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. What is local currency?

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

2. If 1 Share = 10 USD and 1 CASE = 30 USD - then 1 share =?
Indirect quote
SEK
1 share = 1/3 case
liquidity and cash

3. 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?
1.40 - Because I would be able to buy more euros
foreign exchange forward contract
translation
SFAS 52 - FX Translation - SFAS 133 - Accounting for Derivative Instruments & Hedging - SFAS 157 - Fair Value Measurement - SFAS 161 - Disclosures about Derivative Instruments & Hedging

4. A downward slope that represents AUD-USD relationship means that if you bought Australian dollars at point A - you have _____ money at point B
Effective Hedge rate
MXN - EUR - CHF
lost
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

5. What is Revaluation?

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

6. What are the four major FX accounting guidances?
is getting bigger
Treasury Daily Spot Rate
Buy a stock in an Oil Company. Stock price increases when oil goes up and offset for your expenses in filling up tank
SFAS 52 - FX Translation - SFAS 133 - Accounting for Derivative Instruments & Hedging - SFAS 157 - Fair Value Measurement - SFAS 161 - Disclosures about Derivative Instruments & Hedging

7. If you are an European planning a trip to America - which rate do you want? 1.40 or 1.60?
more
valuable
interest rate differential
1.60 - Because you can buy more dollars

8. How is the hedge rate variance calculated?
Treasury Daily Spot Rate
The difference between hedge rate and final effective hedge rate
valuable
average rate

9. In a EUR-USD relationship - when arrow is going down - means Euro weakens and US Dollar...
strengthens
less
valuable
This means 1 Euro measured against US Dollars is worth $1.40

10. If you execute an FX trade to _______________ using the current market price - the trade will typically settle in two business days
FX policy
British Pound - Australian Dollar - New Zealand Dollar - Euro
interest rate differential
exchange one currency for another

11. The ticker symbol for the Chinese Yuan
The average P&L rate (APL) which is the weighted average of Treasury Daily Spot rates for the month
interest rate differential
BRL
CNY

12. Treasury is responsible for banking requirements - funding for the business and managing...
financial risk
British Pound - Australian Dollar - New Zealand Dollar - Euro
Effective Hedge rate
90%

13. The rules for adding or subtracting forward points depend on whether it is quoted...
weakens
directly or indirectly
spot price x interest differential
less

14. What rate is used on the P&L?
Current market price - spot - plus or minus the difference between the interest rates of the two countries
The average P&L rate (APL) which is the weighted average of Treasury Daily Spot rates for the month
less
Forward Points

15. Hedging instrument used in cash flow program is...
currency options and forward
Current market price - spot - plus or minus the difference between the interest rates of the two countries
largest - It is open 24 hours a day - except weekends
Pound strengthens

16. A downward slope that represents stock-USD relationship means that stock price is losing ______ - so you are losing money
3 business days and beyond
value
1 share = 1/3 case
Forward contracts and Options

17. How does treasury accomplish its purpose?
actual weighted average contract rate
90%
Accounts that revalue every month to the balance sheet rate. (cash - A/are)
Mitigates risks by using hedging techniques

18. 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?
exchange one currency for another
weakens
5%
financial strength

19. ____________ is used for translation of foreign currency P&L to Reporting currency?
3 -210 billion (3 trillion)
APL rate
currency options and forward
actual weighted average contract rate

20. 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
What is happening
Currency in which the entity reports results externally
allow FX rate
Accounts that are carried at historical rates at which they were booked (fixed assets - inventory)

21. We do not speculate on Foreign Exchange - 10-K says it is to reduce the impact of...
adverse fluctuations
Effective Hedge rate
two business days
actual weighted average contract rate

22. Treasury's role is to identify risk - control to prevent erosion of...
CNY
SFAS 52
strengthens
financial strength

23. How do you read EUR-USD = 1.40
interest rate differential
This means 1 Euro measured against US Dollars is worth $1.40
30%
B/S rate

24. Australian currency code is...
FX policy
AUD
6 weeks prior to Q/E
three digit ticker symbol ex: USD - United States Dollar

25. The currency ticker for the Sweden Kroner is?
fx forward
SEK
15 months in advance - layering on hedges through time
The currency of the primary economic environment in which the legal entity operates

26. How far in advance do we hedge?
3 -210 billion (3 trillion)
FX policy
China - Malaysia - Colombia - Chile - Argentina
15 months in advance - layering on hedges through time

27. How many currencies use Direct method of quoting?
Currency of the respective operating unit's country
There are FOUR
functional currency
Mitigates risks by using hedging techniques

28. Functional currency of an entity is determined by Treasury Accounting based on ______ requirements
SFAS 52
Current market price - spot - plus or minus the difference between the interest rates of the two countries
P&L activity
functional currency

29. What instruments do we use to hedge?
Forward contracts and Options
interest rate differential
liquidity and cash
P&L activity

30. What is Fair Value hedge program used for?
Used to hedge against the change in fair value (revaluation) of monetary assets & liabilities
direct
Used to hedge against variability in expected future cash flows
Oracle

31. What are the exceptions to the ticker naming convention?
Accounts that are carried at historical rates at which they were booked (fixed assets - inventory)
MXN - EUR - CHF
15 months in advance - layering on hedges through time
6 weeks prior to Q/E

32. Revaluation can be hedged - while ___________ cannot be hedged
strengthens
interest rate differential
Indirect quote
translation

33. What is the ticker symbol for Brazilian Real?
BRL
Pound strengthens
downward slope
CNY

34. In a stock-USD relationship - when arrow is going down means that stock is becoming ____ valuable against dollar
two business days
less
Treasury Daily Spot Rate
BS account balances

35. The timing of when we execute hedges drastically impacts the ____________ we achieve
average rate
SFAS 52 - FX Translation - SFAS 133 - Accounting for Derivative Instruments & Hedging - SFAS 157 - Fair Value Measurement - SFAS 161 - Disclosures about Derivative Instruments & Hedging
is getting bigger
1 Case = 2 pizzas

36. 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...
Spot price
downward slope
Used to hedge against the change in fair value (revaluation) of monetary assets & liabilities
is getting bigger

37. What would happen if the US interest rate was bigger than Mexico?
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
largest - It is open 24 hours a day - except weekends
The calculation is the same - but instead of adding forward points you subtract
an estimate of aggregate rate

38. Treasury ensures that companies have ____________ to meet its obligations
China - Malaysia - Colombia - Chile - Argentina
liquidity and cash
21%
Buy a stock in an Oil Company. Stock price increases when oil goes up and offset for your expenses in filling up tank

39. What are monetary accounts?
value
Forward Points
BRL
Accounts that revalue every month to the balance sheet rate. (cash - A/are)

40. 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
allow FX rate
Pound strengthens
less
B/S rate

41. What dictates minimum and maximum hedge percentages?
exchange rate
AUD
FX policy
21%

42. B/S rate is used for revaluation of foreign currency transaction to...
functional currency
weakens
APL rate
1 unit

43. __________ is used for translation of foreign currency B/S to reporting currency
weakens
What is happening
Hedging protects the value of a future event by executing a trade that changes value in the opposite direction as the future event.
B/S rate

44. When is hedge rate published?
There are FOUR
actual weighted average contract rate
6 weeks prior to Q/E
1.60 - Because you can buy more dollars

45. What is the purpose of hedging?
more
interest rate differential
Hedging allows us to provide stable earnings - makes planning simpler - and allows for longer lead time for marketing
Accounts that are carried at historical rates at which they were booked (fixed assets - inventory)

46. Treasury is responsible for managing companies funds and determining the firms'...
financial strategy and financial policy
Treasury Daily Spot Rate
BS account balances
Current market price - spot - plus or minus the difference between the interest rates of the two countries

47. US Treasuries is the second highest trading volume accounting for...
300 billion
exchange rate
functional currency
1 share = 1/3 case

48. Forward points is equal to...
spot price x interest differential
1.40 - Because I would be able to buy more euros
foreign currency* rate
Forward Points

49. In a EUR-USD relationship - when arrow is going up means Euro is strengthening and Dollar...
weakens
Treasury Daily Spot Rate
foreign currency* rate
The average P&L rate (APL) which is the weighted average of Treasury Daily Spot rates for the month

50. An ___________ expresses the value of one currency relative to another
financial strategy and financial policy
financial risk
lost
exchange rate

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

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