Introduction | Rates of Exchange | Market Drivers | Measuring FX Exposure | Business Needs for Foreign Currency | Foreign Exchange Trading | Common Instruments to Offset Risk | Summary | Resources | Activities | Assessment
1 When purchasing or selling foreign currency at a spot rate, what best describes your adverse (negative) foreign exchange risk?
2 The current market conditions indicate that in the next 90 days the US dollar is expected to decline in value. The company is currently going through a very tight cash flow period and must monitor cash closely. The company has an outstanding foreign currency payable that is due for payment in the next 60 days. The current spot rate is favorable to cover the payable due in 60 days. Which of the following would you recommend based on the current condition of the company?
3 Which of the following best defines the balance of payments?
4 Which of the following is defined as allowing open market conditions to determine the value of the currency in relationship to others?
5 Companies that have operations overseas use transfer pricing to revalue their balance sheet creating a “paper” gain or loss. Which best describes this type of exposure?
6 Which of the following best describes a forward contract?
7 Is it important to monitor foreign exchange positions on a continual basis?