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71) The bid is the price at which the trader is willing to sell foreign currency.

72) In the spot market, the spread is the difference between the bid and offer rates and is the trader's profit margin.

73) If the forward rate for a foreign currency is less than the spot rate, the foreign currency is selling at a forward premium.

74) A currency sells at a forward premium when the forward rate is greater than the spot rate.

75) Options are more flexible than forward contracts.

76) An offer is the right but not the obligation to buy or sell foreign currency.

77) Commercial banks look at foreign-exchange trading as a service extended primarily to important customers, not as a major business activity of its own.

78) Although most foreign exchange activity takes place through big money center banks, the use of electronic trading has allowed even regional banks to deal directly in foreign exchange markets.

79) One reason that companies use the foreign exchange market is to diversify their expenses from other sources.

80) Companies use the foreign exchange market to convert money for use in financial transactions.



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