What is the term for the conditional mean of the probability distribution of future spot rates? A) the expected swap rate B) the future exchange rate C) the outright rate D) the expected future spot rate ANSWER Answer: D
Date: September 19th, 2020
The efficient market hypothesis states that: A) Requiring firms to issue more stock will reduce volatility. B) Requiring investors to hold securities longer will reduce volatility. C) Electing a pro-business Republican president makes the market more efficient. D) Taxing security returns will raise prices . E) Markets price securities fairly at all times and that […]
Date: September 19th, 2020
In today’s Wall Street Journal, you see the Greek drachma (GRD) quoted at $0.003635. Yesterday, it was quoted at $0.003521. The drachma ________ by ________. A) depreciated; 1.14% B) appreciated; 3.05% C) depreciated; 3.05% D) appreciated; 3.24% E) depreciated; 3.24% ANSWER D
Date: September 19th, 2020
What is the name of the exchange rate specified in the forward contract? A) spot rate B) forward rate C) future exchange rate D) cross-rate ANSWER Answer: B
Date: September 19th, 2020
If you want to hedge and owe a firm a foreign currency in the future, you would A) buy the foreign currency forward. B) sell the foreign currency forward. C) speculate on the possibility to not hedge. D) buy the currency now and deposit into a bank account until needed. ANSWER Answer: A
Date: September 19th, 2020
One important purpose of the forward markets for foreign exchange allows global traders to protect themselves by ________. A) hedging B) arbitraging C) speculating D) preventing default ANSWER Answer: A
Date: September 19th, 2020
A swap transaction in the forward market involves the simultaneous sale and purchase of a certain amount of foreign currency for ________. A) one specific date in the future B) many different dates in the future C) two different dates in the future D) speculation under the correct conditions ANSWER Answer: C
Date: September 19th, 2020
Information Asymmetry is: A) false information spread by competitors. B) when two pieces of information counteract each other. C) when some know more than others. D) when information is not reflected properly in the market. E) incomplete information. ANSWER C
Date: September 19th, 2020
What is a spot-forward swap? A) the purchase of foreign currency spot against the sale of the same amount of foreign currency forward B) the sale of foreign currency spot against the purchase of the same amount of the foreign currency forward C) both the purchase or sale of a foreign currency spot against the […]
Date: September 19th, 2020
If the forward price of a currency contract is lower than the spot rate, the currency is said to be at a A) forward discount. B) forward premium. C) future expected exchange rate. D) forward swap rate. ANSWER Answer: A
Date: September 19th, 2020
