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Foreign Exchange Essentials

Instructions:
  • Answer 50 questions in 15 minutes.
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  • 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. What currencies use Direct method of quoting?






2. Direct quote- _____________=USD






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






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






5. Effective Hedge Rate is ________________ of all outstanding FX contracts for the quarter being hedged






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






7. GBP-USD account for ____ of trading FX volume






8. Treasury is responsible for banking requirements - funding for the business and managing...






9. A downward slope that represents stock-USD relationship means that stock price is losing ______ - so you are losing money






10. A Spot happens in...






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






12. Treasury is responsible for managing companies funds and determining the firms'...






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






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






15. In a stock-USD relationship - when arrow is going down means that stock is becoming ____ valuable against dollar






16. What does it mean to hedge?






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






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






19. How many currencies use Direct method of quoting?






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






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






22. What is Revaluation?

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






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






25. What is local currency?

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






27. What rate is used to book daily transactions?






28. A forward happens in...






29. 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?






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






31. 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






32. 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?






33. What is the trading in volume for FX?






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






35. What is currency Translation?

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36. EUR-USD currency pair accounts for about ____ of all FX volume






37. What are non-monetary accounts?






38. The Foreign Exchange market is the __________ market in the world






39. What is reporting currency?






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






41. Treasury's role is to identify risk - control to prevent erosion of...






42. What is Functional Currency?






43. The rules for adding or subtracting forward points depend on whether it is quoted...






44. How does treasury accomplish its purpose?






45. 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






46. The offset of revaluation is recorded to...






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






48. What is Fair Value hedge program used for?






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






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







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