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    Chapter 3

    Uploaded by

    zeeshan
    The document contains 9 multiple choice questions about foreign exchange rates and markets. Key details include: - The bid-ask percentage spread on a bank's Swiss franc rates is approximately 3.85% - The forward rate is used for immediate exchange of currencies, while the statement that it is the exchange rate used for future exchange is false. - If the Canadian dollar is worth £0.51 and the Peruvian Sol is worth £0.16, the value of the Peruvian Sol in Canadian dollars is approximately $0.3137 Canadian dollars. - LIBOR stands for the interest rate commonly charged for loans between banks. - From 1944 to 1971, exchange rates between currencies were typically

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    © All Rights Reserved
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    Chapter 3

    Uploaded by

    zeeshan
    935 views2 pages
    The document contains 9 multiple choice questions about foreign exchange rates and markets. Key details include: - The bid-ask percentage spread on a bank's Swiss franc rates is approximately 3.85% - The forward rate is used for immediate exchange of currencies, while the statement that it is the exchange rate used for future exchange is false. - If the Canadian dollar is worth £0.51 and the Peruvian Sol is worth £0.16, the value of the Peruvian Sol in Canadian dollars is approximately $0.3137 Canadian dollars. - LIBOR stands for the interest rate commonly charged for loans between banks. - From 1944 to 1971, exchange rates between currencies were typically

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    Chapter 4

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    The document contains 9 multiple choice questions about foreign exchange rates and markets. Key details include: - The bid-ask percentage spread on a bank's Swiss franc rates is approximately 3.85% - The forward rate is used for immediate exchange of currencies, while the statement that it is the exchange rate used for future exchange is false. - If the Canadian dollar is worth £0.51 and the Peruvian Sol is worth £0.16, the value of the Peruvian Sol in Canadian dollars is approximately $0.3137 Canadian dollars. - LIBOR stands for the interest rate commonly charged for loans between banks. - From 1944 to 1971, exchange rates between currencies were typically

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    935 views2 pages

    Chapter 3

    Uploaded by

    zeeshan
    The document contains 9 multiple choice questions about foreign exchange rates and markets. Key details include: - The bid-ask percentage spread on a bank's Swiss franc rates is approximately 3.85% - The forward rate is used for immediate exchange of currencies, while the statement that it is the exchange rate used for future exchange is false. - If the Canadian dollar is worth £0.51 and the Peruvian Sol is worth £0.16, the value of the Peruvian Sol in Canadian dollars is approximately $0.3137 Canadian dollars. - LIBOR stands for the interest rate commonly charged for loans between banks. - From 1944 to 1971, exchange rates between currencies were typically

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Multiple Choice

    Identify the choice that best completes the statement or answers the question.
    Assume that a bank's bid rate on Swiss francs is 0.25 and its ask rate is 0.26. Its
    1. bid-ask percentage spread is:
    c. about 3.85%.
    Chapter 3 a. 4.00%.
    b. 4.26%.
    d. about 4.17%.
    C

    The forward rate is the exchange rate used for immediate exchange of currencies.
    b. false.
    2. a. true.

    Assume the Canadian dollar is equal to 0.51 and the Peruvian Sol is equal to
    3. 0.16. The value of the Peruvian Sol in Canadian dollars is:
    a. about .3621 Canadian dollars.
    c. about 2.36 Canadian dollars.
    b. about .3137 Canadian dollars.
    d. about 2.51 Canadian dollars.

    _______ is not a bank characteristic important to customers in need of foreign


    4. exchange.
    a. Quote competitiveness
    b. Speed of execution
    c. Forecasting advice
    d. Advice about current market conditions
    e. All of the above are important bank characteristics to customers in need of
    foreign exchange.

    LIBOR is:
    5. a. the interest rate commonly charged for loans between banks.
    b. the average inflation rate in European countries.
    c. the maximum loan rate ceiling on loans in the international money market.
    d. the maximum deposit rate ceiling on deposits in the international money
    market.
    e. the maximum interest rate offered on bonds that are issued in London.

    From 1944 to 1971, the exchange rate between any two currencies was typically:
    6. a. fixed within narrow boundaries.
    b. floating, but subject to central bank intervention.
    c. floating, and not subject to central bank intervention.
    d. nonexistent; that is currencies were not exchanged, but gold was used to
    pay for all foreign transactions.

    Futures contracts are typically _______; forward contracts are typically _______.
    7. a. sold on an exchange; sold on an exchange
    b. offered by commercial banks; sold on an exchange
    c. sold on an exchange; offered by commercial banks
    d. offered by commercial banks; offered by commercial banks

    When the foreign exchange market opens in the UK each morning, the opening
    8. exchange rate quotations will be based on the:
    a. closing prices in the U.S. during the previous day.
    b. closing prices in Canada during the previous day.
    c. prevailing prices in locations where the foreign exchange markets have
    been open.
    d. officially set by central banks before the U.S. market opens.

    Under the gold standard, each currency was convertible into gold at a specified
    9. rate, and the exchange rate between two currencies was determined by their

    Bid-ask percentage spread = (0.26 - 0.25)/0.26 = 3.85%


    0.16/0.51 = .3137
    C

    15 $1.10 = $16.50

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