11) A foreign exchange transaction is a disagreement between a buyer and a seller that a varied amount of one currency will be delivered for some other currency at a non- specified rate. True False

12) The three functions of the foreign exchange market are to: (1) transfer purchasing power, (2) provide credit, and (3) maximize foreign exchange risk True False

13) The Bank for International Settlement (BIS) is not a foreign exchange market participant. True False

14) The role of the BIS is to foster international monetary and financial stability and financial co-orporation with commercial banks. True False

15) Continuous Linked Settlement (CLS) eliminates the settlement risk in foreign exchange transactions. True False.

16) Forward exchange rates are determined by the relationship between spot exchange rate and interest or inflation rates in the domestic and foreign countries. True False

17) An FX swap transaction in the interbank market is the simultaneous purchase and sale of a varied amount of foreign exchange for three different value dates. True False

18) In an FX SWAP transaction, the parties are essentially loaning each other money and repay the amounts at a specified date and at a specified exchange rate. True False

19) A futures contract is a forward contract that is traded on a non-organized exchange and subject to the guidelines and rule applied by that exchange. True False

20) Currency futures contracts are marked-to-market daily. What does this statement mean?

21) In currency options transactions, if the strike rate is exactly at the spot rate, it is called OTMS (out-of-the -money-spot) True False

22) The biggest market on earth is the stock market. It is 25 times bigger than the commodities market. It handles about $6 trillion dollars worth of transactions daily. True False