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The market for foreign exchange SB

Terms in this set (28)

Broadly defined, the ______ market includes the conversion of purchasing power from one currency into another, bank deposits of foreign currency, the extension of credit denominated in a foreign currency, foreign trade financing, trading in foreign currency options and futures contracts, and currency swaps.
foreign exchange
The structure of the foreign exchange market is an outgrowth of one of the primary functions of a(n) ______ banker: to assist clients in the conduct of international commerce.
commercial
The process of using foreign currency reserves to buy one's own currency in order to decrease its supply and thus increase its value in the foreign exchange market, or alternatively, selling one's own currency for foreign currency in order to increase its supply and lower its price is referred to as ______.
intervention
Most foreign exchange trading involves the exchange of _____ for another currency.
U.S. dollars
The currency of the United Kingdom is the
pound
Which of the following statements about the foreign exchange market is correct?
It is the largest and most active financial market in the world.
It is open somewhere in the world 24 hours a day, 365 days a year.
What are ways that cross-exchange rates can be calculated?
The product of an American term and a European term exchange rate
The quotient of two American term exchange rates
Foreign exchange is traded in a(n) ______ market, not in a central marketplace where buyers and sellers congregate.
over-the-counter
Currency market-makers buy at the ______ price and sell at the ______ ______ price.
bid; higher ask
Which are the tiers of the foreign exchange market?
retail or client market
wholesale or interbank market
The process of trading out of the U.S. dollar into a second currency, then trading it for a third currency, which is in turn traded for U.S. dollars to make a profit is referred to as ___________ arbitrage.
Triangular
The almost immediate (two-day) purchase or sale of foreign exchange occurs on the ________ market.
spot
The currency of Germany is the
euro
If £1 costs $1.50 and €1.00 costs $1.20, then the €/£ cross-rate is ______.
1.25
Suppose that the interbank bid for a currency is $1.0543 and the ask is $1.0545.
The retail bid could be 1.0542.
The big figure for the bid is 1.05.
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