Exchange Rates Quiz

Exchange Rates: ten practice questions on currency calculations and market mechanisms. Every answer is explained.

Free, with no sign-up.

For High school students and adults reviewing the topic.

About 12 minutes. 10 questions.

How does it work?

Choose one answer or enter a number in the stated unit, then check it.
Read the explanation after answering.
Round only the final answer to the precision requested.

What will you get?

Review your score and the reasoning for each answer.

Question 1At an illustrative rate of 1 domestic unit = 1.6 foreign units, convert 275 domestic units into foreign units before fees. Round to two decimal places.

Enter a number in foreign units.

Answers within 0.005 foreign units of the expected value are accepted.

Question 2An illustrative quote is 2.5 foreign units per domestic unit. Find the inverse quote in domestic units per foreign unit, rounded to four decimal places.

Enter a number in domestic units/foreign unit.

Answers within 0.00005 domestic units/foreign unit of the expected value are accepted.

Question 3A domestic currency rises from 0.80 to 0.92 foreign units per domestic unit. Calculate its percentage appreciation, rounded to two decimal places in %.

Enter a number in %.

Answers within 0.005 % of the expected value are accepted.

Question 4An import costs 630 foreign units. The quote falls from 1.8 to 1.5 foreign units per domestic unit. Find the new import cost in domestic units, rounded to two decimal places.

Enter a number in domestic units.

Answers within 0.005 domestic units of the expected value are accepted.

Question 5A central bank promises a target exchange rate and trades reserves to defend it. Which arrangement is described?

A forward contract between two private exportersA consumer price index adjusted for importsA pegged currency defended through the monetary authority’s tradesA freely floating rate with no target to defend

Question 6Buy orders for a floating currency increase while other influences are unchanged. What pressure does this exert on its price?

Downward pressure because buyers use up the currencyA rise in its relative value as demand competes for available supplyNo price pressure until the central bank changes a pegEqual percentage increases in both sides of the quote

Question 7A converter displays a midpoint rate, but a cash desk charges a spread and a fixed fee. What comparison captures the customer’s actual terms?

The midpoint rate multiplied by the number of providersThe complete transaction charge shown by the spreadThe quoted rate at the start of the previous monthThe full home-currency payment per foreign unit received

Question 8An exporter fixes a future conversion rate in a forward contract. What trade-off has it made?

Less uncertainty in exchange for forgone favorable movesA larger foreign invoice created by the contractHigher revenue if the market moves in either directionProtection from customers refusing to pay their invoices

Question 9Strong economic news coincides with a currency falling. Which account explains how that response is possible?

The exchange market reverses the sign of published growth figuresTraders had already priced in a better resultPositive headlines lower a currency by signaling falling demandA rise in economic output mechanically lowers the currency’s value

Question 10The nominal exchange quote stays fixed while domestic prices rise relative to foreign prices. Which measure captures the resulting change in goods’ relative cost?

The number of banknotes used to settle a paymentThe frequency with which the quote is printedThe reciprocal of the nominal currency conversion quoteThe real rate adjusted for relative price levels

Answer every question to see and share your score.

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