Ch005MarketforForeignExchange学习资料.docx

Ch005MarketforForeignExchange学习资料.docx

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Ch005MarketforForeignExchange学习资料

Ch005-Market-for-Foreign-Exchange

Eun&Resnick4e

CHAPTER5TheMarketforForeignExchange

FunctionandStructureoftheFXMarket

InternationalFinanceinPractice:

TheMouseTakesOvertheFloor

FXMarketParticipants

CorrespondentBankingRelationships

InternationalFinanceinPractice:

WhereMoneyTalksVeryLoudly

TheSpotMarket

SpotRateQuotations

TheBid-AskSpread

SpotFXTrading

Cross-ExchangeRateQuotations

AlternativeExpressionsfortheCross-ExchangeRate

TheCross-RateTradingDesk

TriangularArbitrage

SpotForeignExchangeMarketMicrostructure

TheForwardMarket

ForwardRateQuotations

LongandShortForwardPositions

ForwardCross-ExchangeRates

SwapTransactions

ForwardPremium

Summary

MINICASE:

ShrewsburyHerbalProducts,Ltd.

FunctionandStructureoftheFXMarket

1Theworld’slargestforeignexchangetradingcenteris:

a）NewYork

b）Tokyo

c）London

d）HongKong

Answer:

c）

2Onaverage,worldwidedailytradingofforeignexchangeis

a）impossibletoestimate

b）$15billion

c）$504billion

d）$1.88trillion

Answer:

d）

3Theforeignexchangemarketcloses

a）Never

b）4:

00p.m.EST（NewYorktime）

c）4:

00p.m.GMT（Londontime）

d）4:

00p.m.（Tokyotime）

Answer:

a）

FXMarketParticipants

4Mostforeignexchangetransactionsarefor:

a）Interventionbycentralbanks

b）Interbanktradesbetweeninternationalbanksornonbankdealers

c）retailtrade

d）purchaseofhardcurrencies

Answer:

b）

5Thedifferencebetweenabrokerandadealeris

a）Dealersselldrugs,brokerssellhouses.

b）Brokersbringtogetherbuyersandsellers,butcarrynoinventory.Dealersstandreadytobuyandsellfromtheirinventory.

c）Brokerstransactinstocksandbonds;currencyisboughtandsoldthroughdealers.

d）Noneoftheabove

Answerb）

Rationale:

ifsomeonecomplainsabouta）beingcorrect,askthemwhowouldsellacrackhouseoramethlab.

6MostInterbanktradesare

a）Speculativeorarbitragetransactions

b）Simpleorderprocessingfortheretailclient

c）Overnightloansfromonebanktoanother

d）Brokeredbydealers

Answera）

7Atthewholesalelevel

a）MosttradingtakesplaceOTCbetweenindividualsontheflooroftheexchange

b）Mosttradingtakesplaceoverthephone

c）MosttradingflowsoverReutersandEBSplatforms

d）Mosttradingflowsthroughspecialized“broking”firms

Answer:

c）

8Interventionintheforeignexchangemarketistheprocessof:

a）Acentralbankrequiringthecommercialbanksofthatcountrytotradeatasetpricelevel.

b）Commercialbanksindifferentcountriescoordinatingeffortsinordertostabilizeoneormorecurrencies.

c）Acentralbankbuyingorsellingitscurrencyinordertoinfluenceitsvalue.

d）Thegovernmentofacountryprohibitingtransactionsinoneormorecurrencies.

Answer:

c）

CorrespondentBankingRelationships

9ConsideraU.S.importerdesiringtopurchasemerchandisefromaDutchexporterinvoicedineuros,atacostof€512,100.TheU.S.importerwillcontacthisU.S.bank（whereofcoursehehasanaccountdenominatedinU.S.dollars）andinquireabouttheexchangerate,whichthebankquotesas€1.0242/$1.00.Theimporteracceptsthisprice,sohisbankwill____________theimporter’saccountintheamountof____________.

a）Debit,$500,000

b）Credit,€512,100

c）Credit,$500,000

d）Debit€512,100

Answer:

a）

Rationale:

debit,sincetheimporterispaying.$500,000=€512,100×$1.00/€1.0242

TheSpotMarket

10Thespotmarket

a）Involvesthealmost-immediatepurchaseorsaleofforeignexchange.

b）Involvesthesaleoffutures,forwards,andoptionsonforeignexchange

c）Takesplaceonlyonthefloorofaphysicaltradingfloor

d）Alloftheabove.

Answer:

a）

11Spotforeignexchangetrading

a）accountsforabout5percentofallforeignexchangetrading

b）accountsforabout20percentofallforeignexchangetrading

c）accountsforabout35percentofallforeignexchangetrading

d）accountsforabout70percentofallforeignexchangetrading

Answer:

d）

SpotRateQuotations

Country

U.S.$equiv.

CurrencyperU.S.$

Tuesday

Monday

Tuesday

Monday

Britain（Pound）£62,500

1.6000

1.6100

0.625

0.6211

1MonthForward

1.6100

1.6300

0.6211

0.6173

3MonthsForward

1.6300

1.6600

0.6173

0.6024

6MonthsForward

1.6600

1.7200

0.6024

0.5814

12MonthsForward

1.7200

1.8000

0.5814

0.5556

12Usingthetableshown,whatisthemostcurrentspotexchangerateshownforBritishpounds?

Useadirectquote

a）$1.61=£1.00

b）$1.60=£1.00

c）$1.00=£0.625

d）$1.72=£1.00

Answer:

b）

13ItiscommonpracticeamongcurrencytradersworldwidetobothpriceandtradecurrenciesagainsttheU.S.dollar.Infact,BISstatisticsindicatethatabout__percentofcurrencytradingintheworldinvolvestheU.S.dollarononesideofthetransaction

a）90percent

b）75pe