Test your basic knowledge |

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. What is local currency?


2. How many currencies use Direct method of quoting?






3. 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?






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






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






6. ____________ - foreign currency/rate = USD






7. What would happen if the US interest rate was bigger than Mexico?






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






9. What is currency Translation?


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






11. What are the four major FX accounting guidances?






12. What is Functional Currency?






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






14. What rate is used on the balance sheet?






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






16. Treasury ensures that companies have ____________ to meet its obligations






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






18. Australian currency code is...






19. The ticker symbol for the Chinese Yuan






20. 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...






21. Where are revaluations done?






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






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






24. What is the trading in volume for FX?






25. In a stock-USD relationship - when arrow is going up means that stock is becoming more ______ against dollar






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






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






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






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






30. In a GBP-USD relationship - if pound is strengthening it means that you can get _____ US Dollars for one pound






31. What is the purpose of hedging?






32. What is the ticker symbol for Brazilian Real?






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






34. 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






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






36. How far in advance do we hedge?






37. How is the hedge rate variance calculated?






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






39. What rate is used to book daily transactions?






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






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






42. Whether the quote was indirect or direct - they are all stored as ______ in Oracle






43. What is cash flow used for?






44. What currencies use Direct method of quoting?






45. Direct quote- _____________=USD






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






47. An ___________ expresses the value of one currency relative to another






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






49. If you are an European planning a trip to America - which rate do you want? 1.40 or 1.60?






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