Financial Info Management Test Bank

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1. The world 's largest foreign exchange trading center is A. New York. B. Tokyo. C. London. D. Hong Kong. Topic: Function and Structure of the FX Market 2. On average, worldwide daily trading of foreign exchange is A. impossible to estimate. B. $15 billion. C. $504 billion. D. $3.21 trillion. Topic: Function and Structure of the FX Market 3. The foreign exchange market closes A. Never. B. 4:00 p.m. EST (New York time). C. 4:00 p.m. GMT (London time). D. 4:00 p.m. (Tokyo time). Topic: Function and Structure of the FX Market 4. Most foreign exchange transactions are for A. intervention by central banks. B. interbank trades between international banks or nonbank dealers. C. retail trade. D.…show more content…
The current exchange rate is €1.00 = $1.50. Compute the correct balances in Bank A 's correspondent account(s) with bank B if a currency trader employed at Bank A buys €100,000 from a currency trader at bank B for $150,000 using its correspondent relationship with Bank B. A. Bank A 's dollar-denominated account at B will fall by $150,000. B. Bank B 's dollar-denominated account at A will fall by $150,000. C. Bank A 's pound-denominated account at B will fall by €100,000. D. Bank B 's pound-denominated account at A will rise by €100,000. Topic: Correspondent Banking Relationships 14. The spot market A. involves the almost-immediate purchase or sale of foreign exchange. B. involves the sale of futures, forwards, and options on foreign exchange. C. takes place only on the floor of a physical exchange. D. all of the above. Topic: The Spot Market 15. Spot foreign exchange trading A. accounts for about 5 percent of all foreign exchange trading. B. accounts for about 20 percent of all foreign exchange trading. C. accounts for about 33 percent of all foreign exchange trading. D. accounts for about 70 percent of all foreign exchange trading. Topic: The Spot Market Spot Rate Quotations 16. Using the table shown, what is the most current spot exchange rate shown for British pounds? Use a direct quote from a U.S. perspective. A. $1.61 = £1.00 B. $1.60 = £1.00 C. $1.00 = £0.625

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