FX EXAMINATION SET 2026 SOLVED
QUESTIONS GRADED A+
● Which currency is the most traded in the foreign exchange market?
Answer: USD (44% of daily turnover)
● What percentage of daily turnover does the Euro represent in the
foreign exchange market? Answer: 16%
● What is the largest center for foreign exchange trading? Answer: UK,
with a daily turnover of $2 billion
● What are the two main types of foreign exchange systems? Answer:
Floating and Fixed
● What is a benefit of a floating exchange rate system? Answer: The
market determines its own level, acting as a natural buffer to economic
distortions.
● What is a disadvantage of a floating exchange rate system? Answer:
Market-set levels may not be desirable.
, ● What does it mean for a currency to be fixed? Answer: It is artificially
pegged to a reference standard, requiring government or central bank
intervention.
● What is a benefit of a fixed exchange rate system? Answer:
Predictability of exchange rates.
● What is a disadvantage of a fixed exchange rate system? Answer:
Heightened degree of intervention can cause distortions and require
adjustments.often devaluations
● What happens if a local currency does not reflect its pegged value?
Answer: A black market may arise, requiring central bank intervention.
● How does central bank intervention differ between floating and fixed
regimes? Answer: Intervention is less frequent in floating regimes.
● What proportion of foreign exchange market is nz Answer: 1%
● Is a floating market self correcting Answer: Yes any differences in
demand and supply are normally worked out
● Floating market is subject to Answer: Demand and supply
QUESTIONS GRADED A+
● Which currency is the most traded in the foreign exchange market?
Answer: USD (44% of daily turnover)
● What percentage of daily turnover does the Euro represent in the
foreign exchange market? Answer: 16%
● What is the largest center for foreign exchange trading? Answer: UK,
with a daily turnover of $2 billion
● What are the two main types of foreign exchange systems? Answer:
Floating and Fixed
● What is a benefit of a floating exchange rate system? Answer: The
market determines its own level, acting as a natural buffer to economic
distortions.
● What is a disadvantage of a floating exchange rate system? Answer:
Market-set levels may not be desirable.
, ● What does it mean for a currency to be fixed? Answer: It is artificially
pegged to a reference standard, requiring government or central bank
intervention.
● What is a benefit of a fixed exchange rate system? Answer:
Predictability of exchange rates.
● What is a disadvantage of a fixed exchange rate system? Answer:
Heightened degree of intervention can cause distortions and require
adjustments.often devaluations
● What happens if a local currency does not reflect its pegged value?
Answer: A black market may arise, requiring central bank intervention.
● How does central bank intervention differ between floating and fixed
regimes? Answer: Intervention is less frequent in floating regimes.
● What proportion of foreign exchange market is nz Answer: 1%
● Is a floating market self correcting Answer: Yes any differences in
demand and supply are normally worked out
● Floating market is subject to Answer: Demand and supply
