GEB 3017 UF EXAM STUDY SHEET 2026
TEST QUESTIONS WITH ANSWERS
GRADED A+
◉cross rate. Answer: exchange rate between two currencies other
than the dollar
◉bid rate. Answer: price at which the dealer is willing to buy foreign
currency
◉offer rate. Answer: price at which the dealer is willing to sell
foreign currency
◉direct quote. Answer: gives value in US dollars of a unit of foreign
currency
◉indirect quote. Answer: European terms
gives value in foreign currency of one US dollar
◉base currency. Answer: denominator
,the quoted, underlying, or fixed currency
◉terms currency. Answer: numerator
◉interbank transactions. Answer: transactions between banks
◉forward discount. Answer: forward rate, future delivery price
lower than spot rate
◉forward premium. Answer: forward rate is higher than spot rate
◉CME Group. Answer: Chicago Mercantile Exchange
offers futures and options contracts in numerous foreign currencies
◉NASDAQ QMX. Answer: 3rd largest options market in the US and a
new hybrid of trading both traditional floor trading and online
trading
◉NYSE Liffe. Answer: London International Futures and Options
Exchange (LIFFE)
still trades at the US dollar/euro and euro/US dollar option contract
,◉draft / commercial bill of exchange. Answer: instrument in which
one party directs another to make a payment
◉sight draft. Answer: exporter demands payment to be made
immediately
◉time draft. Answer: exporter allows payment to be made later
◉letter of credit. Answer: obligates the buyer's bank to honor the
draft
◉confirmed letter of credit. Answer: letter of credit that is
confirmed by the another bank
◉speculation. Answer: involves buying/selling a currency based on
the expectation that it will gain/lose strength in other currencies
◉arbitrage. Answer: purchase foreign currency on one market for
immediate resale on another market
◉interest arbitrage. Answer: investing in debt instruments such as
bods in different countries to maximize profits by capturing interest-
rate and exchange-rate differentials
, ◉Economic integration. Answer: political and economic agreements
among countries that give preference to member countries in the
agreement
◉global integration. Answer: countries from all over the world
decide to cooperate through the WTO
◉bilateral integration. Answer: two countries decide to cooperate
more closely together, usually in the form of tariff reductions
◉regional integration. Answer: group of countries located in the
same geographic proximity decide to cooperate (EU)
◉General Agreement on Tariffs and Trade (GATT). Answer:
established in 1947 by 23 nations whose objective was to abolish
quotas and reduce tariffs
◉most favored nation (MFN) clause. Answer: principle that each
member must open its markets equally to every other member in
the nation as they do with their closest trading partner
◉World Trade Organization (WTO). Answer: created in 1995 to
institutionalize GATT
permanent world trade body for the purposes of facilitating
reciprocal trade negotiations and enforcing trade agreements
TEST QUESTIONS WITH ANSWERS
GRADED A+
◉cross rate. Answer: exchange rate between two currencies other
than the dollar
◉bid rate. Answer: price at which the dealer is willing to buy foreign
currency
◉offer rate. Answer: price at which the dealer is willing to sell
foreign currency
◉direct quote. Answer: gives value in US dollars of a unit of foreign
currency
◉indirect quote. Answer: European terms
gives value in foreign currency of one US dollar
◉base currency. Answer: denominator
,the quoted, underlying, or fixed currency
◉terms currency. Answer: numerator
◉interbank transactions. Answer: transactions between banks
◉forward discount. Answer: forward rate, future delivery price
lower than spot rate
◉forward premium. Answer: forward rate is higher than spot rate
◉CME Group. Answer: Chicago Mercantile Exchange
offers futures and options contracts in numerous foreign currencies
◉NASDAQ QMX. Answer: 3rd largest options market in the US and a
new hybrid of trading both traditional floor trading and online
trading
◉NYSE Liffe. Answer: London International Futures and Options
Exchange (LIFFE)
still trades at the US dollar/euro and euro/US dollar option contract
,◉draft / commercial bill of exchange. Answer: instrument in which
one party directs another to make a payment
◉sight draft. Answer: exporter demands payment to be made
immediately
◉time draft. Answer: exporter allows payment to be made later
◉letter of credit. Answer: obligates the buyer's bank to honor the
draft
◉confirmed letter of credit. Answer: letter of credit that is
confirmed by the another bank
◉speculation. Answer: involves buying/selling a currency based on
the expectation that it will gain/lose strength in other currencies
◉arbitrage. Answer: purchase foreign currency on one market for
immediate resale on another market
◉interest arbitrage. Answer: investing in debt instruments such as
bods in different countries to maximize profits by capturing interest-
rate and exchange-rate differentials
, ◉Economic integration. Answer: political and economic agreements
among countries that give preference to member countries in the
agreement
◉global integration. Answer: countries from all over the world
decide to cooperate through the WTO
◉bilateral integration. Answer: two countries decide to cooperate
more closely together, usually in the form of tariff reductions
◉regional integration. Answer: group of countries located in the
same geographic proximity decide to cooperate (EU)
◉General Agreement on Tariffs and Trade (GATT). Answer:
established in 1947 by 23 nations whose objective was to abolish
quotas and reduce tariffs
◉most favored nation (MFN) clause. Answer: principle that each
member must open its markets equally to every other member in
the nation as they do with their closest trading partner
◉World Trade Organization (WTO). Answer: created in 1995 to
institutionalize GATT
permanent world trade body for the purposes of facilitating
reciprocal trade negotiations and enforcing trade agreements
