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FIN 350 Quiz 7 NEW
Which of the following is most likely to provide currency forward contracts to their customers?
____ forecasting is usually based on either the spot rate or the forward rate.
If the spot rate of the British pound is $2, and the 180-day forward rate is $2.05, what is the annualized premium or discount?
The speculative risk of purchasing a ____ is that the foreign currency value ____ over time.
In the Wall Street Journal, you observe that the British pound (£) is quoted for $1.65. The Australian dollar (A$) is quoted for $0.60. What is the value of the Australian dollar in British pounds?
Assume that a British pound put option has a premium of $.03 per unit, and an exercise price of $1.60. The present spot rate is $1.61. The expected future spot rate on the expiration date is $1.52. The option will be exercised on this date if at all. What is the expected per unit net gain (or loss) resulting from purchasing the put option?
When a government influences factors, such as inflation, interest rates, or income, in order to affect currency's value, this is an example of
If the U.S. government imposed trade restrictions on U.S. imports, this would ____ the U.S. demand for foreign currencies, and would place ____ pressure on the values of foreign currencies (with respect to the dollar).
The act of capitalizing on the discrepancy between the forward rate premium and the interest rate differential is called
Currency futures contracts differ from forward contracts in that they
If a firm planning to hedge receivables is certain of the future direction a spot rate will move, and requires a tailor-made hedge in terms of amount and maturity date, it should use a
If U.S. interest rates suddenly become much higher than European interest rates (and if it does not cause concern about higher inflation there), the U.S. demand for euros would ____, and the supply of euros to be exchanged for dollars would ____, other factors held constant.
A system whereby exchange rates are market determined without boundaries but subject to government intervention is called
Assume interest rate parity exists. If the spot rate on the British pound is $2 and the 1-year British interest rate is 7 percent, and the 1-year U.S. interest rate is 11 percent, what is the pound's forward discount or premium?
Assume an equilibrium state in which European inflation and U.S. inflation are both 4 percent. If U.S. inflation suddenly decreased to 2 percent, the euro will ____ against the dollar by approximately ____ percent, according to purchasing power parity.
When banks obtain funds in the federal funds market, the providers of the funds are
____ loans are extended primarily to finance the purchase of fixed assets such as machinery.
A ____ is a time deposit offered by some large banks to corporations, with a specific maturity date, minimum deposit of $100,000 or more, and a secondary market.
When a bank obtains funds through ____, households are not a common provider of the funds.
When a bank obtains funds through a ____, the provider of the funds receives collateral.
When banks need funding for just a few days, they would most likely
Which of the following is not an off-balance sheet activity?
____ are the largest bank source of funds (as a percentage of total liabilities).
____ is (are) not a major source of funds for commercial banks.
A ____ is a type of loan commitment.
Which type of savings account transfers funds to a checking account when checks are written?
Commercial banks are not allowed to invest in
Subordinated notes and debentures are examples of
____ loans are primarily used to finance the purchase of fixed assets.
When a bank in need of funds for a few days sells some of its government securities to a corporation with a temporary excess of funds, then buys them back shortly thereafter, this is a.
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