quiz 2

Question 1

Currency Derivatives

Answer 1

a contract who’s vale derives from an underlying currency

Question 2

forward market

Answer 2

facilitates the trading of forward contracts on curencies

Question 3

Forward contract

Answer 3

An agreement between and an entity and a financial institution to exchange a specific amount of currency at a specific rate at a specific date

Question 4

Forward rate

Answer 4

an agreed rate that a currency will be exchanged during sometime in the future

Question 5

Currency futures contract

Answer 5

a contract for a standard amount for a specific currency to be traded at a standard date

Question 6

for a discount the homes interest rate is _____ the the foreign interest rate

Answer 6

Lower

Question 7

for a premium the homes interest rate is _____ the the foreign interest rate

Answer 7

higher

Question 8

Bid > Ask

Answer 8

Discount

Question 9

Bid < Ask

Answer 9

premium

Question 10

where do you deal on to buy EUR

EUR/USD 1.0874-1.0876

Answer 10

1.0876

Question 11

Buy JPY (USD/JPY 104.33-104.36

Answer 11

104.33

Question 12

Sell JPY (USD/JPY 104.33-104.36)

Answer 12

104.36

Question 13

Dates when you can deal futures

Answer 13

3rd Wednesday of the 3rd month

Question 14

Bretton woods agreement

Answer 14

exchange rate held fixed

Currency valued in terms of gold

Question 15

Smithsonian agreement

Answer 15

Devalued the USD by 8%

changed bounders to 2.25%

Question 16

Europe snake agreement

Answer 16

maintain their currency within established limits of each other

Question 17

Impacts of the Eurozone

Answer 17

Single currency allowed comparison of price

international trade without exchange rates

Question 18

Devaluing

Answer 18

Reducing currency value

Question 19

revaluing

Answer 19

increasing currency value