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Test your basic knowledge |
Foreign Exchange Markets Vocab
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Subjects
:
business-skills
,
industries
Instructions:
Answer 15 questions in 15 minutes.
If you are not ready to take this test, you can
study here
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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. Triangular arbitrage - Temporary disequilibrium among the different F.X. markets makes this possible
American Quote
Speculation
Hedging
3 point arbitrage
2. Transaction in FWD market designed to minimize potential loss from ex. rate fluctuation
2 point arbitrage
Cross rate
Direct Quote
Hedging
3. # of F.C. for 1 unit of M.C.(
Usage of F.X. market
2 point arbitrage
Indirect Quote
Settlement
4. Using one of the instruments in the F.X. market (spot - forward - future)
Usage of F.X. market
3 point arbitrage
Speculation
European Quote
5. Locational arbitrage - Temporary disequilibrium among the regional banks makes this arbitrage possible
2 point arbitrage
Settlement
Hedging
Forward contract
6. Settlement - Speculation - Arbitrage (2 & 3 point) - Hedging
2 point arbitrage
Speculation
American Quote
Usage of F.X. market
7. Option 1: do nothing - sell X amount in future spot (uncertain) - Option 2: Hedging - Sell fwd X amount now (locked in rate)
Trading Options
Cross rate
Indirect Quote
Settlement
8. 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
Forward contract
American Quote
Speculation
FWD rate
9. $ equivalent value of 1 unit of F.C. (direct quote from American's point of view).
American Quote
2 point arbitrage
European Quote
FWD rate
10. # of M.C for 1 unit of F.C.($0.005/
3 point arbitrage
Usage of F.X. market
Settlement
Direct Quote
11. Exchange rate between two foreign currencies x rate for Euro: :
Forward contract
Trading Options
Cross rate
Direct Quote
12. Transferring purchasing power from one currency to another currency
Direct Quote
Settlement
Trading Options
American Quote
13. Agreement to deliver/ to take delivery of certain # of F.C. immediately ( 2 buss Days)
Hedging
Forward contract
Spot contract
Usage of F.X. market
14. F.C. equivalent value of $1 (direct quote from foreigner's point of view).
Hedging
Speculation
2 point arbitrage
European Quote
15. Agreement to deliver/ to take delivery of certain # of F.C. in the future
Cross rate
Forward contract
American Quote
European Quote