土豆妮

The direct quote method is:

A) FC/DC.

B) DC/FC.

C) 1/(DC/FC).

土豆妮

The direct quote method is:

A) FC/DC.

B) DC/FC.

C) 1/(DC/FC).

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Direct quotes are the usual method of quoting currencies. Indirect quotes are used in the U.K., Canada, and U.S.

土豆妮

If the indirect quote for U.S. dollars in Sydney is 0.7927, what is the equivalent indirect quote in New York City for Australian dollars?

A) 1.2615.

B) 0.3964.

C) 0.7927.

土豆妮

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) USD 12,000,000.

B) USD 3,000,000.

C) Alpha 3,000,000.

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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.

土豆妮

Which of the following statements about the foreign exchange market is least accurate?

A) 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.

B) 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.

C) 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.

土豆妮

Which of the following statements about the foreign exchange market is least accurate?

A) 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.

B) 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.

C) 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.

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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.