IF class 3: entry quiz

Central banks are the largest players on the forex market in terms of generated turnover

• True

• False

Which type of transactions generate the largest part of the foreign exchange market

• spot

• swap

• forward

• options

In the following exchange rate: EUR/USD = 1.1633 or 1 EUR = 1.1633 USD, the euro is

• the base currency

• the quote currency

• the unit of account

• the cross currency

Geographically, the largest part of forex transactions is localized in

• New York (USA)

• London (UK)

• Tokyo (Japan)

• Zurich (Switzerland)

Cross exchange rates

• Are related only to cross-border transactions

• Is a name for EUR/USD or USD/JPY exchange rates (when crossing an ocean is necessary)

• Are usually applied for less traded currencies (e.g. ILS/PLN)

• Cannot be used for inter-market (triangular) arbitrage

Arbitrage allows for a risk-free profit thanks to a simultaneous purchase and sale of the same asset (including foreign exchange) on two different markets

• True

• False