Chapter 2 Reading Notes

Question 1

Occurs when money moves across border

Answer 1

financial globalization

Question 2

A bank long on JPY would generate losses when?

Answer 2

the JPY falls

Question 3

A bank short on JPY would generate losses when?

Answer 3

the JPY rises.

Question 4

A long is?

Answer 4

positive

Question 5

A short is?

Answer 5

negative

Question 6

If the current value of JPY is USD 0.01, a bank short on JPY 10 million will lose USD ______ if the spot value increases to USD .0104

Answer 6

4,000

Question 7

What does EURUSD = 1.25 mean

Answer 7

It means 1 EUR = 1.25 USD

Question 8

Is the question before direct or indirect.

Answer 8

It is direct

Question 9

What does USDEUR = .80 mean.

Answer 9

It means 1 USD = 0.80 EUR

Question 10

Is the question before direct or indirect

Answer 10

It is indirect

Question 11

The first 3 letters of the currency pair represents what?

Answer 11

Represents the base currency (one that is being bought or sold)

Question 12

What are the last 3 letters.

Answer 12

Represents the terms currency ( the one used to buy or sell)