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PASSED > PASAR QUIZZZZ > Flashcards

PASAR QUIZZZZ Flashcards

1
Q

trading of one currency for another

A

FOREIGN EXCHANGE

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2
Q

largest and most liquid market

A

FOREX MARKET

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3
Q

foreign exchange transaction takes place on the foreign exchange market

A

FOREX MARKET

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4
Q

decentralized network

A

FOREX MARKET

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5
Q

market determines the value of majority currencies

A

EXCHANGE RATES

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6
Q

FOREIGN EXCHANGE WORKS

A

market determines the value of majority currencies
involve trading currency on the foreign exchange market

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7
Q

exert significant impact on forex market

A

POLITICAL CONDITION

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7
Q

political instability & political conflicts affect negatively the strength of currency

A

POLITICAL CONDITION

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7
Q

FACTORS THAT AFFECT FOREIGN EXCHANGE RATES

A

ECONOMIC CONDITIONS
POLITICAL CONDITIONS
PSYCHOLOGICAL CONDITIONS

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7
Q

FOREX MARKET CURRENCIES TRADE IN LOTS

A

MICRO (1,000)
MINI (10,000)
STANDARD LOTS (100,000)

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7
Q

include government’s economic policies, trade balances, inflation, & economic growth outlook

A

ECONOMIC CONDITION

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8
Q

psychology of forex market participants influence exchange rates

A

PSYCHOLOGICAL CONDITION

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9
Q

forex, FX, currency market

A

FOREIGN EXCHANGE MARKET

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9
Q

able to sell, exchange & speculate on currencies
original financial market

A

FOREIGN EXCHANGE MARKET

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9
Q

global marketplace determine exchange rate for currencies around the world

A

OVER-THE-COUNTER

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10
Q

FOREIGN EXCHANGE MARKETS ARE MADE UP OF

A

banks
forex dealers
commercial companies
central banks
investment management firms
hedge funds
retail forex dealers
investors

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11
Q

owned by central banks
trading in forex market averaged of 6.6 trillion

A

BANK OF INERNATIONAL SETTLEMENTS (BIS)

12
Q

always traded in pairs

A

CURRENCIES

12
Q

value of one currencies in that pair is relative to the value of another

A

CURRENCIES

12
Q

THE VALUE OF A COUNTRY’S CURRENCY DEFENDS ON

A

FREE FLOAT CURRENCY
FIXED FLOAT CURRENCY

13
Q

country’s governing body sets its currency relative value to other countries

A

FIXED FLOAT CURRENCY

13
Q

relative value determined by free market forces

A

FREE FLOAT CURRENCY

14
Q

BENEFITS OF USING FOREX MARKET

A

> fewer rules
no clearing houses & no central bodies to oversee the forex market
most investors won’t pay traditional fees
market is open 24 hours (trade anytime & no cut off time)
worried about risk & reward, you can get in and get out anytime you want and you can buy as much currency as you can afford

15
Q

buy or sell currencies anytime during the day

A

OPEN 24 HOURS

15
Q

DIFFERENCES IN THE FOREX MARKET

A

THE SPOT MARKET
THE FORWARD MARKET
THE FUTURES MARKET

15
Q

very volatile
spot for most currencies is two days

A

THE SPOT MARKET

16
Q

THE MOST LIQUID TRADING PAIRS

A

EUR/USD
USD/JPY
GPR/USD

17
Q

prices established on the trade date, but money is exchanged on value date

A

THE SPOT MARKET

17
Q

trade that settles further in the future than spot

A

THE FORWARD MARKET

18
Q

combination of spot rate (add/minus)

A

FORWARD PRICE

18
Q

tailor-made

A

FORWARD CONTRACT

19
Q

future transactions similar to forward than settles later than spot deal

A

THE FUTURES MARKET

20
Q

another way to participate in forex market

A

FORWARDS & FUTURE

21
Q

approach forecasts that exchange rate will change due to offset prices changes due to inflation

A

PURCHASING POWER PARITY

21
Q

indoctrination in most economic textbook

A

PURCHASING POWER PARITY

21
Q

THREE COMMON WAYS TO FORECAST CURRENCY EXCHANGE RATES

A

PURCHASING POWER PARITY
RELATIVE ECONOMIC STRENGTH
ECONOMETRIC MODELS OF FORECASTING EXCHANGE RATES

22
Q

approach looks at the strength of economic growth in different countries to forecast direction of exchange rate

A

RELATIVE ECONOMIC STRENGTH

22
Q

gathering factors might affect currency movements

A

ECONOMETRIC MODELS OF FORECASTING EXCHANGE RATES

23
Q

compares level of economic growth across countries

A

RELATIVE ECONOMIC STRENGTH

24
Q

most complex & time consuming approach

A

ECONOMETRIC MODELS OF FORECASTING EXCHANGE RATES

25
Q

forecast help broker and business make better decision

A

CURRENCT EXCHANGE RATE

PASSED (5 decks)

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