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Test your basic knowledge |
Foreign Exchange Markets Vocab
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Study First
Subjects
:
business-skills
,
industries
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)
American Quote
Hedging
Trading Options
FWD rate
2. F.C. equivalent value of $1 (direct quote from foreigner's point of view).
Usage of F.X. market
FWD rate
American Quote
European Quote
3. Settlement - Speculation - Arbitrage (2 & 3 point) - Hedging
Usage of F.X. market
3 point arbitrage
Speculation
Settlement
4. 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
Indirect Quote
FWD rate
Forward contract
Direct Quote
5. Agreement to deliver/ to take delivery of certain # of F.C. in the future
FWD rate
2 point arbitrage
Usage of F.X. market
Forward contract
6. # of F.C. for 1 unit of M.C.(
Trading Options
Indirect Quote
Hedging
Cross rate
7. Agreement to deliver/ to take delivery of certain # of F.C. immediately ( 2 buss Days)
FWD rate
Trading Options
Spot contract
American Quote
8. Transferring purchasing power from one currency to another currency
Spot contract
Settlement
Forward contract
Cross rate
9. Triangular arbitrage - Temporary disequilibrium among the different F.X. markets makes this possible
Spot contract
3 point arbitrage
Usage of F.X. market
European Quote
10. $ equivalent value of 1 unit of F.C. (direct quote from American's point of view).
Indirect Quote
American Quote
Speculation
Cross rate
11. Locational arbitrage - Temporary disequilibrium among the regional banks makes this arbitrage possible
Speculation
American Quote
2 point arbitrage
Spot contract
12. Exchange rate between two foreign currencies x rate for Euro: :
2 point arbitrage
Direct Quote
Spot contract
Cross rate
13. Transaction in FWD market designed to minimize potential loss from ex. rate fluctuation
Spot contract
2 point arbitrage
FWD rate
Hedging
14. # of M.C for 1 unit of F.C.($0.005/
Forward contract
Usage of F.X. market
Trading Options
Direct Quote
15. Using one of the instruments in the F.X. market (spot - forward - future)
Indirect Quote
American Quote
FWD rate
Speculation