This quiz works best with JavaScript enabled. Home > International > Currency > Foreign Currency Markets – Quiz 2 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Foreign Currency Markets Quiz 2 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. The transaction that has fixed initial margin and kept as a collateral for future position. A) FUTURE TRANSACTION. B) SPOT TRANSACTION. C) SWAP TRANSACTION. D) FORWARD TRANSACTION. Show Answer Correct Answer: A) FUTURE TRANSACTION. 2. On average, more than a trillion ..... A) US dollars worth of currency is traded every day. B) Euros worth of currency is traded every day. C) US dollars worth of currency is stolen every day. D) None of above. Show Answer Correct Answer: A) US dollars worth of currency is traded every day. 3. A method of trading stocks, currencies, etc. through electronic stock markets, forex, crypto currency. A) Seach Engine Optimization. B) Electronic Trading. C) Digital Currency. D) Online Selling. Show Answer Correct Answer: B) Electronic Trading. 4. The exchange rate is A) The price of one currency relative to gold. B) The value of a currency relative to inflation. C) The change in the value of money over time. D) The price of one currency relative to another. Show Answer Correct Answer: D) The price of one currency relative to another. 5. It is very difficult to interpret news in foreign exchange markets because A) It is difficult to know which news is relevant to future exchange rates. B) It is difficult to know whether the news has been obtained legally. C) Very little information is publicly available. D) None of above. Show Answer Correct Answer: A) It is difficult to know which news is relevant to future exchange rates. 6. When the value of the British pound changes from $ 1.25 per pound to $ 1.50 per pound, the pound has ..... and the Canadian dollar has ..... A) Appreciated; appreciated. B) Depreciated; appreciated. C) Appreciated; depreciated. D) Depreciated; depreciated. Show Answer Correct Answer: C) Appreciated; depreciated. 7. Everything else held constant, when a country's currency appreciates, the country's goods abroad become ..... expensive and foreign goods in that country become ..... expensive. A) More; less. B) More; more. C) Less; less. D) Less; more. Show Answer Correct Answer: A) More; less. 8. If the dollar appreciates relative to the British pound, A) British dishes will become cheaper in the United States. B) American wheat will become cheaper in Great Britain. C) British dishes will become more expensive in the United States. D) No change will occur. Show Answer Correct Answer: A) British dishes will become cheaper in the United States. 9. An action a government uses to control trade between countries A) Trade barrier. B) Voluntary trade. C) Free trade. D) None of the above. Show Answer Correct Answer: A) Trade barrier. 10. When domestic currency appreciates, it benefits ..... and harms ..... A) Domestic exporters, domestic importer. B) Domestic exporter, foreign importer. C) Domestic importer foreign exporter. D) Domestic importer, domestic exporter. Show Answer Correct Answer: D) Domestic importer, domestic exporter. 11. The ..... is a monetary policy tool that use to determine the amount of deposits that banks must hold. A) Open market operations. B) Reserve requirements. C) Discount ratio. D) Federal funds rate. Show Answer Correct Answer: B) Reserve requirements. 12. The primary purpose of the foreign-exchange market is to A) Encourage globalization. B) Assist developing countries. C) Facilitate currency conversions. D) Stabilize the currency exchange rate. Show Answer Correct Answer: C) Facilitate currency conversions. 13. The theory of ..... states that the prices of tradable goods, when expressed in a common currency, will tend to equalize across countries as a result of exchange rate changes. A) Supply and demand. B) Purchasing power parity. C) Arbitrage. D) Competitive advantage. Show Answer Correct Answer: B) Purchasing power parity. 14. The exchange rate at which demand for foreign currency is equal to its supply is called: A) Equilibrium exchange rate. B) Floating exchange rate. C) Par exchange rate. D) Both (a) & (c). Show Answer Correct Answer: D) Both (a) & (c). 15. Appreciation of domestic currency will A) Encourage imports. B) Encourage Exports. C) Discourage imports. D) None of above. Show Answer Correct Answer: A) Encourage imports. 16. There are 2 types of foreign currency trading:i. Primary marketii. Secondary marketiii. Spot marketiv. Forward market A) I and ii. B) Iii and iv. C) Ii and iv. D) None of above. Show Answer Correct Answer: B) Iii and iv. 17. Dirty float is another term for ..... A) Flexible float. B) Managed float. C) Illegal float. D) Par value. Show Answer Correct Answer: B) Managed float. 18. When US dollar exchanges for Rs.50 instead of Rs55 earlier, the domestic currency shows: A) Currency appreciation. B) Currency depreciation. C) Currency devaluation. D) None of these. Show Answer Correct Answer: A) Currency appreciation. 19. Higher interest rates will cause hot money flows and increase demand for the currency. Higher interest rates make it relatively more attractive to save in the said country. A) BORROWING. B) JOINING FIXED EXCHANGE RATES. C) CHANGING INTEREST RATES. D) None of above. Show Answer Correct Answer: C) CHANGING INTEREST RATES. 20. ..... focus on offering banking and other financial services to nonresident customers. A) Branch banks. B) Subsidiary banks. C) Affiliated banks. D) Offshore financial centers. Show Answer Correct Answer: D) Offshore financial centers. ← PreviousNext →Related QuizzesInternational QuizzesForeign Currency Markets Quiz 1Foreign Currency Markets Quiz 3Foreign Currency Markets Quiz 4Foreign Currency Markets Quiz 5Foreign Currency Markets Quiz 6Foreign Currency Markets Quiz 7Foreign Currency Markets Quiz 8Foreign Currency Markets Quiz 9Foreign Currency Markets Quiz 10 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books