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. If EUR/USD is quoted to you as 1.1050-53, does this price represent?
A. The number of EUR per USD
B. The number of USD per EUR
C. Depends on whether the price is being quoted in Europe or the US
D. Depends on whether the price is being quoted interbank or to a customer
Click on the Detail Button to view the Formula Sheet. How much is a big figure worth per million of base currency if EUR/GBP is 0.6990?
A. GBP 10,000
B. EUR 10,000
C. GBP 6,990
D. EUR 6,990
Click on the Detail Button to view the Formula Sheet. What is the incentive for market-making?
A. Bid/offer spread
B. Flow information
C. Relationships
D. All of the above
Click on the Detail Button to view the Formula Sheet. The forward points are calculated from:
A. The level of interest rates in the base currency
B. The level of interest rates in the quoted currency
C. The interest rates in the two currencies
D. Your expectations of the future spot rate
Click on the Detail Button to view the Formula Sheet. EURIBOR is the:
A. Daily fixing of EUR interbank deposit rates in the European market
B. Daily fixing of EUR interbank deposit rates in the London market
C. Another name for EUR LIBOR
D. The ECBs official repo rate
Click on the Detail Button to view the Formula Sheet. Which of the following rates represents the highest investment yield in the euromarket?
A. Semi-annual bond yield of 3.75 %
B. Annual bond yield of 3.75 %
C. Semi-annual money market yield of 3.75 %
D. Annual money market rate of 3.75 %
Click on the Detail Button to view the Formula Sheet. Which of the following are transferable instruments?
A. Eurocertificate of deposit
B. US Treasury bill
C. CP
D. All of the above
Click on the Detail Button to view the Formula Sheet. Which of the following is always a secured instrument?
A. ECP
B. Repo
C. Interbank deposit
D. CD
Click on the Detail Button to view the Formula Sheet. Which of the following is sometimes called two-name paper?
A. ECP
B. BA or bank bill
C. Treasury bill
D. CD
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