1. A ______contract is between a bank and its customer and requires a fixed delivery date, at a fixed exchange rate for a specified amount of a foreign currency to be delivered or purchased.

A. Currency swap

B. Currency forward

C. Currency options

D. Currency futures

2. When exchange rate are at _____, there is little to no pressure on the rates to change.

A. the world market rate

B. Parity

C. Arbitrage

D. the hedged mode

3. One important assumption when hedging foreign currency is that the hedger _______.

A. buys the forward contract from a bank

B. does not know which direction future exchange rates will change

C. knows which direction future exchange rates will change

D. buys the forward contract from a legally recognized stock markets