Assume the euro is selling in the spot market for $1.33. Simultaneously, in the 3-month forward market the euro is selling for $1.35

A basic interest rate swap generally involves trading a:    A.  short-term rate for a long-term rate. B.  foreign rate for a domestic rate. C.  government rate for a corporate rate. D.  fixed rate for a variable rate. E.  taxable rate for a tax-exempt rate. Refer to section 21.1

26.

Which one of the following statements is correct concerning the foreign exchange market?    A.  The trading floor of the foreign exchange market is located in London, England. B.  The foreign exchange market is the world's second largest financial market. C.  The four primary currencies that are traded in the foreign exchange market are the U.S. dollar, the British pound, the French franc, and the euro. D.  Importers, exporters, and speculators are key players in the foreign exchange market. E.  The U.S. created a communications network called SWIFT to facilitate currency trading. Refer to section 21.2

27.

Triangle arbitrage: I. is a profitable situation involving three separate currency exchange transactions. II. helps keep the currency market in equilibrium. III. opportunities can exist in either the spot or the forward market. IV. is based solely on differences in exchange ratios between spot and futures markets.    A.  I and IV only B.  II and III only C.  I, II, and III only D.  II, III, and IV only E.  I, II, III, and IV Refer to section 21.2

28.	Spot trades must be settled:    A.  at the time of the trade. B.  on the day following the trade date. C.  within two business days. D.  within three business days. E.  within one week of the trade date. Refer to section 21.2

29.

Assume the euro is selling in the spot market for $1.33. Simultaneously, in the 3-month forward market the euro is selling for $1.35. Which one of the following statements correctly describes this situation?    A.  The spot market is out of equilibrium. B.  The forward market is out of equilibrium. C.  The dollar is selling at a premium relative to the euro. D.  The euro is selling at a premium relative to the dollar. E.  The euro is expected to depreciate in value. Refer to section 21.2