Quiz #1

1. Dollar-Swiss is currently trading at 1.4500. The trader tells you that he expects the Dollar-Swiss to go up by five biggies (big figure) in three months time. What he means is that in three months time the spot USD/CHF will trade at:

1. 1.4800
2. 1.4900
3. 1.5000
4. None of the above;

2. Dollar-Yen is trading at 120.00. If the FX rates moves up to 121.50, then means that:

1. Dollar has strengthened
2. Dollar has weakened
3. Yen has strengthened;
4. None of the above;

3. Cable (GBP/USD) is trading at 1.9525. If you buy cable (GBP/USD) then this means:

1. you buy GBP at 1.9525 against the Dollar;
2. you buy GBP and sell the Dollar at 1.9515;
3. you go long on GBP and short on USD;
4. All the above;

4. USD/JPY is trading in the spot market at 110.00. Japanese interest rates are 1.00% and the U.S. interest rates are 5.00%. You would expect to see the One year USD/JPY forward price quoted at:

1. 105.25
2. 104.95
3. 105.81
4. 105.08

5. A customer wants to buy Dollars and sell Yen in the spot market for a notional amount of US$100 million and comes to you for a quote. The most common (likely) way that you would ask for a quote to your trader for this transaction is:

1. Dollar-Yen for ten dollars;
2. Dollar-Yen for hundred dollars;
3. Yen-Dollar for ten dollars;
4. Yen-Dollar for hundred dollars;

6. You want to buy Dollar-Yen and ask for a quote from your trader/dealer. He quotes you "121 fifty sixty" (121.50/60). If you were to take the trader's price then it will mean that:

1. you'll buy Dollars and sell Yen at 121.60;
2. you'll buy Dollars and sell Yen at 121.50;
3. you'll buy Dollars and sell Yen at 121.55 (mid-market);
4. you'll sell Dollars and buy Yen at 121.60

7. A dealer (trader) quotes a bid-offer for USD/CHF as 1.2540/50. The bid price for CHF/USD would be:

1. 0.7968
2. 0.7974
3. 0.7945
4. 0.7971

8. USD/CHF spot is being quoted at 1.2500/05 and the three month forward points are quoted at 62/63. The bid ask spread in the forward (outright, i.e. the forward rate) quote would be:

1. 1 pip
2. 2 pips
3. 5 pips
4. 6 pips

Answers:

1(c)
2(a)
3(d)
4(c)
5(c)
6(a)
7(a)
8(d)

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