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. A Spot happens in...






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






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






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






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






6. What rate is used on the balance sheet?






7. Direct quote- _____________=USD






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






9. What rate is used on the P&L?






10. What dictates minimum and maximum hedge percentages?






11. What is cash flow used for?






12. Treasury's role is to identify risk - control to prevent erosion of...






13. What is Fair Value hedge program used for?






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






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






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






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






18. Australian currency code is...






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?






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






21. How does treasury accomplish its purpose?






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






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






24. What is the trading in volume for FX?






25. The timing of when we execute hedges drastically impacts the ____________ we achieve






26. What are non-monetary accounts?






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






28. Give some examples of countries where its hard to hedge?






29. The current market price for any currency pair is referred to as ?






30. 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?






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






32. What currencies use Direct method of quoting?






33. Hedge rate is constant throughout quarter while _______________ changes throughout quarter






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






35. What is Revaluation?

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36. What is the ticker symbol for Brazilian Real?






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






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






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






40. 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...






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






42. What rate is used to book daily transactions?






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






44. A downward slope that represents stock-USD relationship means that stock price is losing ______ - so you are losing money






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






46. What are the exceptions to the ticker naming convention?






47. What are the four major FX accounting guidances?






48. What is the purpose of hedging?






49. 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






50. What instruments do we use to hedge?