Click on the Detail Button to view the Formula Sheet. The Interest Rate Parity Theorem states that:
A. Interest rates in different currencies will tend to move into line with each other over time
B. Interest rates in different currencies differ due to differences in expectations about inflation
C. Selling a low interest rate currency to invest a high interest rate currency will only be profitable if one hedges the currency risk
D. Selling a low interest rate currency to invest in a high interest rate currency should not be profitable if one hedges the currency risk
Click on the Detail Button to view the Formula Sheet. How is an outright forward FX transaction quoted?
A. Forward points
B. Full forward exchange rate
C. Depends on whether it is interbank or to a customer
D. Depends on the currency pair and sometimes the term
Click on the Detail Button to view the Formula Sheet. You wish to sell a customer GBP/USD for value tomorrow. How can you hedge yourself?
A. Sell and buy GBP/USD T/N
B. Buy and sell GBP/USD T/N
C. Sell GBP/USD spot, and sell and buy GBP/USD T/N
D. Buy GBP/USD spot, and buy and sell GBP/USD T/N
Click on the Detail Button to view the Formula Sheet. What is the Gold Offered Forward Rate?
A. The price differential between spot and forward gold prices
B. The rate at which dealers will lend gold against US dollars
C. The implied forward price of gold
D. The price of gold for forward delivery
Click on the Detail Button to view the Formula Sheet. Spot cable is quoted at 1.6048-53 in the brokers and you quote a customer 1.6050-55 in USD 3 million. If they sell USD to you, how much GBP will you be short of?
A. 4,816,500.00
B. 1,868,809.57
C. 1,868,576.77
D. 4,815,900.00
Click on the Detail Button to view the Formula Sheet. If spot AUD/USD is quoted to you as 0.7406-09. How many AUD would you receive in exchange for USD 5,000,000 if you dealt on the price?
A. 3,704,500
B. 6,748,549
C. 3,703,000
D. 6,751,283
Click on the Detail Button to view the Formula Sheet. If GBP/USD is quoted to you at 1.6120-30, how much GBP would you receive if you sold USD 2,000,000 ?
A. 1,239,925.60
B. 1,237,873.80
C. 1,240,694.79
D. 1,242,720.50
Click on the Detail Button to view the Formula Sheet. If EUR/USD is 1.1025-28 and the 6-month swap is 112.50/113, what is the 6-month outright price?
A. 1.1380-1.11405
B. 1.11375-1.1141
C. 1.09125-1.0915
D. None of these
Click on the Detail Button to view the Formula Sheet.
You quote the following rates to a customer:
spot GBP/CHF 2.2005-10
3M GBP/CHF swap 120/115
At what rate do you sell GBP to a customer 3-month outright?
A. 2.1890
B. 2.2125
C. 2.1895
D. 2.1885
Click on the Detail Button to view the Formula Sheet. A forward-forward loan creates an exposure to the risk of:
A. Higher interest rates
B. Lower interest rates
C. Steepening yield curve
D. Parallel shift downwards in the yield curve
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