. If 1 Share = 10 USD and 1 CASE = 30 USD - then 1 share =?
1 share = 1/3 case
fx forward
downward slope
financial strategy and financial policy
29. ____________ is used for translation of foreign currency P&L to Reporting currency?
Currency of the respective operating unit's country
15 months in advance - layering on hedges through time
APL rate
weakens
30. What is Functional Currency?
largest - It is open 24 hours a day - except weekends
1.40 - Because I would be able to buy more euros
The currency of the primary economic environment in which the legal entity operates
directly or indirectly
31. B/S rate is used for revaluation of foreign currency transaction to...
B/S rate
functional currency
5%
F&O account 87503
32. Australian currency code is...
exchange one currency for another
Forward contracts and Options
interest rate differential
AUD
33. A ____________________ is an exchange of two currencies at a fixed rate for any date other than spot delivery
Treasury Daily Spot Rate
FX policy
The average P&L rate (APL) which is the weighted average of Treasury Daily Spot rates for the month
foreign exchange forward contract
34. Treasury's role is to identify risk - control to prevent erosion of...
financial strength
exchange rate
Used to hedge against the change in fair value (revaluation) of monetary assets & liabilities
Accounts that are carried at historical rates at which they were booked (fixed assets - inventory)
35. Hedge Rate is _______________ that will be achieved on a specific quarter's cash flow
1 unit
Process to convert an entity's BS & P&L from the functional currency to the reporting currency - BS is translated at BS rate - P&L is translated at APL rate
an estimate of aggregate rate
The difference between hedge rate and final effective hedge rate
36. What is the trading in volume for FX?
1USD
valuable
Buy a stock in an Oil Company. Stock price increases when oil goes up and offset for your expenses in filling up tank
3 -210 billion (3 trillion)
37. With direct quoting _______ of the first item is quoted for a specific price in terms of the second item.
6 weeks prior to Q/E
Process to revalue the monetary BS accounts from: entered rate to B/S rate - prior month's B/S rate to current month's BS rates
1 unit
12%
38. The timing of when we execute hedges drastically impacts the ____________ we achieve
Pound strengthens
average rate
AUD
Oracle
39. A downward slope that represents AUD-USD relationship means that if you bought Australian dollars at point A - you have _____ money at point B
Spot price
3 -210 billion (3 trillion)
lost
FX policy
40. How far in advance do we hedge?
direct
15 months in advance - layering on hedges through time
downward slope
financial risk
41. __________ is used for translation of foreign currency B/S to reporting currency
Spot price
6 weeks prior to Q/E
B/S rate
lost
42. How is the hedge rate variance calculated?
Buy a stock in an Oil Company. Stock price increases when oil goes up and offset for your expenses in filling up tank
Spot price
The difference between hedge rate and final effective hedge rate
Forward Points
43. In a GBP-USD relationship - when the line in a graph is upward slope it means the __________ overtime because the exchange rate is getting bigger
3 business days and beyond
Pound strengthens
MXN - EUR - CHF
Used to hedge against variability in expected future cash flows
44. What would happen if the US interest rate was bigger than Mexico?
End of Period Rate (SCO-4 rate)
financial strength
BS account balances
The calculation is the same - but instead of adding forward points you subtract
45. The rules for adding or subtracting forward points depend on whether it is quoted...
value
Mitigates risks by using hedging techniques
adverse fluctuations
directly or indirectly
46. Effective Hedge Rate is ________________ of all outstanding FX contracts for the quarter being hedged
30%
Current market price - spot - plus or minus the difference between the interest rates of the two countries
FX policy
actual weighted average contract rate
47. What rate is used on the P&L?
financial risk
The average P&L rate (APL) which is the weighted average of Treasury Daily Spot rates for the month
90%
SFAS 52 - FX Translation - SFAS 133 - Accounting for Derivative Instruments & Hedging - SFAS 157 - Fair Value Measurement - SFAS 161 - Disclosures about Derivative Instruments & Hedging
48. In a USD-JPY relationship - when the line in a graph is upward slope it means the yen is weakening and dollar is strenghtening because exchange rate...
average rate
financial strength
an estimate of aggregate rate
is getting bigger
49. Treasury is responsible for managing companies funds and determining the firms'...
translation
direct
an estimate of aggregate rate
financial strategy and financial policy
50. A forward happens in...
3 business days and beyond
15 months in advance - layering on hedges through time
AUD
APL rate
Sorry!:) No result found.
Can you answer 50 questions in 15 minutes?
Let me suggest you:
Browse all subjects
Browse all tests
Most popular tests
Major Subjects
Tests & Exams
AP
CLEP
DSST
GRE
SAT
GMAT
Certifications
CISSP go to https://www.isc2.org/
PMP
ITIL
RHCE
MCTS
More...
IT Skills
Android Programming
Data Modeling
Objective C Programming
Basic Python Programming
Adobe Illustrator
More...
Business Skills
Advertising Techniques
Business Accounting Basics
Business Strategy
Human Resource Management
Marketing Basics
More...
Soft Skills
Body Language
People Skills
Public Speaking
Persuasion
Job Hunting And Resumes
More...
Vocabulary
GRE Vocab
SAT Vocab
TOEFL Essential Vocab
Basic English Words For All
Global Words You Should Know
Business English
More...
Languages
AP German Vocab
AP Latin Vocab
SAT Subject Test: French
Italian Survival
Norwegian Survival
More...
Engineering
Audio Engineering
Computer Science Engineering
Aerospace Engineering
Chemical Engineering
Structural Engineering
More...
Health Sciences
Basic Nursing Skills
Health Science Language Fundamentals
Veterinary Technology Medical Language
Cardiology
Clinical Surgery
More...
English
Grammar Fundamentals
Literary And Rhetorical Vocab
Elements Of Style Vocab
Introduction To English Major
Complete Advanced Sentences
Literature
Homonyms
More...
Math
Algebra Formulas
Basic Arithmetic: Measurements
Metric Conversions
Geometric Properties
Important Math Facts
Number Sense Vocab
Business Math
More...
Other Major Subjects
Science
Economics
History
Law
Performing-arts
Cooking
Logic & Reasoning
Trivia
Browse all subjects
Browse all tests
Most popular tests