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. If 1 pizza = 15 USD then ____ = 1/15 pizza
is getting bigger
1USD
Accounts that revalue every month to the balance sheet rate. (cash - A/are)
The average P&L rate (APL) which is the weighted average of Treasury Daily Spot rates for the month

2. Functional currency of an entity is determined by Treasury Accounting based on ______ requirements
three digit ticker symbol ex: USD - United States Dollar
interest rate differential
less
SFAS 52

3. With direct quoting _______ of the first item is quoted for a specific price in terms of the second item.
1 unit
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
Spot price
P&L activity

4. Give an example of one way to hedge a price increase in gas prices...
Current market price - spot - plus or minus the difference between the interest rates of the two countries
Buy a stock in an Oil Company. Stock price increases when oil goes up and offset for your expenses in filling up tank
fx forward
1 Case = 2 pizzas

5. What is local currency?

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

6. In a EUR-USD relationship - when arrow is going up means Euro is strengthening and Dollar...
directly or indirectly
value
weakens
largest - It is open 24 hours a day - except weekends

7. Treasury's role is to identify risk - control to prevent erosion of...
financial strength
Hedging allows us to provide stable earnings - makes planning simpler - and allows for longer lead time for marketing
British Pound - Australian Dollar - New Zealand Dollar - Euro
average rate

8. How many currencies use Direct method of quoting?
AUD
fx forward
There are FOUR
Accounts that revalue every month to the balance sheet rate. (cash - A/are)

9. The ticker symbol for the Chinese Yuan
SEK
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
CNY
1.60 - Because you can buy more dollars

10. Treasury is responsible for banking requirements - funding for the business and managing...
allow FX rate
fx forward
an estimate of aggregate rate
financial risk

11. The current market price for any currency pair is referred to as ?
3 -210 billion (3 trillion)
Spot price
There are FOUR
3 business days and beyond

12. The Foreign Exchange market is the __________ market in the world
BRL
largest - It is open 24 hours a day - except weekends
direct
foreign exchange forward contract

13. What rate is used to book daily transactions?
F&O account 87503
functional currency
translation
Treasury Daily Spot Rate

14. Effective Hedge Rate is ________________ of all outstanding FX contracts for the quarter being hedged
3 -210 billion (3 trillion)
actual weighted average contract rate
APL rate
British Pound - Australian Dollar - New Zealand Dollar - Euro

15. If you execute an FX trade to _______________ using the current market price - the trade will typically settle in two business days
foreign exchange forward contract
exchange one currency for another
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
SFAS 52

16. If 1 case = 30 USD and 1 pizza = 15 USD - then What is 1 case = ?
1 Case = 2 pizzas
Used to hedge against the change in fair value (revaluation) of monetary assets & liabilities
downward slope
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

17. How is the price of the forward contract determined?
AUD
Current market price - spot - plus or minus the difference between the interest rates of the two countries
SFAS 52
two business days

18. ____________ should be denominated in the currency they will either be paid or received in...
End of Period Rate (SCO-4 rate)
BS account balances
SFAS 52 - FX Translation - SFAS 133 - Accounting for Derivative Instruments & Hedging - SFAS 157 - Fair Value Measurement - SFAS 161 - Disclosures about Derivative Instruments & Hedging
downward slope

19. 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?
5%
P&L activity
is getting bigger
Hedging allows us to provide stable earnings - makes planning simpler - and allows for longer lead time for marketing

20. Hedging instrument used in Fair Value Hedge program is...
5%
fx forward
financial strength
direct

21. What rate is used on the balance sheet?
13%
End of Period Rate (SCO-4 rate)
Hedging allows us to provide stable earnings - makes planning simpler - and allows for longer lead time for marketing
foreign currency* rate

22. The rules for adding or subtracting forward points depend on whether it is quoted...
15 months in advance - layering on hedges through time
foreign currency* rate
1.60 - Because you can buy more dollars
directly or indirectly

23. Direct quote- _____________=USD
more
foreign currency* rate
adverse fluctuations
The calculation is the same - but instead of adding forward points you subtract

24. What currencies use Direct method of quoting?
spot price x interest differential
15 months in advance - layering on hedges through time
British Pound - Australian Dollar - New Zealand Dollar - Euro
average rate

25. The timing of when we execute hedges drastically impacts the ____________ we achieve
Spot price
average rate
Indirect quote
financial risk

26. A forward happens in...
The average P&L rate (APL) which is the weighted average of Treasury Daily Spot rates for the month
BRL
90%
3 business days and beyond

27. Hedge rate is constant throughout quarter while _______________ changes throughout quarter
CNY
Used to hedge against the change in fair value (revaluation) of monetary assets & liabilities
valuable
Effective Hedge rate

28. Forward points multiply the exchange rate by the...
interest rate differential
is getting bigger
fx forward
The currency of the primary economic environment in which the legal entity operates

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?
The difference between hedge rate and final effective hedge rate
1.40 - Because I would be able to buy more euros
value
China - Malaysia - Colombia - Chile - Argentina

30. __________ is used for translation of foreign currency B/S to reporting currency
13%
APL rate
B/S rate
lost

31. EUR-USD currency pair accounts for about ____ of all FX volume
30%
What is happening
directly or indirectly
allow FX rate

32. Treasury is responsible for managing companies funds and determining the firms'...
China - Malaysia - Colombia - Chile - Argentina
15 months in advance - layering on hedges through time
Pound strengthens
financial strategy and financial policy

33. What is currency Translation?

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

34. Where are revaluations done?
APL rate
12%
Oracle
is getting bigger

35. A Spot happens in...
financial strategy and financial policy
SFAS 52
two business days
functional currency

36. In a stock-USD relationship - when arrow is going down means that stock is becoming ____ valuable against dollar
Pound strengthens
Hedging protects the value of a future event by executing a trade that changes value in the opposite direction as the future event.
The difference between hedge rate and final effective hedge rate
less

37. What is the purpose of hedging?
less
strengthens
Hedging allows us to provide stable earnings - makes planning simpler - and allows for longer lead time for marketing
Hedging protects the value of a future event by executing a trade that changes value in the opposite direction as the future event.

38. We do not speculate on Foreign Exchange - 10-K says it is to reduce the impact of...
Forward contracts and Options
Effective Hedge rate
adverse fluctuations
APL rate

39. The ______________ for a currency normally uses the first two digits to identify the country - and the last digit to identify the currency
1 unit
three digit ticker symbol ex: USD - United States Dollar
adverse fluctuations
The average P&L rate (APL) which is the weighted average of Treasury Daily Spot rates for the month

40. In a stock-USD relationship - when arrow is going up means that stock is becoming more ______ against dollar
13%
valuable
There are FOUR
Government regulation and cost of hedging

41. ____________ - foreign currency/rate = USD
Indirect quote
SFAS 52 - FX Translation - SFAS 133 - Accounting for Derivative Instruments & Hedging - SFAS 157 - Fair Value Measurement - SFAS 161 - Disclosures about Derivative Instruments & Hedging
directly or indirectly
translation

42. What is Fair Value hedge program used for?
Used to hedge against the change in fair value (revaluation) of monetary assets & liabilities
6 weeks prior to Q/E
FX policy
foreign exchange forward contract

43. GBP-USD account for ____ of trading FX volume
Buy a stock in an Oil Company. Stock price increases when oil goes up and offset for your expenses in filling up tank
interest rate differential
P&L activity
12%

44. When is hedge rate published?
6 weeks prior to Q/E
This means 1 Euro measured against US Dollars is worth $1.40
valuable
is getting bigger

45. USD-JPY account for ____ of trading FX volume
Indirect quote
13%
Accounts that revalue every month to the balance sheet rate. (cash - A/are)
The calculation is the same - but instead of adding forward points you subtract

46. How far in advance do we hedge?
21%
actual weighted average contract rate
15 months in advance - layering on hedges through time
exchange one currency for another

47. US Treasuries is the second highest trading volume accounting for...
300 billion
valuable
P&L activity
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

48. What are monetary accounts?
Accounts that revalue every month to the balance sheet rate. (cash - A/are)
1 Case = 2 pizzas
15 months in advance - layering on hedges through time
This means 1 Euro measured against US Dollars is worth $1.40

49. A downward slope that represents stock-USD relationship means that stock price is losing ______ - so you are losing money
financial strength
value
adverse fluctuations
Hedging protects the value of a future event by executing a trade that changes value in the opposite direction as the future event.

50. What would happen if the US interest rate was bigger than Mexico?
1 share = 1/3 case
liquidity and cash
The calculation is the same - but instead of adding forward points you subtract
Accounts that revalue every month to the balance sheet rate. (cash - A/are)

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