FIN 480
Finance Exam #1
1. True or false? A pure arbitrage takes advantage of price discrepancies by buying low and selling high in such a way as to place no wealth at risk.
2. SKR is the ISO code for the Swedish Currency, the krona. A Swedish band quotes SKR 8/USD Bid and SKR 9/USD Ask. These quotes are in:
A. American terms
B. Direct terms from a U.S perspective
C. Direct terms from a Swedish perspective
D. Indirect terms from a Swedish perspective
3. U.S. bank quotes $1.27/€ ask (€ is the Symbol for the euro. Expressed strictly in Rule #2 terms, what is U.S bank willing to do at this exchange rate?
A. Buy dollar.
B. Buy euros.
C. Sell dollars.
D. Sell euros.
4. U.S. bank quotes $1.19/€ bid and $1.27/€ ask. How many euros is U.S bank effectively asking for $1 that it sells to the public?
A. 1.19
B. 1.24
C. 0.79
D. 0.84
5. True or false? A hedge of a currency risk exposure should be designed to take advantage of exchange rate and interest rate discrepancies to make a profit.
6. The euro depreciates 16.67% against the dollar in one period. How much does the dollar appreciate or depreciate against the euro in that same period?
A. Depreciates 14.29%
B. Depreciates 5.00%
C. Appreciates 16.67%
D. Appreciates 20.00%
7. In a forward trade for pounds that is made at t=0 by a U.S resident and U.S. bank and settles at t=1.
A. The dollar amount is determined at t=0, the number of pounds is determined at t=1.
B. The dollar amount and the number of pound are both determined at t=0.
C. The dollar amount and the number of pound are both determined at t=1.
D. The dollar amount is determined at t=1; the exchanged rate is determined at t=0.
8. Global foreign exchanged market volume (also called turnover) is approximately:
A. $ 4 billion per day.
B. $ 4 trillion per day.
C. $ 4 billion per year.
D. $ 4 trillion per year.
9. True or false? In a 90-day forward contract, one party is strictly obligated to perform the agreed currency
1. True or false? A pure arbitrage takes advantage of price discrepancies by buying low and selling high in such a way as to place no wealth at risk.
2. SKR is the ISO code for the Swedish Currency, the krona. A Swedish band quotes SKR 8/USD Bid and SKR 9/USD Ask. These quotes are in:
A. American terms
B. Direct terms from a U.S perspective
C. Direct terms from a Swedish perspective
D. Indirect terms from a Swedish perspective
3. U.S. bank quotes $1.27/€ ask (€ is the Symbol for the euro. Expressed strictly in Rule #2 terms, what is U.S bank willing to do at this exchange rate?
A. Buy dollar.
B. Buy euros.
C. Sell dollars.
D. Sell euros.
4. U.S. bank quotes $1.19/€ bid and $1.27/€ ask. How many euros is U.S bank effectively asking for $1 that it sells to the public?
A. 1.19
B. 1.24
C. 0.79
D. 0.84
5. True or false? A hedge of a currency risk exposure should be designed to take advantage of exchange rate and interest rate discrepancies to make a profit.
6. The euro depreciates 16.67% against the dollar in one period. How much does the dollar appreciate or depreciate against the euro in that same period?
A. Depreciates 14.29%
B. Depreciates 5.00%
C. Appreciates 16.67%
D. Appreciates 20.00%
7. In a forward trade for pounds that is made at t=0 by a U.S resident and U.S. bank and settles at t=1.
A. The dollar amount is determined at t=0, the number of pounds is determined at t=1.
B. The dollar amount and the number of pound are both determined at t=0.
C. The dollar amount and the number of pound are both determined at t=1.
D. The dollar amount is determined at t=1; the exchanged rate is determined at t=0.
8. Global foreign exchanged market volume (also called turnover) is approximately:
A. $ 4 billion per day.
B. $ 4 trillion per day.
C. $ 4 billion per year.
D. $ 4 trillion per year.
9. True or false? In a 90-day forward contract, one party is strictly obligated to perform the agreed currency