Test your basic knowledge |

Foreign Exchange Essentials

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. The difference in interest rate is referred to as...
fx forward
currency options and forward
Forward Points
1.60 - Because you can buy more dollars

2. Treasury's role is to identify risk - control to prevent erosion of...
adverse fluctuations
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
downward slope
financial strength

3. What rate is used on the balance sheet?
FX policy
End of Period Rate (SCO-4 rate)
1USD
P&L activity

4. In a GBP-USD relationship - if pound is strengthening it means that you can get _____ US Dollars for one pound
Currency of the respective operating unit's country
more
functional currency
weakens

5. ____________ - foreign currency/rate = USD
This means 1 Euro measured against US Dollars is worth $1.40
Indirect quote
Pound strengthens
90%

6. Whether the quote was indirect or direct - they are all stored as ______ in Oracle
1 share = 1/3 case
direct
downward slope
functional currency

7. Give an example of one way to hedge a price increase in gas prices...
Effective Hedge rate
Buy a stock in an Oil Company. Stock price increases when oil goes up and offset for your expenses in filling up tank
Current market price - spot - plus or minus the difference between the interest rates of the two countries
Accounts that revalue every month to the balance sheet rate. (cash - A/are)

8. What rate is used on the P&L?
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
The average P&L rate (APL) which is the weighted average of Treasury Daily Spot rates for the month
SFAS 52
Government regulation and cost of hedging

9. Revaluation can be hedged - while ___________ cannot be hedged
average rate
translation
End of Period Rate (SCO-4 rate)
1.40 - Because I would be able to buy more euros

10. What is Functional Currency?
average rate
The average P&L rate (APL) which is the weighted average of Treasury Daily Spot rates for the month
The currency of the primary economic environment in which the legal entity operates
fx forward

11. __________ is used for translation of foreign currency B/S to reporting currency
CNY
functional currency
China - Malaysia - Colombia - Chile - Argentina
B/S rate

12. Australian currency code is...
1 share = 1/3 case
weakens
AUD
1USD

13. The ticker symbol for the Chinese Yuan
value
CNY
Mitigates risks by using hedging techniques
financial strength

14. The currency ticker for the Sweden Kroner is?
There are FOUR
P&L activity
1 share = 1/3 case
SEK

15. How do you read EUR-USD = 1.40
This means 1 Euro measured against US Dollars is worth $1.40
two business days
300 billion
The difference between hedge rate and final effective hedge rate

16. The offset of revaluation is recorded to...
13%
CNY
F&O account 87503
Hedging protects the value of a future event by executing a trade that changes value in the opposite direction as the future event.

17. Hedging instrument used in cash flow program is...
Forward Points
This means 1 Euro measured against US Dollars is worth $1.40
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
currency options and forward

18. If 1 case = 30 USD and 1 pizza = 15 USD - then What is 1 case = ?
three digit ticker symbol ex: USD - United States Dollar
financial strength
1 Case = 2 pizzas
SFAS 52 - FX Translation - SFAS 133 - Accounting for Derivative Instruments & Hedging - SFAS 157 - Fair Value Measurement - SFAS 161 - Disclosures about Derivative Instruments & Hedging

19. In a EUR-USD relationship - when arrow is going up means Euro is strengthening and Dollar...
financial strength
13%
weakens
MXN - EUR - CHF

20. In general EUR-USD is involved in roughly ___ of all FX volume
Hedging protects the value of a future event by executing a trade that changes value in the opposite direction as the future event.
15 months in advance - layering on hedges through time
directly or indirectly
90%

21. US Treasuries is the second highest trading volume accounting for...
an estimate of aggregate rate
300 billion
End of Period Rate (SCO-4 rate)
Indirect quote

22. EUR-USD currency pair accounts for about ____ of all FX volume
financial strength
foreign currency* rate
valuable
30%

23. 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?
functional currency
1.40 - Because I would be able to buy more euros
Forward Points
90%

24. The Foreign Exchange market is the __________ market in the world
is getting bigger
largest - It is open 24 hours a day - except weekends
90%
Effective Hedge rate

25. The rules for adding or subtracting forward points depend on whether it is quoted...
functional currency
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
two business days
directly or indirectly

26. What is reporting currency?
directly or indirectly
Effective Hedge rate
Currency in which the entity reports results externally
Used to hedge against the change in fair value (revaluation) of monetary assets & liabilities

27. What rate is used to book daily transactions?
There are FOUR
This means 1 Euro measured against US Dollars is worth $1.40
strengthens
Treasury Daily Spot Rate

28. What currencies use Direct method of quoting?
Currency in which the entity reports results externally
is getting bigger
Current market price - spot - plus or minus the difference between the interest rates of the two countries
British Pound - Australian Dollar - New Zealand Dollar - Euro

29. B/S rate is used for revaluation of foreign currency transaction to...
exchange one currency for another
more
1.60 - Because you can buy more dollars
functional currency

30. What is Fair Value hedge program used for?
Used to hedge against the change in fair value (revaluation) of monetary assets & liabilities
What is happening
F&O account 87503
APL rate

31. A Spot happens in...
Buy a stock in an Oil Company. Stock price increases when oil goes up and offset for your expenses in filling up tank
12%
two business days
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

32. What instruments do we use to hedge?
The average P&L rate (APL) which is the weighted average of Treasury Daily Spot rates for the month
strengthens
3 -210 billion (3 trillion)
Forward contracts and Options

33. What dictates minimum and maximum hedge percentages?
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
Currency in which the entity reports results externally
FX policy
Mitigates risks by using hedging techniques

34. What are the exceptions to the ticker naming convention?
MXN - EUR - CHF
financial risk
financial strategy and financial policy
interest rate differential

35. USD-JPY account for ____ of trading FX volume
13%
Currency of the respective operating unit's country
Hedging allows us to provide stable earnings - makes planning simpler - and allows for longer lead time for marketing
value

36. A ____________________ is an exchange of two currencies at a fixed rate for any date other than spot delivery
foreign exchange forward contract
Used to hedge against the change in fair value (revaluation) of monetary assets & liabilities
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
China - Malaysia - Colombia - Chile - Argentina

37. An ___________ expresses the value of one currency relative to another
Government regulation and cost of hedging
Used to hedge against variability in expected future cash flows
Currency in which the entity reports results externally
exchange rate

38. ____________ booked a hedge rate is trued up to the EHR each month during the quarter
is getting bigger
direct
P&L activity
China - Malaysia - Colombia - Chile - Argentina

39. Hedge rate is constant throughout quarter while _______________ changes throughout quarter
Effective Hedge rate
End of Period Rate (SCO-4 rate)
Forward Points
functional currency

40. What is local currency?

Warning: Invalid argument supplied for foreach() in /var/www/html/basicversity.com/show_quiz.php on line 183

41. A downward slope that represents AUD-USD relationship means that if you bought Australian dollars at point A - you have _____ money at point B
lost
Accounts that revalue every month to the balance sheet rate. (cash - A/are)
directly or indirectly
6 weeks prior to Q/E

42. What is the trading in volume for FX?
Spot price
3 -210 billion (3 trillion)
Government regulation and cost of hedging
Effective Hedge rate

43. In a EUR-USD relationship - when arrow is going down - means Euro weakens and US Dollar...
12%
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
The currency of the primary economic environment in which the legal entity operates
strengthens

44. When looking at a currency chart - you need to know if the currency is quoted Directly or Indirectly to be able to describe...
1.40 - Because I would be able to buy more euros
What is happening
Indirect quote
Current market price - spot - plus or minus the difference between the interest rates of the two countries

45. What is the purpose of hedging?
Current market price - spot - plus or minus the difference between the interest rates of the two countries
Hedging allows us to provide stable earnings - makes planning simpler - and allows for longer lead time for marketing
Used to hedge against the change in fair value (revaluation) of monetary assets & liabilities
3 business days and beyond

46. Forward points is equal to...
FX policy
Hedging allows us to provide stable earnings - makes planning simpler - and allows for longer lead time for marketing
spot price x interest differential
3 -210 billion (3 trillion)

47. We do not speculate on Foreign Exchange - 10-K says it is to reduce the impact of...
downward slope
30%
adverse fluctuations
liquidity and cash

48. When is hedge rate published?
BRL
strengthens
directly or indirectly
6 weeks prior to Q/E

49. Treasury is responsible for managing companies funds and determining the firms'...
financial strength
1.60 - Because you can buy more dollars
financial strategy and financial policy
BS account balances

50. A forward happens in...
downward slope
interest rate differential
3 business days and beyond
financial strategy and financial policy

Sorry!:) No result found.

Can you answer 50 questions in 15 minutes?

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

Test your basic knowledge |

Foreign Exchange Essentials

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

Certifications

IT Skills

Business Skills

Soft Skills

Vocabulary

Languages

Engineering

Health Sciences

English

Math

Other Major Subjects

Browse all subjects

Browse all tests

Most popular tests