PT Ch32 - Exam Name MULTIPLE CHOICE Choose the one...

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Exam Name___________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) A ________ in the foreign exchange market leads arbitrageurs to act, with the result that the forward exchange rate changes. 1) A) riskless and uncertain arbitrage situation B) riskless arbitrage situation C) risky opportunity possibility D) risky arbitrage situation 2) The fundamental fact of international finance is that different countries issue different currencies, and the relative values of those currencies may change ________. 2) A) quickly, substantially, and without warning. B) as a response to political events that make no economic sense. C) reflect economic developments. D) All of these 3) Which of the below statements is FALSE? 3) 4) Since the early 1970s, exchange rates among major currencies have been free to float, with ________ determining the relative value of a currency. Thus, each day a currency's price relative to that of another freely floating currency may stay the ________. 4) 5) Foreign - exchange risk ________. 5) 1
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6) Which of the below statements is FALSE? 6) A) Futures options are options to enter into foreign - exchange futures contracts. B) Only options on the major currencies are traded in the over - the - counter market. C) In the case of currency options, the underlying is the foreign currency specified by the option contract. D) In addition to the organized exchanges, an over - the - counter market exists for options on currencies.
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