If U.S. investors cover their exchange rate risk, the extra return for the 6 months on the U.K. treasury bills is .
A. 1.0%
B. 1.5%
C. 2.0%
D. 2.5%
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The most important (in terms of dollar value) type of foreign exchange transaction by U.S. banks is the .
A. Spot transaction
B. Forward transaction
C. Swap transaction
D. Option transaction
The exchange rate is kept the same in all parts of the market by .
A. Forward cover
B. Hedging
C. Exchange speculation
D. Exchange arbitrage
Consider Table 1. Comparing Tuesday to the previous Monday, by Tuesday the dollar had .
A. Depreciated against the pound
B. Appreciated against the pound
C. Not changed against the pound
D. None of the above
Suppose that a Swiss watch that costs 400 francs in Switzerland costs $200 in the United States. The exchange rate between the franc and the dollar is .
A. 2 francs per dollar
B. 1 franc per dollar
C. $2 per franc
D. $3 per franc