the economics of money, banking, and financial markets

566 #

© 2014 Pearson Canada Inc.#

5. 
   

   An agreement to exchange dollar bank deposits for euro bank deposits in one month is a
   ____.
   A) spot transaction
   B) future transaction
   C) forward transaction
   D) deposit transaction
   Answer: C
   Diff: 1 Type: MC Page Ref: 471
   Skill: Applied
   Objective List: 19.1 Summarize the basic function performed by the foreign exchange market

   
   


6. 
   

   Today 1 euro can be purchased for $1.10. This is the ____.
   A) spot exchange rate
   B) forward exchange rate
   C) fixed exchange rate
   D) financial exchange rate
   Answer: A
   Diff: 1 Type: MC Page Ref: 471
   Skill: Applied
   Objective List: 19.1 Summarize the basic function performed by the foreign exchange market

   
   


7. 
   

   In an agreement to exchange dollars for euros in three months at a price of $0.90 per euro, the
   price is the ____.
   A) spot exchange rate
   B) money exchange rate
   C) forward exchange rate
   D) fixed exchange rate
   Answer: C
   Diff: 1 Type: MC Page Ref: 471
   Skill: Applied
   Objective List: 19.1 Summarize the basic function performed by the foreign exchange market

   
   


8. 
   

   When the value of the British pound changes from $1.25 to $1.50, the pound has ____
   and the Canadian dollar has ____.
   A) appreciated; appreciated
   B) depreciated; appreciated
   C) appreciated; depreciated
   D) depreciated; depreciated
   Answer: C
   Diff: 1 Type: MC Page Ref: 471 - 472
   Skill: Applied
   Objective List: 19.1 Summarize the basic function performed by the foreign exchange market