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Foreign Exchange Markets Vocab

Instructions:
  • Answer 15 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. Option 1: do nothing - sell X amount in future spot (uncertain) - Option 2: Hedging - Sell fwd X amount now (locked in rate)






2. Using one of the instruments in the F.X. market (spot - forward - future)






3. Exchange rate between two foreign currencies x rate for Euro: :






4. F.C. equivalent value of $1 (direct quote from foreigner's point of view).






5. Agreement to deliver/ to take delivery of certain # of F.C. in the future






6. Rate applied for forward contract (customarily quoted in multiples of 30 days) - exchg rate for future delivery is locked in at the time of FWD contract markets best estimate of future spot rate as of today






7. Agreement to deliver/ to take delivery of certain # of F.C. immediately ( 2 buss Days)






8. Transferring purchasing power from one currency to another currency






9. Transaction in FWD market designed to minimize potential loss from ex. rate fluctuation






10. Locational arbitrage - Temporary disequilibrium among the regional banks makes this arbitrage possible






11. Settlement - Speculation - Arbitrage (2 & 3 point) - Hedging






12. $ equivalent value of 1 unit of F.C. (direct quote from American's point of view).






13. Triangular arbitrage - Temporary disequilibrium among the different F.X. markets makes this possible






14. # of F.C. for 1 unit of M.C.(






15. # of M.C for 1 unit of F.C.($0.005/