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 currency Translation?

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

2. The ticker symbol for the Chinese Yuan
There are FOUR
adverse fluctuations
SFAS 52 - FX Translation - SFAS 133 - Accounting for Derivative Instruments & Hedging - SFAS 157 - Fair Value Measurement - SFAS 161 - Disclosures about Derivative Instruments & Hedging
CNY

3. Forward points multiply the exchange rate by the...
300 billion
interest rate differential
British Pound - Australian Dollar - New Zealand Dollar - Euro
lost

4. B/S rate is used for revaluation of foreign currency transaction to...
Accounts that are carried at historical rates at which they were booked (fixed assets - inventory)
BS account balances
average rate
functional currency

5. How do you read EUR-USD = 1.40
This means 1 Euro measured against US Dollars is worth $1.40
is getting bigger
SFAS 52 - FX Translation - SFAS 133 - Accounting for Derivative Instruments & Hedging - SFAS 157 - Fair Value Measurement - SFAS 161 - Disclosures about Derivative Instruments & Hedging
functional currency

6. If you are an European planning a trip to America - which rate do you want? 1.40 or 1.60?
functional currency
1.60 - Because you can buy more dollars
largest - It is open 24 hours a day - except weekends
China - Malaysia - Colombia - Chile - Argentina

7. EUR-USD currency pair accounts for about ____ of all FX volume
15 months in advance - layering on hedges through time
30%
AUD
foreign exchange forward contract

8. What is Functional Currency?
foreign currency* rate
Used to hedge against variability in expected future cash flows
The currency of the primary economic environment in which the legal entity operates
Accounts that are carried at historical rates at which they were booked (fixed assets - inventory)

9. What are non-monetary accounts?
Hedging protects the value of a future event by executing a trade that changes value in the opposite direction as the future event.
MXN - EUR - CHF
Accounts that are carried at historical rates at which they were booked (fixed assets - inventory)
1.40 - Because I would be able to buy more euros

10. Hedging instrument used in cash flow program is...
Currency in which the entity reports results externally
SFAS 52 - FX Translation - SFAS 133 - Accounting for Derivative Instruments & Hedging - SFAS 157 - Fair Value Measurement - SFAS 161 - Disclosures about Derivative Instruments & Hedging
90%
currency options and forward

11. ____________ - foreign currency/rate = USD
Indirect quote
exchange one currency for another
CNY
more

12. The current market price for any currency pair is referred to as ?
1USD
largest - It is open 24 hours a day - except weekends
Spot price
valuable

13. The rules for adding or subtracting forward points depend on whether it is quoted...
SFAS 52
directly or indirectly
Oracle
This means 1 Euro measured against US Dollars is worth $1.40

14. What is cash flow used for?
Spot price
Used to hedge against variability in expected future cash flows
Accounts that are carried at historical rates at which they were booked (fixed assets - inventory)
Current market price - spot - plus or minus the difference between the interest rates of the two countries

15. We do not speculate on Foreign Exchange - 10-K says it is to reduce the impact of...
foreign currency* rate
is getting bigger
downward slope
adverse fluctuations

16. What rate is used on the balance sheet?
strengthens
financial strength
Used to hedge against variability in expected future cash flows
End of Period Rate (SCO-4 rate)

17. How many currencies use Direct method of quoting?
liquidity and cash
There are FOUR
an estimate of aggregate rate
B/S rate

18. The ______________ for a currency normally uses the first two digits to identify the country - and the last digit to identify the currency
Spot price
three digit ticker symbol ex: USD - United States Dollar
F&O account 87503
6 weeks prior to Q/E

19. How is the price of the forward contract determined?
Current market price - spot - plus or minus the difference between the interest rates of the two countries
valuable
lost
The difference between hedge rate and final effective hedge rate

20. In a stock-USD relationship - when arrow is going down means that stock is becoming ____ valuable against dollar
less
lost
1.40 - Because I would be able to buy more euros
Spot price

21. If you execute an FX trade to _______________ using the current market price - the trade will typically settle in two business days
1 Case = 2 pizzas
directly or indirectly
two business days
exchange one currency for another

22. Forward points is equal to...
spot price x interest differential
B/S rate
foreign currency* rate
Spot price

23. How far in advance do we hedge?
15 months in advance - layering on hedges through time
foreign currency* rate
currency options and forward
The calculation is the same - but instead of adding forward points you subtract

24. All other currency trading with USD accounts for ____ of FX volume
This means 1 Euro measured against US Dollars is worth $1.40
21%
3 business days and beyond
spot price x interest differential

25. What instruments do we use to hedge?
AUD
The calculation is the same - but instead of adding forward points you subtract
Forward contracts and Options
What is happening

26. What are the four major FX accounting guidances?
Current market price - spot - plus or minus the difference between the interest rates of the two countries
P&L activity
SFAS 52 - FX Translation - SFAS 133 - Accounting for Derivative Instruments & Hedging - SFAS 157 - Fair Value Measurement - SFAS 161 - Disclosures about Derivative Instruments & Hedging
Forward Points

27. The timing of when we execute hedges drastically impacts the ____________ we achieve
What is happening
average rate
FX policy
financial strategy and financial policy

28. Treasury is responsible for managing companies funds and determining the firms'...
What is happening
Effective Hedge rate
average rate
financial strategy and financial policy

29. What rate is used to book daily transactions?
Treasury Daily Spot Rate
strengthens
Forward contracts and Options
allow FX rate

30. How is the hedge rate variance calculated?
Used to hedge against the change in fair value (revaluation) of monetary assets & liabilities
12%
The difference between hedge rate and final effective hedge rate
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

31. The Foreign Exchange market is the __________ market in the world
AUD
largest - It is open 24 hours a day - except weekends
Accounts that revalue every month to the balance sheet rate. (cash - A/are)
Oracle

32. 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
China - Malaysia - Colombia - Chile - Argentina
downward slope
largest - It is open 24 hours a day - except weekends
strengthens

33. Treasury ensures that companies have ____________ to meet its obligations
less
The average P&L rate (APL) which is the weighted average of Treasury Daily Spot rates for the month
3 business days and beyond
liquidity and cash

34. Give an example of one way to hedge a price increase in gas prices...
Buy a stock in an Oil Company. Stock price increases when oil goes up and offset for your expenses in filling up tank
less
more
21%

35. Revaluation can be hedged - while ___________ cannot be hedged
strengthens
foreign currency* rate
translation
SEK

36. Australian currency code is...
FX policy
less
directly or indirectly
AUD

37. If 1 case = 30 USD and 1 pizza = 15 USD - then What is 1 case = ?
1 share = 1/3 case
Forward Points
1 Case = 2 pizzas
liquidity and cash

38. What is the ticker symbol for Brazilian Real?
directly or indirectly
functional currency
two business days
BRL

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
Indirect quote
Used to hedge against the change in fair value (revaluation) of monetary assets & liabilities
lost
30%

40. What is local currency?

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

41. 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...
China - Malaysia - Colombia - Chile - Argentina
is getting bigger
5%
The calculation is the same - but instead of adding forward points you subtract

42. In a EUR-USD relationship - when arrow is going down - means Euro weakens and US Dollar...
The calculation is the same - but instead of adding forward points you subtract
CNY
strengthens
British Pound - Australian Dollar - New Zealand Dollar - Euro

43. What is reporting currency?
financial strategy and financial policy
Currency of the respective operating unit's country
Currency in which the entity reports results externally
Treasury Daily Spot Rate

44. The offset of revaluation is recorded to...
21%
F&O account 87503
fx forward
interest rate differential

45. Hedge rate is constant throughout quarter while _______________ changes throughout quarter
allow FX rate
SFAS 52
Effective Hedge rate
13%

46. 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
Currency of the respective operating unit's country
average rate
an estimate of aggregate rate
Pound strengthens

47. USD-JPY account for ____ of trading FX volume
Pound strengthens
Government regulation and cost of hedging
foreign currency* rate
13%

48. In general EUR-USD is involved in roughly ___ of all FX volume
Government regulation and cost of hedging
15 months in advance - layering on hedges through time
This means 1 Euro measured against US Dollars is worth $1.40
90%

49. What is Revaluation?

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

50. 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
weakens
allow FX rate
SFAS 52
valuable

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