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Foreign Exchange Essentials

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. Functional currency of an entity is determined by Treasury Accounting based on ______ requirements






2. How is the price of the forward contract determined?






3. ____________ should be denominated in the currency they will either be paid or received in...






4. B/S rate is used for revaluation of foreign currency transaction to...






5. Direct quote- _____________=USD






6. The timing of when we execute hedges drastically impacts the ____________ we achieve






7. Hedging instrument used in Fair Value Hedge program is...






8. Hedge Rate is _______________ that will be achieved on a specific quarter's cash flow






9. 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?






10. Australian currency code is...






11. If 1 case = 30 USD and 1 pizza = 15 USD - then What is 1 case = ?






12. The currency ticker for the Sweden Kroner is?






13. If 1 pizza = 15 USD then ____ = 1/15 pizza






14. What is Functional Currency?






15. 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






16. How does treasury accomplish its purpose?






17. What rate is used on the P&L?






18. ____________ is used for translation of foreign currency P&L to Reporting currency?






19. USD-JPY account for ____ of trading FX volume






20. All other currency trading with USD accounts for ____ of FX volume






21. Hedging instrument used in cash flow program is...






22. In a EUR-USD relationship - when arrow is going up means Euro is strengthening and Dollar...






23. In a EUR-USD relationship - when arrow is going down - means Euro weakens and US Dollar...






24. The current market price for any currency pair is referred to as ?






25. What is reporting currency?






26. If you execute an FX trade to _______________ using the current market price - the trade will typically settle in two business days






27. Forward points multiply the exchange rate by the...






28. If 1 Share = 10 USD and 1 CASE = 30 USD - then 1 share =?






29. What are some of the reason not hedge at all or partially hedge in a few countries?






30. Give an example of one way to hedge a price increase in gas prices...






31. How far in advance do we hedge?






32. The difference in interest rate is referred to as...






33. The ticker symbol for the Chinese Yuan






34. What are the four major FX accounting guidances?






35. What does it mean to hedge?






36. What rate is used on the balance sheet?






37. What is currency Translation?

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38. A forward happens in...






39. When is hedge rate published?






40. Hedge rate is constant throughout quarter while _______________ changes throughout quarter






41. With direct quoting _______ of the first item is quoted for a specific price in terms of the second item.






42. In general EUR-USD is involved in roughly ___ of all FX volume






43. ____________ booked a hedge rate is trued up to the EHR each month during the quarter






44. __________ is used for translation of foreign currency B/S to reporting currency






45. If the Mexico rate is 5.25%/year and the US is 0.25%/year - What is the rate that would be used to calculate the forward rate?






46. When looking at a currency chart - you need to know if the currency is quoted Directly or Indirectly to be able to describe...






47. 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






48. A ____________________ is an exchange of two currencies at a fixed rate for any date other than spot delivery






49. What are non-monetary accounts?






50. What dictates minimum and maximum hedge percentages?