Question : 47. If you buy yen forward when the yen selling at : 1284469

47. If you buy yen forward when the yen is selling at a forward premium, you will get: 
A. more yen than if you buy on spot market.
B. fewer yen than if you buy on spot market.
C. the same number of yen as on the spot market, but with a lower commission.
D. the expectation of more yen, but the difference is not locked in.

48. According to the expectations theory of exchange rates, what change is expected in the future spot exchange rate if the current spot rate is 8% lower than the forward exchange rate? 
A. Future spot rate is expected to increase by 8%.
B. Future spot rate is expected to decrease by 8%.
C. Future spot rate is expected to decrease by 4%.
D. No change is expected in the future spot rate.

49. If interest rates are higher in Italy than in the United States, the market expects that the Euro will: 
A. appreciate against the dollar.
B. depreciate against the dollar.
C. offer a higher real rate of return than the dollar.
D. be selling at a forward discount.

50. An indirect exchange rate can be converted to a direct exchange rate by: 
A. dividing the indirect rate by number of U.S. dollars required to purchase one unit of the other currency.
B. dividing the indirect rate by 100.
C. multiplying the indirect rate by the spot rate.
D. taking the inverse of the indirect rate.

51. Yesterday the spot exchange rate of yen-to-dollar was 105. What is today’s spot exchange rate if the yen has appreciated 10% against the dollar today? 
A. ¥94.5/$
B. ¥94.5/$1.10
C. ¥115.5/$
D. ¥115.5/$1.10

52. Which of the following is correct when foreign currency is contracted in the forward market? 
A. A fixed amount is paid when initiating the contract.
B. A fixed amount is paid at the end of the contract.
C. The amount to be paid is determined and paid at the end of the contract.
D. The amount to be paid is determined periodically and paid in installments during the contract.

53. If you are a currency speculator, you will always make money by: 
A. buying currency with high interest rate.
B. buying currency with low interest rate.
C. accurately predicting whether exchange rate will change more or less than the interest rate differential.
D. buying the currency with the highest interest rate differential.

54. That Italian antique was priced at 3 million lire which, fortunately, does not have to be paid for 3 months. The lira has a spot exchange rate of L2,000/$ but is trading 3 months forward at a 5% discount. If you contract ahead now, how many dollars will the antique cost? 
A. $1,425
B. $1,429
C. $1,575
D. $1,579

55. Which of the following is correct when contracting ahead in the forward exchange market? 
A. At contract close you pay either the forward rate that was contracted or the then-current rate.
B. Contracting ahead is always cheaper than waiting to pay spot rates.
C. Your cost is locked in from the beginning of the contract, regardless of market changes.
D. Paying spot price is safer than contracting forward.

56. Consider the following spot exchange rates: $1.60/£, ¥105/$, €1.6/$, and L2,020/$. Which of the following seems to violate the law of one price if gold sells for $290 per ounce in the United States? 
A. 1 troy oz. gold = £181.25
B. 1 troy oz. gold = ¥30,450
C. 1 troy oz. gold = €405
D. 1 troy oz. gold = L585,800