The franc is said to be selling at a _______ if the spot dollar price is $0.48 and the nine-month forward rate is $0.42 ?

A. Forward discount
B. Forward premium
C. Forward spread
D. None of these

If Sweden’s currency depreciates relative to Norway’s currency ?

A. Norway’s export goods become more expensive to norway’s residents
B. Norway’s exports goods become cheaper to sweden’s residents
C. Sweden’s export goods become cheaper to norway’s residents
D. Sweden’s export goods become cheaper to sweden’s residents

Which of the following is not a reason why Joe Smith (an American) might participate as a demander in the foreign exchange market ?

A. His desire to open a bank account in japan
B. His desire to purchase an automobile produced domestically
C. His desire to travel to europe
D. His desire to purchase treasury bills issued by the british government

The largest volume of foreign exchange trading takes place in ?

A. China
B. Germany
C. United kingdom
D. Usa

In a supply and demand diagram for Japanese yen, with the exchange rate in dollars per yen on the vertical axis, the demand schedule for yen is drawn sloping ?

A. Upward
B. Vertical
C. Downward
D. Horizontal

The exchange rate is kept the same across geographically separate markets by ?

A. Hedging
B. Speculation
C. Government regulation
D. Arbitrage

An important feature of a _______ is that the holder has the right but not the obligation to buy or sell currency ?

A. Swap
B. Foreign exchange arbitrage
C. Foreign exchange option
D. Futures market contract

If the bank is selling francs for $0.45, then what is the implied franc price of the dollar ?

A. 2.0
B. 1.999
C. 2.323
D. 2.222

Riskless transactions to take advantage of profit opportunities due to a price differential or a yield differential in excess of transaction costs are called ?

A. Differential actions
B. Cash transaction
C. Arbitrage
D. Forward transactions

The most widely traded currency in the foreign exchange market is the ?

A. 2. euro
B. 3. chinese yuan
C. 4. british pound
D. 5. u.s dollar