CIPS Exam L3M1 Topic 2 Question 20 Discussion

Actual exam question for CIPS's L3M1 exam

Question #: 20
Topic #: 2

[All L3M1 Questions]

The price of one currency expressed in terms of another currency is called the:

ABase rate

BEquilibrium rate

CExchange rate

DInterest rate

Show Suggested Answer

Suggested Answer: C

Exchange rate - the rate at which the currencies are exchanged. This rate can vary frequently, some-times several times per hour, depending on circumstances.

The interest rate is the rate charged on loans - the cost of borrowing.

The base rate is the basic interest rate used for agreeing loans within an economy. This rate is nor-mally set by the government or the central bank. Loans within that economy will usually be at a higher rate than the base rate, often much higher.

The equilibrium rate (more commonly 'equilibrium price') is the rate at which supply and demand meet, not necessarily related to currency.

by Dierdre at Sep 13, 2024, 09:26 AM

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Stanton

21 days ago

Exchange rate, easy peasy. Although I do wish I could just use bitcoins for everything and never have to worry about exchange rates!

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Tequila

1 days ago

Yeah, exchange rates can be a hassle sometimes.

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Lamar

6 days ago

I think the answer is C) Exchange rate.

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Elenore

7 days ago

I agree, using bitcoins would make things so much simpler!

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Lilli

25 days ago

I'll go with exchange rate. Seems like the most logical choice, unless the exam writer is trying to trick us with some obscure financial jargon.

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Hillary

28 days ago

Exchange rate, without a doubt. Although I do wonder how the exchange rate is calculated. Probably some kind of magic, right?

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Louis

7 days ago

That makes sense, thanks for clarifying!

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Nathan

16 days ago

So, the correct answer is C) Exchange rate.

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Jenise

17 days ago

It's actually not magic, the exchange rate is calculated based on supply and demand for each currency.

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Lashunda

1 months ago

Exchange rate, for sure. I can't imagine any other option being correct here.

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Derrick

1 days ago

I think it's the base rate, actually.

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Myra

23 days ago

I agree, it's definitely the exchange rate.

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Frederica

1 months ago

Hmm, exchange rate sounds like the right answer. Is that the one that fluctuates based on supply and demand?

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Adell

14 days ago

Exactly! The exchange rate is the correct answer and it does indeed fluctuate based on supply and demand.

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Gary

25 days ago

I think it's C) Exchange rate. It makes sense that it fluctuates based on supply and demand.

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Frederica

26 days ago

That's right! The exchange rate does fluctuate based on supply and demand.

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Ling

1 months ago

Yes, you're correct! The exchange rate is the price of one currency in terms of another.

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Janna

1 months ago

I'm not sure, but I'll go with C as well. It seems like the most logical option.

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Maryrose

2 months ago

The exchange rate is the term I'm familiar with. That's my pick.

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Kirby

1 months ago

I'm pretty sure it's the equilibrium rate.

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Lashawna

1 months ago

I think it's the base rate.

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Tresa

1 months ago

I agree, the exchange rate is the correct term.

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Hildegarde

2 months ago

I think it's C too. It makes sense because it's about the value of one currency compared to another.

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Carmelina

2 months ago

C) Exchange rate

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