10. Answer the following questions based on text b:

1. Why do dealers aim for a balanced total position?

2. How do foreign exchange dealers make a profit?

3. What is the principle difference between spot and forward contracts?

4. What different ways of measuring and quoting forward exchange rate do you know?

11. Make up sentences of your own using the following expressions from text b.

To keep working balances of foreign currencies, to sell domestic currency to foreign banks, to keep in constant touch with, floating exchange rates, balanced total position, to hedge against future changes, innovative approaches, a wide variety of currency-hedging techniques, foreign exchange departments.

12. Say what is true and what is false. Correct the false sen­tences.

1. The central institutions in modem foreign exchange markets are brokerage firms and mutual funds.

2. Dealing in foreign exchange is rather safe business.

3. Dealers try to be in a long or short position in any foreign cur­rency.

4. The spot market deals in the future delivery of foreign currency.

5. If a customer does not know when he will need foreign currency he may use a future market contract.

6. There is one way of measuring and quoting forward exchange rate.

13. Match the information in column a with the correspondent information in column b.

1. The prices of foreign currencies expressed in terms of other currencies 2. There are several different ways of 3. The re­cent volatility of foreign exchange rates has given rise to 4. The central institutions in modern foreign exchange markets are 5. Transactions affecting a bank's working currency bal­ance are carried out by specialized traders with the aid of 6. Among such hedging instruments are 7. Dealers continually adjust the bank position

a. commercial banks with their foreign exchange departments. b. in dollars, yen, pounds and other foreign currencies. c. an ever-growing volume of new techniques to deal with currency risk. d. telephones, video screens and teletype equipment to keep them in constant touch with other exchange dealers. e. currency options, currency fu­tures contracts and currency swaps. f. measuring and quoting forward exchange rate. g. are called foreign exchange rates.

14. Using the words in brackets, explain the meaning of the following terms:

foreign exchange supply (the total amount of, available, at a given price);

foreign exchange demand (the total amount of, required);

foreign exchange (foreign bank notes, placed without restrictions, to the credit of, abroad);

arbitrage (several currencies, dealings, to buy and sell at the same time, profit margin);

cross rate (two currencies, exchange rate, to buy and sell);

hedge ( the deal, to minimize, risk, contract);

position ( dealer, account, amount of money, incoming, coming out, to balance).