Unit 5-1

1. The market in which currencies are bought and sold and in which currency prices are determined is called________

Foreign exchange market

2. The practice of insuring against potential losses that result from adverse changes in exchange rates is called_______

Currency hedging

3._______is the instantaneous purchase and sale of a currency in different markets for profit.

Currency arbitrage

4.________is the purchase or sale of a currency with the expectation that its value will change and generate a profit.

Currency speculation

5. In a quoted exchange rate, the currency with which another currency is to be purchased is called the_______

Quoted currency

6. In a quoted exchange rate, the currency that is to be purchased with another currency is called the_______

Base currency

7. The exchange rate requiring delivery of the traded currency within two business days is called the _____

Spot rate

8. The exchange rate at which two parties agree to exchange currencies on a specified future date is called the_______

Forward rate

9. ________is a contract requiring the exchange of an agreed-upon amount of a currency on an agreed-upon date at a specific exchange rate.

Forward contract

10. A________ is the simultaneous purchase and sale of foreign exchange for two different dates.

Currency swap

11. Currency that trades freely in the foreign exchange market, with its price determined by the forces of supply and demand is called a __________

convertible currency/ hard currency

12. An international monetary system in which nations linked the value of their paper currencies to specific value of gold was called the

Gold standard

13. A system in which the exchange rate for converting one currency into another is fixed by international agreement is called a________

Fixed exchange rate system

14. The____________ was an accord among nations to create a new international monetary system based on the value of the U.S. dollar.

Bretton Woods Agreement

15. The agency created by the Bretton Woods Agreement to provide funding for national economic development efforts is called the___________

World Bank

16.____was the agency created by the Bretton Woods Agreement to regulate fixed exchange rates and enforce the rules of the international monetary system.

The IMF

17. An exchange-rate system in which currencies float against one another with governments intervening to stabilize currencies at a particular target exchange rate is known as a _______

Managed float system

18.______is an exchange - rate system in which currencies float freely against one another, without governments intervening in currency markets.

Free float system 

19. The exchange rate at which the bank will buy a currency is called a________

Buy rate

20. A_________is called the exchange rate at which the bank will sell a currency.

Ask rate

21. А_________is a right, or option, to exchange a specific amount of a currency on a specific date at a specific rate. 

Currency option

22. А__________ is a contract requiring exchange of a specific amount of currency on a specific date at a specific exchange rate with all of these conditions fixed and not adjustable

Currency Futures contract