Podcast
Questions and Answers
What is a natural hedge?
What is a natural hedge?
- A contract that gives its holder the right to buy or sell an asset
- A situation where aggregate risk is reduced by derivatives transactions (correct)
- A type of derivative transaction involving two counterparties
- A method used by MNCs to lock in exchange rates
What distinguishes currency future contracts from forward contracts?
What distinguishes currency future contracts from forward contracts?
- Currency future contracts involve standard contract specifications. (correct)
- Currency future contracts involve non-deliverable transactions.
- Forward contracts offer greater liquidity.
- Forward contracts are based on cross-rates.
Which market is commonly traded on the Chicago Mercantile Exchange (CME)?
Which market is commonly traded on the Chicago Mercantile Exchange (CME)?
- Currency Spot Market
- Currency Futures Market (correct)
- Non-Deliverable Forward Contracts Market
- Forward Contracts Market
What is the purpose of forward contracts for MNCs?
What is the purpose of forward contracts for MNCs?
How is the price of currency futures typically determined?
How is the price of currency futures typically determined?
What does the bid/ask spread indicate for less liquid currencies?
What does the bid/ask spread indicate for less liquid currencies?
Why are currency futures contracts considered similar to forward contracts?
Why are currency futures contracts considered similar to forward contracts?
What does it mean when the forward rate is at a premium compared to the current spot rate?
What does it mean when the forward rate is at a premium compared to the current spot rate?
What is the Strike (Exercise) Price in options trading?
What is the Strike (Exercise) Price in options trading?
In currency futures, what does the term 'arbitrage' refer to?
In currency futures, what does the term 'arbitrage' refer to?
What does a non-deliverable forward contract involve?
What does a non-deliverable forward contract involve?
What does a Call Option allow its holder to do?
What does a Call Option allow its holder to do?
What is the primary function of rural banks?
What is the primary function of rural banks?
Which entities are considered foreign participants in the context of the text?
Which entities are considered foreign participants in the context of the text?
What distinguishes private development banks from government institutions with similar names?
What distinguishes private development banks from government institutions with similar names?
Which sector do thrift banks primarily target for providing funds?
Which sector do thrift banks primarily target for providing funds?
What characterizes commercial banking institutions according to the text?
What characterizes commercial banking institutions according to the text?
What is a significant aspect of central banks' oversight responsibilities?
What is a significant aspect of central banks' oversight responsibilities?
What is the primary role of the BSP in relation to banks?
What is the primary role of the BSP in relation to banks?
Why does BSP need to control credit according to the text?
Why does BSP need to control credit according to the text?
Which group is primarily described as receiving income from wages and salaries?
Which group is primarily described as receiving income from wages and salaries?
What do financial institutions primarily do according to the text?
What do financial institutions primarily do according to the text?
Which entity is responsible for managing a state's currency, money supply, and interest rate?
Which entity is responsible for managing a state's currency, money supply, and interest rate?
What is the purpose of non-financial institutions according to the text?
What is the purpose of non-financial institutions according to the text?
What is the primary purpose of a trust company?
What is the primary purpose of a trust company?
Which entity regulates non-stock savings and loans associations?
Which entity regulates non-stock savings and loans associations?
What distinguishes financing companies from trust companies?
What distinguishes financing companies from trust companies?
Which of the following is a characteristic of other non-bank financial institutions?
Which of the following is a characteristic of other non-bank financial institutions?
What type of funds does the Government Service Insurance System (GSIS) administer?
What type of funds does the Government Service Insurance System (GSIS) administer?
When did the Social Security System (SSS) commence its operations?
When did the Social Security System (SSS) commence its operations?
