Reading 14: Currency Exchange Rates

In the exchange rate quote 1.45 USD/EUR, which currency is the base currency?

An exchange rate of 1.25 USD/EUR is considered a direct quote from the perspective of an investor in which country?

Which of the following formulas correctly calculates the real exchange rate?

The nominal exchange rate is 1.50 USD/GBP. The US CPI is 110 and the UK CPI is 105. What is the real exchange rate?

If the real exchange rate of a foreign currency increases, what does this imply for the domestic consumer?

For most currencies, when does the exchange of currencies take place for a spot exchange rate?

Which group of participants in the foreign exchange market is primarily referred to as the 'sell side'?

Investment accounts that use derivatives to speculate or hedge are referred to as:

If a firm takes a position in the foreign exchange market to reduce an existing risk, the firm is:

The USD/EUR exchange rate changes from 1.40 to 1.35. The percentage change in the euro is closest to:

The USD/EUR exchange rate changes from 1.40 to 1.35. The percentage appreciation of the USD is closest to:

Given MXN/USD = 10.0 and USD/EUR = 1.50, what is the MXN/EUR cross rate?

Given CHF/USD = 1.80 and NZD/USD = 2.40, what is the CHF/NZD cross rate?

A spot exchange rate is 2.5000. A forward quote of +25 points implies a forward rate of:

The AUD/EUR spot rate is 0.7300. The 120-day forward rate is quoted as -0.1 percent. The forward rate is closest to:

The no-arbitrage condition known as Interest Rate Parity states that the percentage difference between forward and spot rates is approximately equal to:

According to the Interest Rate Parity formula, if the interest rate of the base currency is lower than the interest rate of the price currency, the base currency should trade at a:

The spot rate is 2.00 A/B. The 1-year risk-free rate for currency A is 6 percent and for currency B is 4 percent. The no-arbitrage 1-year forward rate is closest to:

If the forward rate quoted in the market is higher than the rate implied by Interest Rate Parity, an arbitrageur should:

When calculating a forward premium or discount for a 90-day period, how should the annual interest rates be handled?

A country uses the currency of another country as its medium of exchange and cannot have its own monetary policy. This regime is called:

What is a primary characteristic of a Currency Board Arrangement?

In a conventional fixed peg arrangement, the currency is pegged within margins of approximately:

Which exchange rate regime allows for wider fluctuations, such as +/- 2 percent, around a central parity?

A 'passive crawling peg' is typically adjusted periodically to account for:

In a managed floating exchange rate regime, the monetary authority:

Which regime relies on the market to determine the exchange rate, with intervention used only to reduce short-term volatility?

The Elasticities Approach to the balance of payments focuses on:

The Marshall-Lerner condition states that currency depreciation will reduce a trade deficit if:

The J-Curve effect suggests that following a currency depreciation, the trade balance will:

The Absorption Approach expresses the balance of trade (BT) as:

According to the Absorption Approach, for a currency depreciation to improve the balance of trade, national income must increase relative to:

If an economy is operating at full employment, a currency depreciation will improve the trade balance only if:

A USD/EUR exchange rate of 1.320 with a 90-day forward rate of 1.328 indicates that the euro is trading at a:

Which of the following describes a 'buy side' participant in the foreign exchange market?

If the spot rate is 100 JPY/USD and the forward rate is 98 JPY/USD, the USD is trading at a:

In the context of the Elasticities Approach, for which type of goods is demand likely most elastic?

Under the absorption approach, a trade deficit (Imports > Exports) implies that:

If the forward premium on the euro is 2 percent annualized, what is the approximate difference between the interest rates?

Spot rate is 1.40 USD/EUR. Forward points are -50. What is the forward rate?

Which of the following is true regarding 'Active Crawling Pegs'?

What is 'formal dollarization'?

Spot rate is 100. Interest rate in Price Currency is 5 percent. Interest rate in Base Currency is 3 percent. Is the forward rate higher or lower than 100?

If a dealer quotes a bid-ask spread, the ask price is:

Calculate the percent change of the USD against the CAD if the rate goes from 0.95 USD/CAD to 0.98 USD/CAD.

In a currency board, can the monetary authority act as a 'lender of last resort' to domestic banks?

If a country has a trade surplus, it must have a:

Which condition is required for a successful arbitrage profit using the Interest Rate Parity mechanism?

A 'direct' intervention in a Fixed Peg regime involves:

In the quote 1.60 USD/GBP, the GBP is the: