Question: Exchange rate volatilities could be exasperated if ______(1)__ and ___(2)_______ are permitted to trade freely in the foreign exchange market. (1) saints...(2) rogues (1) saints...(2) speculators (1) rogues...(2) arbitragers (1) speculators...(2) arbitragers If the USD/CCU bid/ask spot rate is 55.50/70 and the one-month swap points is 15/20, then

Exchange rate volatilities could be exasperated if ______(1)__ and ___(2)_______ are permitted to trade freely in the foreign exchange market.

(1) saints...(2) rogues

(1) saints...(2) speculators

(1) rogues...(2) arbitragers

(1) speculators...(2) arbitragers

If the USD/CCU bid/ask spot rate is 55.50/70 and the one-month swap points is 15/20, then the one-month USD/CCU forward rate is:

55.35/50

55.35/90

55.65/50

55.65/90

Non-sterilized intervention would mean the Central bank intervenes only in the ____(1)_____ market but not in the _____(2)____ market.

(1) money...(2) foreign exchange

(1) foreign exchange..(2) money

(1) money...(2) long term

(1) long term...(2) foreign exchange

If a speculator predicts that JPY is likely to appreciate with respect to USD going forward, he would ____(1)___ USD now (buy JPY) and ___(2)_____ USD later (sell JPY).

(1) buy (2) buy

(1) sell (2) sell

(1) sell (2) buy

(1) buy (2) sell

An investor has two choices: (A) Invest USD 100,000 in the USD money market for 3 months at 4% per annum. (B) Convert USD 100,000 to EUR at spot rate of EUR/USD 1.25, invest in the German money market at 6% per annum. If interest rate parity is to hold, what should be the 3 months forward exchange rate EUR/USD?

1.24 EUR/USD

1.25 EUR/USD

1.26 EUR/USD