1. Most foreign exchange transactions are through the U.S. dollar. If the transaction is expressed as the foreign currency per dollar this is known as ________ whereas ________ are expressed as dollars per foreign unit.
a. European terms; indirect
b. American terms; European terms
c. European terms; American terms
d. American terms; direct
2. Foreign exchange swaps were larger in 1998 than in 2001. The Bank for International Settlements attributes this to
a. growing electronic brokering in the spot interbank market.
b. the introduction of the Euro.
c. consolidation in general.
d. All of the above.
3. The primary motive of foreign exchange activities by most central banks is profit.
a. true
b. false
4. ________ make money on currency exchanges by the difference between the ________ price, or the price they offer to pay, and the ________ price, or the price at which they offer to sell the currency.
a. Brokers; bid; ask
b. Dealers; bid; ask
c. Dealers; ask; bid
d. Brokers; ask; bid
5. When the cross rate for currencies offered by two banks differs from the exchange rate offered by a third bank, a triangular arbitrage opportunity exists.
a. true
b. false
6. A forward contract to deliver British pounds for U.S. dollars could be described either as ________ or ________.
a. buying dollars forward; buying pounds forward
b. selling pounds forward; selling dollars forward
c. selling dollars forward; buying pounds forward
d. selling pounds forward; buying dollars forward.