Question :
61.Which of the following foreign exchange trading centers has the highest : 1299374
61.Which of the following foreign exchange trading centers has the highest percentage of activity?
A. Frankfurt
B. London
C. Paris
D. Hong Kong
E. Sydney
62.Which of the following is a reason for London’s dominance in the foreign exchange market?
A. Great Britain’s decision to retain the British pound instead of using the euro
B. The preeminence of Financial Times Stock Exchange (FTSE) index as an economic health indicator
C. London’s location making it the link between the East Asian and New York markets
D. London being the preferred headquarters destination for major multinational corporations
E. London’s trading centers opening soon after Tokyo’s and New York’s trading centers closing for the night
63.Which of the following is a key feature of the foreign exchange market?
A. The foreign exchange market never sleeps.
B. The foreign exchange market is located in London.
C. The foreign exchange market is characterized by high transaction costs.
D. The foreign exchange market is shut for two hours every day.
E. The foreign exchange market is poorly interconnected giving rise to ample arbitrage opportunities.
64.What is meant by arbitrage?
A. To provide insurance or hedge against the risks that arise from volatile changes in exchange rates
B. A transaction between two parties that involves exchanging currency and executing a deal at some specific date in the future
C. Simultaneous purchase and sale of a given amount of foreign exchange for two different value dates
D. The purchase of securities in one market for immediate resale in another to profit from a price discrepancy
E. To borrow in one currency where interest rates are low and use the proceeds to invest in another currency where interest rates are high
65.Assume that the yen/dollar exchange rate quoted in London at 3 p.m. is ¥120 = $1, and the New York yen/dollar exchange rate at the same time (10 a.m. New York time) is ¥123 = $1. Which of the following transactions would yield immediate profit?
A. Forward exchange
B. Carry trade
C. Currency swap
D. Arbitrage
E. Currency speculation
66.The yen/dollar exchange rate is ¥120 = $1 in London and ¥123 = $1 in New York at the same time. What is the net profit if a dealer takes $1,000,000 to purchase ¥1,23,000,000 in New York and engages in arbitrage by selling it in London?
A. $34,000
B. $20,390
C. $25,000
D. $46,666
E. $39,454
67.Which of the following is true of arbitrage opportunities in foreign exchange markets?
A. They cause long-term bandwagon effects.
B. They tend to be small and they disappear in minutes.
C. They tend to occur very frequently.
D. They are only valid for dollar transactions.
E. They provide insurance against foreign exchange risk.
68.A dealer wishes to sell Thai baht for Argentine peso. Which of the following currencies is most likely to act as a vehicle currency in this transaction?
A. Malaysian ringgit
B. Japanese yen
C. British pound
D. U.S. dollar
E. South African rand
69.Which of the following is a vehicle currency due to its central role in foreign exchange deals?
A. South African rand
B. U.S. dollar
C. British pound
D. Japanese yen
E. Chinese renminbi
70.In terms of foreign exchange transactions, the _____ has replaced the German mark as the world’s second most important vehicle currency.
A. euro
B. yen
C. pound
D. riyal
E. mark
