FIN 001
Select the best answers for questions (2 points each for questions 1-10)
1. HSBC is a UK-based bank, and it holds more than 50% equity of Hang Seng which is a Hong Kong based bank. Which of the following statement is correct?
A) Hang Seng is the representative office of HSBC at HK
B) Hang Seng is the foreign branch of HSBC
C) Hang Seng is the foreign subsidiary bank of HSBC
D) Hang Seng and HSBC are two independent banks.
2. Which of the following services is not provided by a typical bank?
A) Accept deposits
B) Make loans to a firm
C) Manufacture products from raw materials
D) Carry out payments for goods on behalf of customers
3. A WSJ (wall street journal) article reports that:
“the euro was at $1.3653 from $1.3674 at Monday’s close, while the dollar was at 115.09 yen from 116.08 yen”
That means the dollar_________against euro, and the yen_____________against dollar
A) appreciated; appreciated
B) appreciated; depreciated
C) depreciated; depreciated
D) depreciated; appreciated
4. Of the following exchange rates, which are quoted in European terms?
i) 2 USD for one British pound; ii) 0.75 euro for one USD; iii) 7.8 HKD for one USD; iv) 100 yen for one USD
A) only i)
B) only ii)
C) iii) and iv)
D) ii), iii) and iv)
5. The AUD/$ spot exchange rate is AUD1.60/$ and the SF/$ exchange rate is SF1.25/$. The AUD/SF cross exchange rate is thus:
A) 0.7813
B) 2.0000
C) 1.2800
D) 0.3500
6. Which of the following statements about forward rate/forward contract is FALSE?
A) the forward rate is determined when both the long side and the short side enter into the forward contract
B) The forward rate will not be executed until the forward contract expires
C) The forward rate represents the market prediction of the future spot rate
D) The forward rate is determined when the forward contract is about to expire
7. Suppose the current exchange rate is $1.6 for £1, and the expected inflation rate in the U.S. and in the U.K.
1. HSBC is a UK-based bank, and it holds more than 50% equity of Hang Seng which is a Hong Kong based bank. Which of the following statement is correct?
A) Hang Seng is the representative office of HSBC at HK
B) Hang Seng is the foreign branch of HSBC
C) Hang Seng is the foreign subsidiary bank of HSBC
D) Hang Seng and HSBC are two independent banks.
2. Which of the following services is not provided by a typical bank?
A) Accept deposits
B) Make loans to a firm
C) Manufacture products from raw materials
D) Carry out payments for goods on behalf of customers
3. A WSJ (wall street journal) article reports that:
“the euro was at $1.3653 from $1.3674 at Monday’s close, while the dollar was at 115.09 yen from 116.08 yen”
That means the dollar_________against euro, and the yen_____________against dollar
A) appreciated; appreciated
B) appreciated; depreciated
C) depreciated; depreciated
D) depreciated; appreciated
4. Of the following exchange rates, which are quoted in European terms?
i) 2 USD for one British pound; ii) 0.75 euro for one USD; iii) 7.8 HKD for one USD; iv) 100 yen for one USD
A) only i)
B) only ii)
C) iii) and iv)
D) ii), iii) and iv)
5. The AUD/$ spot exchange rate is AUD1.60/$ and the SF/$ exchange rate is SF1.25/$. The AUD/SF cross exchange rate is thus:
A) 0.7813
B) 2.0000
C) 1.2800
D) 0.3500
6. Which of the following statements about forward rate/forward contract is FALSE?
A) the forward rate is determined when both the long side and the short side enter into the forward contract
B) The forward rate will not be executed until the forward contract expires
C) The forward rate represents the market prediction of the future spot rate
D) The forward rate is determined when the forward contract is about to expire
7. Suppose the current exchange rate is $1.6 for £1, and the expected inflation rate in the U.S. and in the U.K.