This is a study guide. It is a broad information. Some of them are definitions and some are just conceptual.

1. Explain from the standpoint of the exporter and the importer the advantages and disadvantages associated with each method making payments.

2. Review the contract specifications for foreign currency options 9. What is the fee charged by the writer?

3. When would you use a currency option to hedge exchange rate risk?

4. Identify pre-shipment, shipment, and post-shipment risk.

5. Be able to calculate a currency cross rate

6. Be able to calculate an indirect combined currency quote and place in proper bid-ask order.

7. What is the bid-ask spread of a currency quote?

8. Know how the foreign exchange markets are organized such as spot and forward, arbitrageurs, traders, hedgers, and speculators.

9. Know how the clearing system works.

10. What is a cost minimizing MNC? Give examples