Hw2new - ECN 162 International Economic Relations Ina...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
ECN 162 International Economic Relations University of California - Davis Ina Simonovska Fall 2010 Assignment 2 (Maximum Points: 100) Due Thursday, October 28, at the beginning of class. Multiple-Choice Questions (Each question is worth 3 points) Instructions: Please use scantrons to complete the multiple choice section. 1. The difference between bid (buying) rates and ask (selling) rates is called the (a) profit. (b) arbitrage. (c) spread. (d) forward transaction. 2. The size of the spread that a dealer will quote for a foreign exchange transaction will vary depending on (a) the degree of market volatility at the time. (b) the degree of risk associated with a particular currency. (c) the size of the market for the currency being traded. (d) All of above. 3. The euro is said to be selling at a ______ if the spot dollar price is $1.18 and the nine-month forward rate is $1.16 (a) forward discount (b) forward premium (c) forward spread (d) none of the above 4. A is a transaction in which both a spot transaction and a forward transaction are agreed upon simultaneously. (a) arbitrage (b) call (c) swap (d) put 5. An important feature of a is that the holder has the right, but not the obligation, to buy or sell currency. (a) swap (b) foreign exchange arbitrage (c) foreign exchange option (d) futures market contract 6. In order from highest to lowest, the top 3 trading locations for foreign exchange are:
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 09/25/2011 for the course ECN 162 taught by Professor Ina during the Fall '10 term at UC Davis.

Page1 / 4

Hw2new - ECN 162 International Economic Relations Ina...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online