The Foreign Exchange Market
1) ________ seek to profit from trading in the market itself rather than having the foreign
exchange transaction being incidental to the execution of a commercial or investment transaction.
2) Foreign exchange ________ earn a profit by a bid-ask spread on currencies they purchase and
sell. Foreign exchange ________, on the other hand, earn a profit by bringing together buyers and
sellers of foreign currencies and earning a commission on each sale and purchase.
3) What are some of the reasons central banks and treasuries enter the foreign exchange markets,
and in what important ways are they different from other foreign exchange participants?
4) A ________ transaction in the foreign exchange market requires delivery of foreign exchange at
some future date.
5) What are the four currencies that constitute about 80% of all foreign exchange trading?
6) A foreign exchange ________ is the price of one currency expressed in terms of another
currency. A foreign exchange ________ is a willingness to buy or sell at the announced rate.
7) Most foreign exchange transactions are through the U.S. dollar. If the transaction is expressed as
the foreign currency per dollar this known as ________ whereas ________ are expressed as
dollars per foreign unit
Answers all questions and give short explanation. Reference the PowerPoint attached Questions are at the end of PowerPoints. You do not have to add question to the paper.