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






2. One of the objectives of the hedge rate is to __________ that is used for pricing - planning - and accounting thus maximizing the efficiency of our hedge program






3. What does it mean to hedge?






4. How many currencies use Direct method of quoting?






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






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






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






8. A Spot happens in...






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






10. What is the trading in volume for FX?






11. 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...






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






13. The ______________ for a currency normally uses the first two digits to identify the country - and the last digit to identify the currency






14. A forward happens in...






15. What currencies use Direct method of quoting?






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






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






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






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






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






21. What dictates minimum and maximum hedge percentages?






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






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






24. What instruments do we use to hedge?






25. What are non-monetary accounts?






26. What is Fair Value hedge program used for?






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






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






29. What rate is used on the balance sheet?






30. 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?






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






32. US Treasuries is the second highest trading volume accounting for...






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






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






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






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






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






38. The ticker symbol for the Chinese Yuan






39. Forward points is equal to...






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






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






42. Revaluation can be hedged - while ___________ cannot be hedged






43. What are the four major FX accounting guidances?






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






45. A downward slope that represents AUD-USD relationship means that if you bought Australian dollars at point A - you have _____ money at point B






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






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






48. 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






49. ____________ - foreign currency/rate = USD






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







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