In the interbank market for foreign exchange, the refers to the difference between the offer rate and the bid rate.
A. Cross rate
B. Option
C. Arbitrage
D. Spread
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Which method of trading currencies involves the conversion of one currency into another at one point in time with an agreement to reconvert it back to the original currency at some point in the future?
A. Forward transaction
B. Futures transaction
C. Spot transaction
D. Swap transaction
Suppose the exchange rate between the Japanese yen and the U.S. dollar is 100 yen per dollar. A Japanese stereo with a price of 60,000 yen will cost
A. $60
B. $600
C. $6000
D. None of the above
Consider Table 1. Concerning the Tuesday quotations: compared to the cost of buying 100 pounds on the spot market, if 100 pounds were bought for future delivery in 180 days the dollar cost of the pounds would be:
A. $3.40 higher
B. $3.40 lower
C. $6.80 higher
D. $6.80 lower
Consider Table 1. If one were to sell dollars for immediate delivery, on Tuesday the pound cost of each dollar would be:
A. 0.7008 pounds per dollar
B. 0.7037 pounds per dollar
C. 1.4270 pounds per dollar
D. 1.4211 pounds per dollar