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41) Which of the following is NOT one of the top exchanges that trade in foreign currency futures and options?

A) CME

B) UBS

C) NYSE Liffe

D) NASDAQ OMX

42) When selecting a commercial and/or investment bank to deal in foreign exchange, corporations are most likely to use ________.

A) the exchange-based market rather than the over-the-counter market

B) more than one bank to meet different needs

C) banks located in the home country

D) investment banks only

43) Companies most likely use the foreign exchange market to ________.

A) diversify their expenses from other sources

B) convert money for use in financial transactions

C) increase their presence on the black market

D) acquire currency from emerging markets

44) Companies most likely use the foreign exchange market to ________.

A) establish fair currency trading policies

B) facilitate regular business transactions

C) establish a global market presence

D) diversify their hedge funds

45) If a company from Country A decides to sell merchandise to a company from Country B, then the company from Country A ________.

A) will denominate the sale in its own currency since it is too hard to convert foreign currency

B) will denominate the sale in the currency of the buyer since it is too hard for them to convert foreign currency

C) can denominate the sale in either currency and use the foreign exchange market to convert currency

D) can use the OTC market to convert receipts in the future and the exchange markets to convert receipts in the spot market

46) Which of the following is NOT a reason a company would deal in foreign exchange?

A) to pay or receive dividends in a foreign currency

B) to speculate on possible future movements in a currency

C) to buy and sell merchandise denominated in a foreign currency

D) to import merchandise denominated in its currency rather than the currency of the exporter

47) In a ________, one party directs another party to make payment.

A) reverse letter of credit

B) commercial bill of exchange

C) commercial bill of trade

D) confirmed irrevocable foreign exchange transaction

48) Gomez Enterprises, a firm based in Mexico City, exported 1,000 circuit boards to Taylor Industries, a firm based in Chicago. Taylor received a document from Gomez that requests immediate payment for the goods. Gomez has most likely sent a ________.

A) time draft

B) sight draft

C) spot draft

D) futures draft

49) A document requesting payment 30 days after delivery is known as a ________.

A) time draft

B) sight draft

C) spot draft

D) futures draft

50) An irrevocable letter of credit ________.

A) is issued by a global credit agency

B) is the basis for multilateral credit netting

C) can be amended only if all parties involved agree

D) obligates the exporter's bank to pay interest to the importer

 

 

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