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FIA Foreign Exchange & Currency Markets Flashcards

6 cards from real FIA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 6 FIA Foreign Exchange & Currency Markets flashcards as text

  1. What does the term 'spot rate' refer to in the foreign exchange market?

    Answer: The rate for currency exchange settled immediately or within two business days

    The spot rate is the current exchange rate at which a currency can be bought or sold for immediate delivery, typically settling within two business days.

  2. In a USD/EUR currency pair quote of 1.0850, what does the figure 1.0850 represent?

    Answer: The number of USD required to buy one EUR

    In a USD/EUR quote, the base currency is USD, so 1.0850 means it costs 1.0850 USD to purchase one EUR.

  3. Which type of foreign exchange order guarantees execution but not a specific price?

    Answer: Market order

    A market order is executed immediately at the best available price, guaranteeing execution but not a specific rate.

  4. What is the 'bid-ask spread' in foreign exchange trading?

    Answer: The difference between the price a dealer will buy and sell a currency

    The bid-ask spread is the difference between the dealer's buying price (bid) and selling price (ask), representing the dealer's profit margin.

  5. Which institution is primarily responsible for setting US monetary policy that influences the USD exchange rate?

    Answer: The Federal Reserve (Fed)

    The Federal Reserve sets US monetary policy, including interest rates, which directly influence the value of the US dollar in global markets.

  6. What is 'currency appreciation'?

    Answer: An increase in the value of a currency relative to another currency

    Currency appreciation occurs when a currency increases in value relative to another, meaning it can buy more of the foreign currency than before.

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