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






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






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






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






5. 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






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






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






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






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






10. Transferring purchasing power from one currency to another currency






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






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






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






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






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