At any given time, the bank will purchase foreign exchange currency at what cost? a. market price b. client's selling price c. lower than the selling price
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1. At any given time, the bank will purchase foreign exchange currency at what cost?
a. market price
b. client's selling price
c. lower than the selling price
2. A
a. lower than par value
b. higher than par value
c. lower than discount value
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Solved in 2 steps
- Identify under which one of the following market the issue of treasury bills lies: a.Equity Market b.Capital Market c.Foreign Currency Market d. **fast i dont have time plzMoney Market4 - At what rate is the valuation of demand deposit accounts in foreign currency in the bank account?A) Nominal valueB) Foreign exchange selling rateC) Exchange rateD) With effective purchase rateE) With comparable value8 When considering counterparty credit risk, which of the following financial products has the largest outstanding notional amount in the marketplace A. Credit default swaps. B. Foreign exchange forwards. C. Interest rate swaps. D. Repos and reverse repos
- If the treasury bonds in country A consistently yield more returns compared to those in country B, we would see __ . (assuming treasury bonds are risk-free) a. Country A goes bankrupt b. The currency in country A appreciates against the currency in country B over time c. The currency in country A depreciates against the currency in country B over time d. The currency exchange rate is unaffected.Exchange rate risk is a. The risk associated with the use of debt financing by companies b. The risk of doing business in a particular industry or environment c. The risk of loss due to imports and exports dominated in other currencies d. The uncertainty about the time element, the price concession, and the conversion to cash. ************************** correct answer please.For the statements below indicate if it is true or false. If the statement is false, rewrite so that it is a true statement. Use the space available to answer your question. 2. When the actual foreign exchange rate for the dollar is greater than the equilibrium rate, the dollar is undervalued, meaning that it will buy less in international trade than it will buy at home. TRUE/False:
- Which of the following refers to the money market hedge of a company’s payables (receivables)? 1. A company sells (buys) its foreign currency receivables (payables) forward to eliminate its exchange risk exposure. 2. A company borrows (or lends) in foreign currency to hedge its foreign currency receivables (payables), thereby matching its assets and liabilities in the same currency. 3. A company buys a currency at the place where it is priced cheaper and immediately sells it at the place where it is priced higher. 4. A company buys a foreign currency call (put) option to hedge its foreign currency payables (receivables).Describe how foreign exchange transactions using futures would differ from those using forward exchange contracts. Hint: the bank always makes a profit on forex, by taking more of one currency in the exchange transaction and giving less of the other currency to the customer.TRUE OR FALSE 1.Treasury bills are money market instruments that can be bought or sold at a discount or premium 2. Withholding taxes for treasury bills should be added to the purchase price 3. In commercial pricing, the final buying rate for the base currency should be lower than the bid rate in the inter-bank market to make a profit 4. When base currency appreciates, you will need less of a terms currency to buy 1 unit of base currency 5. Fixed Rate Treasury Notes (FXTN) provide coupon semi-annually. These securities have maturities longer than treasury bills 6. A peso liquidity trader lends at the highest bid rate to maximize profit and borrows at the lowest offer rate to minimize cost 8. If one of the mandates of the central bank is to manage inflation, then the BSP may cut rates if inflation is too low 10. A quoting bank buys the commodity/base currency at the BID RATE 11. In commercial pricing, a bank is a quoting party to the client at the same time a price taker from the…
- Fannie Mae and Freddie Mac play an important role in the mortgage market. True False The effective yield on foreign money market securities is not affected by exchange rate movements. True FalseFor each of the following monetary policy tools:A. The BSP buys securities in the open market.B. The BSP sells foreign exchange currentC. The BSP increases the reserve requirement ratio.D. The BSP applies its moral suasion ability requesting commercial banks to lowerdown interest rates.E. The government decided to deposit funds at the BSP.1. Determine whether the monetary tool imposed by the BSP is an expansionary or acontractionary policy.Let's say a bank offers the following exchange rates between US Dollar ($), Euro (€), British Pound (£) and Japanese Yen (¥): $/€ 1.20 i.e., €1 equals $1.20 $/£1.40 i.e., £1 equals $1.40 €/£1,16 i.e., £1 equals €1.16 ¥/$120 i.e., $1 equals 120¥ ¥/€140 i.e., €1 equals 140¥ Show how you can make a profit with triangular arbitrage by trading at the above exchange rates by following two alternative strategies. More specifically, the first strategy should only use transactions/conversions between dollar ($), Euro (€) and poundsterling (£), while the second strategy should only use transactions/conversions between dollar ($), Euro (€) and Japanese yen (¥). In both strategies, suppose you start with $1 ($) in your hands. Calculate the profit of each strategy. Which of the two strategies is more advantageous?