6.The direct method of foreign exchange quotations: A) quotes the domestic currency per unit of foreign currency: DC/FC. B) quotes the foreign currency per unit of domestic currency: FC/DC. C) is used primarily in the U.K., Canada, and the U.S. D) is used in the interbank market. The correct answer was A) The direct method of foreign exchange quotations is quoted as DC/FC. 7.Which of the following statements about the foreign exchange market is FALSE? A) In the spot market, currencies are traded for immediate delivery but in the forward market, contracts are made to buy and sell currencies for future delivery. B) Foreign exchange quotations can be expressed on a direct basis--the foreign currency price of the home currency--or an indirect basis--the home currency price of another currency. C) When the forward discount (or premium) exactly offsets the interest rate differential, interest rate parity holds. D) A foreign currency is at a forward discount if the forward rate expressed in domestic currency is below the spot rate, whereas a forward premium exists if the forward rate is above the spot rate. The correct answer was B) Foreign exchange quotations can be expressed on a direct basis — the home currency price of another currency—or an indirect basis—the foreign currency price of the home currency. 8.The spot exchange rate is USD 0.50 per Alpha. A U.S. importer wants to buy stuffed toys for a total amount of 6 million Alphas. The USD equivalent cost is: A) Alpha 3,000,000. B) USD 12,000,000. C) USD 3,000,000. D) Alpha 12,000,000. The correct answer was C) Start by computing $0.50 times 6,000,000 Alpha = USD 3,000,000. Dividing 6,000,000 Alpha by $0.50 gives an incorrect answer of USD 12,000,000 and Alpha-denominated choices don’t provide the USD equivalent. | 
发表于 2008-4-29 14:18
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