Q5. If the forward exchange rate is 2 DC/FC and the spot rate is 1.9 DC/FC when the foreign rate of return is 12% and the domestic return is 10%, which of the following statements would be most accurate? A) Arbitrage is possible here, investors should borrow foreign, lend domestic. B) Arbitrage is possible here, investors should borrow domestic, lend foreign. C) The arbitrage possibilities cannot be determined with the data given.
Q6. Which of the following statements about foreign exchange quotes is most accurate? A) The ask price (KPW/USD) is what the bank will sell a KPW for. B) Standard interbank dealer quotes are foreign currency over the U.S. dollar. C) If the KPW goes from 2 KPW/USD to 1.75 KPW/USD the dollar has appreciated.
Q7. Which of the following would least likely be a participant in the forward market? A) Arbitrageurs. B) Long-term investors. C) Traders.
Q8. Which of the following statements related to the foreign exchange market is FALSE? A) The bid-ask spread is a function of trading volume, volatility, and term of the forward contract. B) Foreign exchange brokers provide information, anonymity, and reduced trading time. C) The settlement date in the spot market is two days after the trade. A Friday trade would be settled on Monday.
Q9. Immediate delivery is assumed in which market? A) Spot market. B) Currency swap market. C) Forward market.
Q10. Given the following information: § The U.S. interest rate is 6%. § The GBP/USD spot rate is 2.2. § The GBP forward rate is 2 GBP/USD § The domestic Great Britain interest rate is 8%. Which of the following statements is least accurate? A) Capital will flow into Great Britain. B) If you start by borrowing $1,000, your arbitrage profits will be $128. C) If you start by borrowing 1,000 GBP, your arbitrage profits will be 116 GBP.
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发表于 2009-1-13 11:47
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