Finance Module 13

American Depository Receipt.

A security issued in the United States that represents shares of a foreign stock and allows that stock to be traded in the United States is called a(n):

forward

An agreement to exchange currencies at some point in the future using an exchange rate agreed upon today is called a _____ trade.

spot

An agreement to trade currencies based on the exchange rate set today for settlement within two business days is called a(n) _____ trade.

pound is selling at a premium.

Suppose the spot exchange rate is $1 = £.7304 and the 1-month forward rate is $1 = £.7303. Given this, you know the:

an implicit rate based on two currencies and their individual relationships with a third currency.

The cross rate is:

one country's currency is traded for another's.

The foreign exchange market is where:

cross-rate.

The implicit exchange rate between two currencies when both are quoted in some third currency is called a(n):

exchange rate.

The price of one country's currency expressed in terms of another country's currency is called the:

cross; equal

Triangle arbitrage can occur when the _____ rate between two currencies is not _____ to the ratio of the two direct rates.

Forward trade

What kind of trade involves agreeing today on an exchange rate for settlement in 90 days?

Importers and exporters are key players in the foreign exchange market.

Which one of these statements is true?