Which of the following statements best defines a foreign bond?

Question $1$Answer

a$.$

A bond issued in the currency of the country where the bond is issued and issued by a company domiciled in the country of issue.

b$.$

A bond issued in the currency of the country where the bond is issued, but issued by a company domiciled outside of the country of issue.

C$.$

A bond issued in a currency other than the currency of the country where the bond is issued, and issued by a company domiciled in the country of issue.

d$.$

A bond issued in a currency other than the currency of the country where the bond is issued, and issued by a company domiciled outside of the country of issue.

QUESTION $2$

All countries have a three$-$character currency code. The currency code is derived as follows: the first two letters are from the country$$s country code. The third letter is from the country$$s currency. Based on this, which country is the following currency code from: BRL

a$.$

Country is Bahrain; currency is Dinar

b$.$

Country is Botswana; currency is Pula

c$.$

Country is Brazil; currency is real

d$.$

Country is Belgium; currency is Euro

QUESTION $03$

You are provided with the following quote: EUR$/$CHF $=0\mathrm{.}9743$

If you have $10,000$ Swiss Francs $($CHF$),$ how many Euros $($EUR$)$ can you purchase?

a$.$

$10,263\mathrm{.}78$ EUR

b$.$

$9,743$ EUR

c$.$

$10,166\mathrm{.}10$ EUR

d$.$

$10,445$ EUR

QUESTION $04$

Which of the following currencies are considered to be the Queen$$s currencies and thus will be used as the base currency in any quotation, other than against the Euro?

Question $4$Answer

a$.$

GBP$,$ AUD, NZD$,$ CAD, JMD

b$.$

GBP$,$ AUD, NZD$,$ CAD, BZD

c$.$

GBP$,$ AUD, NZD$,$ CAD

d$.$

GBP$,$ AUD, NZD

QUESTION $05$

You are a resident of Canada and are provided with the following quote: GBP$/$CAD $=1\mathrm{.}5667.$

Is this considered a Direct Quote or an Indirect Quote?

Question $5$Answer

a$.$

Indirect Quote $$ the domestic currency is the base currency

b$.$

Direct Quote $$ the domestic currency is the quote currency

c$.$

Direct Quote $$ the domestic currency is the base currency

d$.$

Indirect Quote $$ the domestic currency is the quote currency

QUESTION $06$

You are provided with the following quote: USD$/$CAD $=1\mathrm{.}3251/56.$ You want to BUY $1,000$ USD from the dealer. How much will you pay in CAD?

Question $6$Answer

a$.$

CAD $1,315\mathrm{.}60$

b$.$

CAD $1,325\mathrm{.}60$

c$.$

CAD $1,320\mathrm{.}60$

d$.$

CAD $1,325\mathrm{.}10$

Question $7$

In the question above, how many PIPS or POINTS are there in the spread? $($The spread is the profit earned by the dealer and is equal to difference between the rates at which the dealer will buy and sell CAD$)?$ Given your answer to the first part of the question, how much profit does the dealer make from selling USD $100,000?$

Question $7$Answer

a$.$

CAD $60$

b$.$

CAD $40$

c$.$

CAD $50$

d$.$

CAD $500$

QUESTION $08$

You observe the following two quotations:

USD$/$CAD $=1\mathrm{.}3251$

USD$/$THB $=35\mathrm{.}9264$

Based on the above quotes, what exchange rate would you expect for CAD$/$THB$,$ computed using a cross rate?

Question $8$Answer

a$.$

CAD$/$THB $=26\mathrm{.}1122$

b$.$

CAD$/$THB $=24\mathrm{.}1122$

c$.$

CAD$/$THB $=27\mathrm{.}1122$

d$.$

CAD$/$THB $=25\mathrm{.}1122$

Question $9$

Question text

Continue with the information provided in Question #$8$ above. Assume that you also observe a quoted exchange rate of CAD$/$THB $=30\mathrm{.}0000.$ You have $$100,000$ CAD to invest. What is your potential profit from arbitrage?

Question $9$Answer

a$.$

$$11,651$

b$.$

$$12,651$

c$.$

$$10,151$

d$.$

$$10,651$

QUESTION $10$

You observe the following quotations:

Spot: GBP$/$CAD $=1\mathrm{.}5884$

$12$ Month Forward: GBP$/$CAD $=1\mathrm{.}6628$

Are GBP selling at a forward premium or a forward discount? What is the annualized forward premium or discount for GBP$?$

a$.$

GBP is selling at a Forward Premium of $4\mathrm{.}7\%$

b$.$

GBP is selling at a Forward Premium of $0\mathrm{.}47\%$

c$.$

GBP is selling at a Forward Discount of $4\mathrm{.}7\%$

d$.$

GBP is selling at a Forward Discount of $0\mathrm{.}47\%$

Question $11$Answer

you observe the following two quotations: usd$/$cad $=1\mathrm{.}3251$ usd$/$thb $=35\mathrm{.}9264$ based on the above quotes, what exchange rate would you expect for cad$/$thb$,$ computed using a cross rate?

a$.$

Exchange rate is expected to be CAD$/$CHF$=0\mathrm{.}7478$

b$.$

Exchange rate is expected to be CAD$/$CHF$=0\mathrm{.}5478$

c$.$

Exchange rate is expected to be CAD$/$CHF$=0\mathrm{.}8478$

d$.$

Exchange rate is expected to be CAD$/$CHF$=0\mathrm{.}6478$

a$.0\mathrm{.}6478$