1. If the European Central Bank (ECB) wished to cause the EUR to _______, it would _______EUR and _______ foreign currency. A. depreciate; buy; sell B. appreciate; sell; buy C. depreciate; sell; buy D. appreciate; buy; buy 2. In the FX market, trading: A. stops after the London markets have closed B. is restricted to the hours that the Australian banks are open C. takes place at any hour of the night or day D. stops after the London and New York markets have closed

Q: 4. If the dollar is selling at a discount in the forward market, Fi/E 1, where & denotes the spot…

A: Forward discount tells the the condition of the future expected price for a currency would be less…

Q: Suppose the Swiss Franc is currently traded at SFR 1.40/$. The British Pound is traded at GBP…

A: We can calculate cross rate if we know the exchange rate between two currency.

Q: At any given time, the bank will purchase foreign exchange currency at what cost?  a. market price…

A: Standard Disclaimers“Since you have asked multiple question, we will solve the first question for…

Q: What is a mismatch risk (for an IRS)? Select one: The risk that a country will impose exchange rate…

A: Mismatch Risk Mismatch risk which was associated with many factors while in the investment which are…

Q: Suppose you observe the following exchange rates and interest rates for the USD and THB:    Bid…

A: According interest parity concept forward rate should be in equilibrium with interest rates.

Q: These are currency quotes found on a foreign market: GH 4.30/$, and GH 4.55/$. Which currency is…

A: First quote 1$ = GH 4.30 Second quote 1$ = GH 4.55 -------------------- In first case if have 1$ we…

Q: The euro and British pound usually are quotedas direct quotes. Most other currencies arequoted as…

A: The currency quote which expresses the foreign currency in per unit terms of native currency is…

Q: Choose a,b,c,d,e for the following: Question 10 - Which of the following is true? a. An indirect…

A: Answer- Option (e)

Q: the monetary approach to the balance of payments (under flexible exchange rates) an increase in the…

A:

Q: 3. For currency transactions, the spot exchange rate is the rate _______, and the forward exchange…

A: Spot exchange rate: It is the current market price level to exchange one currency with another to…

Q: Suppose you are a customer in the FX market and observe the following quotes for FX spot trades of…

A: Here,

Q: A foreign exchange trader with a U.S. bank took a short position of £5,000,000 when the $/£ exchange…

A: Information Provided: Short position = 5,000,000 Prior exchange rate = 1.48 (dollar/pound)…

Q: Broadly defined, the foreign exchange (FX) market encompasses: O a. Foreign trade financing. Ob.…

A: The foreign exchange market is the place where various countries' currencies are purchased and sold…

Q: Which one of the following is the rate that most international banks charge when they loan…

A: London Interbank Offered Rate (LIBOR) is the rate which most international banks charge when they…

Q: rates are higher than Japanese interest rates, then the theory of covered interest arbitrage would…

A: As per covered interest arbitrage theory, there is an inverse relationship between interest rate and…

Q: For a U.S. trader working in American quotes, if the forward price is higher than the spot price: O…

A: The forward price is the price that will be the pre-agreed price where a financial instrument is…

Q: A bank is quoting the following exchange rates against the dollar for the Swiss franc and the…

A: Cross Rate: Cross Rate is the rate calculated when the direct exchange rate between the currency are…

Q: Suppose that a commercial bank’s current quote for transactions involving the United Kingdom pound…

A: A bid is the highest price a buyer will pay for a security and ask is the lowest price a seller will…

Q: d. The following are the foreign currency positions of a Financial Institution, expressed in the…

A: Given, The foreign currency positions of a financial institution which are expressed in the terms of…

Q: You are provided with the following exchange rate quotations: American Terms Bank quotations British…

A: Bid on (€/£) = 1/ Ask ($/€) Ask ($/€) = $1.4742 Bid ($/£) = $1.9712

Q: Answer the following: a. Explain why the interest parity condition must hold if the foreign exchange…

A: Foreign exchange market is referred as the market, where the different currencies used to get…

Q: Which of the following deals with instrument relating to long-term debt and equity? Select one: A.…

A: Long term debt and equity are investments made for the long term in either the debt of a company via…

Q: From a point of view of Omani investor, which of the following would be a direct quote in the…

A: A direct quote is the foreign exchange rate which states what amount of domestic currency is needed…

Q: Assume that 90-day U.S. securities have a 3.5% annualized interest rate, whereas90-day Canadian…

A: Formula to calculate the 90 day forward exchange rate between US & Canadian dollars is: Forward…

Q: When domestic currency deposits and foreign currency deposits are imperfect substitutes, the…

A: Interest rate parity is defined as the fundamental equation, which used to governed the relationship…

Q: You wish to sell US dollars against sterling and are given the following quotes from two banks. At…

A: The question is based on the concept of pricing and quotation of currency in foreign exchange market…

Q: These are currency quotes found on a foreign market: GH 4.30/$, and GH 4.55/$. ii. Which currency…

A: First quote 1$ = GH4.30 Second quote 1$ = GH 4.55 In first case if you have 1$ you can buy GH 4.30.…

Q: Today, $1 = 1.82 Euro and $1 = 130 Korean Won. In the 90-day forward market, $1 = 1.84 Euro and $1 =…

A: Acorxding to interest rate parity theory, the currency of a country which has higher interest rate…

Q: Peter Sheffield has Euros (E) amounting to €500,000 and is provided with the following quotes: Bank…

A: To determine whether an arbitrage opportunity exists or not, it is required to analyze the buying…

Q: When European Central Bank, increases the supply of Euro in the forex markets Select one: a. Major…

A: The foreign exchange market is the market where trading of all the currency is take place.

Q: ou are a proprietary trader under the FX Group of BDO Treasury Department. Due to the political and…

A: We will buy foreign currency at ask rate and sell at bid rate.

Q: Do the following problems. You must show your work. d) You observe the following exchange rates in…

A:

Q: What to do, when central bank wants to increase market rate? Select one alternative: buy…

A: When the central bank wants interest rates to be higher, it sells bonds, pull money out of the money…

Q: Define each of the following terms: Multinational corporation Exchange rate; fixed exchange rate…

A: “Since you have posted a many questions, we will solve first question for you. To get the remaining…

Q: 5. On October 25 2015, one Euro traded for 1.106 US dollars, and thus one US dollar traded for 0.942…

A: The equilibrium graph shows the relation between the supply and demand of both the currencies.  The…

Q: d) You observe the following exchange rates in the market.i) $1 = 0.85 euros and 1 krona = $ 0.13.…

A: i)  Compute the cross exchange rate between euro and krona:

Q: that the current exchange rate is 1, but it is expected to be £1.69= § ar. If the current interest…

A: Interest parity rules says that the forward must change according to interest rate prevalent in the…

Instruments of Foreign Exchange Market

Foreign exchange is a worldwide market in which one nation’s currency is converted into another nation’s currency. In further terms, exchanging of nations currency with foreign currencies. Foreign exchange happens at a specified rate which is termed the foreign exchange rate. The exchange rates are not constant continuously changing as they are derived by market forces of supply and demand. Widely used foreign currencies are the United States- dollar, Euro, Japanese Yen, British pound, and Australian dollar. US- dollar is the most denominated foreign currency. The Euro to US dollar is a widely used currency pair in the forex market as these two currencies represent the world’s enormous economy. Forex trade is simple as exchanging currencies at the bank. The main players of forex markets are the central banks, financial institutions, intermediaries, investments banks, and other banks. Central Bank is the supreme player who decides the currency value of their own nation on the forex market. Mostly foreign exchange-traded at FX market (forex market) when tourists’ visits a foreign country, import, and export happens between two countries.