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Foreign Exchange Market

Instructions:
  • Answer 50 questions in 15 minutes.
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  • Match each statement with the correct term.
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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 are the types of Exchange Rate Fluctuations?






2. What are the two ways to quote currency?






3. What are two methods of reducing translation and transaction exposure?






4. What is the first characteristic of lag strategy?






5. What is hedging?

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6. What is the first roels of the U.S. dollar outside the U.S.?






7. What is the second role of the U.S. dollar outside the U.S. ?






8. What is a currency swamp?






9. The euro faces risks fo recapitalization?






10. What is the law of one price?






11. What is the first issue with EFSF?






12. What is the fourth characteristic of transaction exposure?






13. According to economic theories of exchage rate determination?






14. What is a forward rate?






15. What is the second characteristic of transaction exposure?






16. What is the second issue with EFSF?






17. What is the fourth roles of the U.S. dollar outside the U.S.?






18. What is the third role of the U.S. dollar outside the U.S.?






19. It is important to stay __________ with your current events






20. What implications does understanding foreign exchange rates have on managers?






21. What is the third characteristic of transaction exposure?






22. What holds true to Purchase Power Parity Theory?






23. What are some characteristics of swaps?






24. What is the first characteristic of lead strategy?






25. What are the three different types of foreign exchange rate risks?






26. What are the first two things that determine Forex rates?






27. How do you insure or hedge against a Forex risk?






28. Most Transaction inovolve...






29. What is the fifth thing that determines the forex rates?






30. What is a spot rate?






31. What is the nature of the forex market?






32. Because of the recessionary environment euro banks have failed to do what?

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33. How and What is the purpose of distributing assets?






34. What are three factors that impact a country's future exchange rate movements?






35. When do countries use the foreign exchange market?






36. Marekts are open...






37. What is the characteristic of translation expose?






38. What are the two ways to reduce economic exposure?






39. What is the bandwagon effect when looking at form investor psychology ?






40. What are other strategies for managing forex risk?






41. Currently margins require more cash reserves - What is the best method of doing this **** in the Euro Zone?






42. In the long run empirical testing has of the PPP Theory has proven to be accurate in the long run. True or False






43. No single theory can explain explain the causes the value of currencies to change. True or False?






44. What is non convertible currency?






45. What is the second thing that determines the Forex rates?






46. How can translation exposure be described?






47. When do countries use foreign exchange market?






48. What is the first characteristic of transaction exposure ?






49. Because many banks (2/3) are below the capital adequacy ratio of 9% many can not recapitalize on their own as a result






50. What is the third thing that determines the forex rates?







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