MCQ 1 Sakshu

MCQ ( 16-06-2023)
1.
GATT stands for __________
A. general agreement on tariffs and trade
B. general agreement on transport and trade
C. general arrangement on tariffs and trade
D. general agreement on transport and trade
Answer» A. general agreement on tariffs and trade
view more info and meaning of GATTexternal link
discuss
2.
As per Smithsonian Agreement 1 ounce of gold = USD _
A. 30
B. 35
C. 36
D. 38
Answer» D. 38
discuss
3.
In Loro Account, Loro means ______
A. our
B. theirs
C. yours
D. my
Answer» B. theirs
discuss
4.
GBP/ USD = 1.0376-90. In this case USD is also known as ___Currency
A. base
B. foreign
C. variable
D. transaction
Answer» C. variable
discuss
5.
Satistical residue is a part of _______
A. errors and ommissions
B. current account
C. capital account
D. reserve account
Answer» A. errors and ommissions
discuss
6.
EUR/USD = 1.2596-1.2620, Percentage Spread = _________
A. 0.0024
B. 1.2608
C. 0.19
D. 0.38
Answer» C. 0.19
discuss
7.
If NPV is zero, the project is _________
A. financially viable
B. breakeven
C. financially not viable
D. slower
Answer» B. breakeven
discuss
8.
EUR/INR 68.0000-68.0030 & INR 1.4550-1.4600 what is the arbitage oppportunity
A. 2228
B. 0
C. 2882
D. 2828
Answer» D. 2828
discuss
9.
___ risk is also called as "Accounting Exposure"
A. transaction
B. economic
C. translation
D. transmittion
Answer» C. translation
discuss
10.
ADR stands for ____________
A. asian depository receipt
B. american depository receipt
C. australian depository receipt
D. africa depository receipt
Answer» B. american depository receipt
view more info and meaning of ADRexternal link
discuss
11.
In quote of 1 USD = INR 60, is a home country
A. india
B. usa
C. france
D. russia
Answer» A. india
discuss
12.
The world’s major trading currencies, which are free to float against each other, include all of
the following except
A. british pound
B. japanese yen
C. us dollar
D. spanish peso
Answer» D. spanish peso
discuss
13.
Systematic record of economic transactions of a country during given period of time is
known as .
A. adr
B. bop
C. gdr
D. ifrs
Answer» B. bop
discuss
14.
Fund based services includes all of the following except .
A. bill discounting
B. factoring
C. lease financing
D. m&a services
Answer» D. m&a services
discuss
15.
The Exchange rate is the
A. opportunity cost at which goods are produced domestically
B. balance of trade ratio of one country to another
C. price of one country\s currency expressed in terms of another country\s currency
D. amount of currency that can be purchased with one ounce of gold
Answer» C. price of one country\s currency expressed in terms of another country\s
currency
discuss
16.
Nations that have major economic expansion attract
A. imports
B. exports
C. fdi
D. privatization
Answer» C. fdi
discuss
17.
Fee Based services includes all of the following except .
A. merchant banking
B. factoring
C. m&a services
D. custodian services
Answer» B. factoring
discuss
18.
Current account includes all of the following, except .
A. merchandise balance
B. services balance
C. fdi
D. unilateral transfers
Answer» C. fdi
discuss
19.
Reserves are held in the following forms, except .
A. foreign currency
B. gold
C. sdr
D. silver
Answer» D. silver
discuss
20.
Statistical residue is a part of .
A. errors & omissions
B. current account
C. capital account
D. reserve account
Answer» A. errors & omissions
discuss
21.
SDR is an international reserve asset created by .
A. imf
B. wto
C. world bank
D. ibrd
Answer» A. imf
discuss
22.
FDI in BOP is covered under .
A. official reserve account
B. current account
C. capital account
D. balancing items
Answer» C. capital account
discuss
23.
Under Exchange rate system, there is no interference of monetary authorities to decide
exchange rate.
A. fixed
B. floating
C. mixed
D. pegged
Answer» B. floating
discuss
24.
Under Exchange rate system, value of currency is decided by the market forces of demand
and supply.
A. fixed
B. floating
C. mixed
D. pegged
Answer» B. floating
discuss
25.
In Spot market, exchange of currencies take place on basis.
A. t+1
B. t+0
C. t+2
D. t+3
Answer» B. t + 0
26.
An account which is held within a domestic country by a foreign bank, in a currency of
domestic country is known as account
A. loro
B. nostro
C. vostro
D. swift
Answer» C. vostro
discuss
27.
SBI A/c with HSBC in UK is an example of
A. loro
B. nostro
C. vostro
D. swift
Answer» B. nostro
discuss
28.
Inverse quote for USD/DKK 5.7935 - 5.8085 is
A. dkk/usd 0.1722 - 0.1726
B. usd/dkk 0.1722 - 0.1726
C. dkk/usd 0.1726 - 0.1722
D. usd/dkk 0.1726 - 0.1722
Answer» A. dkk/usd 0.1722 - 0.1726
discuss
29.
100 INR/JPY is an indirect quote for
A. india
B. japan
C. us
D. china
Answer» A. india
discuss
30.
The quote 1 GBP = INR 99.85 is a direct quote for .
A. india
B. britain
C. us
D. china
Answer» A. india
discuss
31.
In Holgate’s principle, if Bid > Ask, Swap points of forward rate are to be
A. added
B. subtracted
C. multiplied
D. divided
Answer» B. subtracted
discuss
32.
is the smallest unit by which a currency quotation can change.
A. pip
B. bid
C. ask
D. spread
Answer» A. pip
discuss
33.
If spot USD/INR is 50, and six months forward rate is 51 then AFM is
A. 1%
B. 4%
C. 2%
D. 3%
Answer» B. 4%
discuss
34.
is a market where foreign currencies are bought & sold.
A. stock market
B. forex market
C. capital market
D. debt market
Answer» B. forex market
discuss
35.
Theory states that the exchange rate between currencies of two countries should
be equal to the ratio of the countries price levels.
A. irp
B. ppp
C. fishers
D. marshalls
Answer» B. ppp
discuss
36.
If formula I of Fishers effect is positive, borrow and invest in .
A. foreign, home
B. foreign, foreign
C. home, home
D. home, foreign
Answer» D. home, foreign
discuss
37.
is a standardized contract to exchange one currency for another at a
A. futures contract
B. options contract
C. swaps
D. forward contract
Answer» A. futures contract
discuss
38.
Foreign currency forward market is
A. over the counter unorganized market
B. organised market without trading
C. organised, listed market
D. unorganised listed market
Answer» A. over the counter unorganized market
discuss
39.
An option giving the buyer of the option the right to buy but not an obligation to buy a
currency is called
A. call option
B. put option
C. forward option
D. futures option
Answer» A. call option
discuss
40.
contacts are bilateral contracts.
A. forward
B. futures
C. options
D. swaps
Answer» A. forward
discuss
41.
bond is issued in a local market by a foreign borrower, denominated in local
currency
A. foreign bond
B. euro bond
C. domestic bond
D. euro credit
Answer» A. foreign bond
discuss
42.
bond is issued in a local market by a domestic borrower, usually denominated in
local currency
A. foreign bond
B. euro bond
C. domestic bond
D. euro credit
Answer» A. foreign bond
discuss
43.
is a negotiable instrument issued by a US bank, representing non-US company
stock, trading on the US stock Exchange.
A. adr
B. gdr
C. idr
D. euro bonds
Answer» A. adr
discuss
44.
is a negotiable instrument issued by an international depository bank, representing a
foreign company stock, trading on global stock Exchanges.
A. adr
B. gdr
C. idr
D. euro bonds
Answer» B. gdr
discuss
45.
In ADR/GDR process, _ issues depository receipts in foreign markets.
A. custodian bank
B. depository bank
C. issuing company
D. lead manager
Answer» B. depository bank
discuss
46.
IPO stands for .
A. indian profit organisation
B. investment & public offerings
C. initial prospectus offering
D. initial public offering
Answer» D. initial public offering
discuss
47.
was introduced at a time when forex reserves of the country were low.
A. fera
B. fema
C. gatt
D. exim
Answer» A. fera
discuss
48.
can authorize a person/company to deal in foreign exchange.
A. sebi
B. rbi
C. irda
D. parliament
Answer» B. rbi
discuss
49.
frames rules and guidelines for Forex Business in India
A. rbi
B. sebi
C. irda
D. fedai
Answer» D. fedai
discuss
50.
If IRR > WACC, then the Project must be
A. accepted
B. rejected
C. discarded
D. reviewed
Answer» A. accepted
51.
is known as Benefit/cost ratio
A. profitability index
B. pay back period
C. npv
D. irr
Answer» A. profitability index
discuss
52.
Lower the better applies to method of Capital budgeting
A. npv
B. pay back period
C. irr
D. profitability index
Answer» B. pay back period
discuss
53.
is not a type of foreign exchange risk.
A. transaction risk
B. translation risk
C. economic risk
D. natural risk
Answer» D. natural risk
discuss
54.
All are methods of Internally managing foreign exchange risk except, .
A. exposure netting
B. leading & lagging
C. denomination in local currency
D. forward contract
Answer» D. forward contract
discuss
55.
If two banks are quoting the following GBP rates: Bank A : Rs 78.9810 - 79.1110 and Bank B
: Rs 79. 0110 - 79.2350. The arbitrage opportunity will be .
A. 100
B. 0
C. 124
D. 142
Answer» B. 0
discuss
56.
When a company has receipts & payments in the same foreign currency due at the same
time, it can use technique of managing foreign exchange risk.
A. risk sharing agreement
B. leading
C. lagging
D. exposure netting (matching)
Answer» D. exposure netting (matching)
discuss
57.
An investor looking at reducing his risk is known as .
A. speculator
B. hedger
C. arbitrageur
D. trader
Answer» B. hedger
discuss
58.
analyses if the benefits will justify the project cost/investment done.
A. economic analysis
B. technical analysis
C. managerial analysis
D. market analysis
Answer» A. economic analysis
discuss
59.
Spot USD/INR is 60.5600/60.5700 and one month SWAP points are 600/700 then outright
forward rate will be .
A. 60.6200/60.6400
B. 60.6400/60.62 00
C. 61.1600/61.2700
D. 61.2700/61.1600
Answer» A. 60.6200/60.6400
discuss
60.
Spot CHF/DEM rate is 0.7865/78 and one month forward points are 25-20 then what will be
the one month forward CHF/DEM quote
A. 1.0365 - 0.9878
B. 0.7890 - 0.7898
C. 0.5365 - 0.5878
D. 0.7840 - 0.7858
Answer» D. 0.7840 - 0.7858
discuss
61.
The world’s major trading currencies, which are a free to float against each other, include all
of the following except__________________
A. British Pound
B. Japanese Yen
C. US Dollar
D. Spanish Peso
Answer» D. Spanish Peso
discuss
62.
National that have major economic expansion attract _____________________
A. Imports
B. Exports
C. FDI
D. Privatization
Answer» C. FDI
discuss
63.
IMF stands for ____________
A. International Monetary Fund
B. Indian Monetary Fund
C. International Monetary Finance
D. Indian Monetary Finance
Answer» A. International Monetary Fund
discuss
64.
In the foreign exchange market, the _______________ of one country is traded for the
________________of another country.
A. Currency, Currency
B. Currency, Financial instruments
C. Currency goods
D. Goods Goods
Answer» A. Currency, Currency
discuss
65.
Systematic record of economic transaction of a country during a given period of time is
_______________--
A. ADR
B. BOP
C. GDR
D. IFRS
Answer» B. BOP
discuss
66.
Funs based services includes all of the following except _______________-
A. Bill discounting
B. Factoring
C. Lease Financing
D. M & A Services
Answer» D. M & A Services
discuss
67.
_________ deals with the global rules of trade between nations.
A. WTO
B. IFC
C. IBRD
D. World Bank
Answer» A. WTO
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68.
Exchange rate is the __________________
A. Opportunity cost at which goods are produced domestically
B. Balance of trade ratio of one country to another
C. Price of one country’s currency expressed in terms of another country’s currency
D. Amount if currency that can be purchased with 1ounce of gold
Answer» C. Price of one country’s currency expressed in terms of another country’s
currency
discuss
69.
Current account includes all of the following except _______________-
A. Merchandise Balance
B. Service Balance
C. FDI
D. Unilateral Transfers
Answer» C. FDI
discuss
70.
Reserves are held in following forms, except __________________
A. Foreign Currency
B. Gold
C. SDR
D. Silver
Answer» D. Silver
discuss
71.
Statistical residue is a part of ____________________
A. Errors and Omissions
B. Current Account
C. Capital Account
D. Reserve Account
Answer» A. Errors and Omissions
discuss
72.
Difference between the value of merchandise exports and imports is
____________________
A. BOP
B. BOT
C. Capital Account
D. Official Reserve Account
Answer» B. BOT
discuss
73.
Sale or purchase of gold in BOP is covered under _____________________
A. Capital Account
B. Current Account
C. Official Reserve Account
D. Balancing Items
Answer» C. Official Reserve Account
discuss
74.
SDR is an international reserve asset created by_____________________
A. IMF
B. WTO
C. World Bank
D. IBRD
Answer» A. IMF
discuss
75.
FDI in Bop is covered under ________________
A. Capital Account
B. Current Account
C. Official Reserve Account
D. Balancing items
Answer» A. Capital Account
76.
FDI Stands for _____________
A. Foreign Direct Intermediation
B. Foreign Domestic Investment
C. Foreign Direct Investment
D. Foreign direct Investment
Answer» D. Foreign direct Investment
discuss
77.
Bretton woods is a town in _________________ in US
A. Boston
B. Seattle
C. Hampshire
D. Denver
Answer» C. Hampshire
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78.
G -10 Countries included all of the following, except ____________
A. Belgium
B. Canada
C. France
D. China
Answer» D. China
discuss
79.
Under _______ monetary unit is associated with the value of circulating gold coins.
A. Gold Specie
B. Gold Exchange
C. Gold Bullion
D. Silver
Answer» A. Gold Specie
discuss
80.
Under ____________ there is no interference of monetary authorities to decide exchange
rate.
A. Fixed
B. Floating
C. Both of these
D. Fixing
Answer» B. Floating
discuss
81.
In Smithsonian Agreement, the variation zone was increased from 1% to ____________ %’
A. 2.25
B. 2.5
C. 2.15
D. 2.35
Answer» A. 2.25
discuss
82.
In ____________ president Nixon announced that dollar would no longer be convertible into
gold.
A. 1944
B. 1945
C. 1970
D. 1971
Answer» D. 1971
discuss
83.
During BWS, value of USD was fixed at 1-ounce gold is equal to USD______________
A. 25
B. 30
C. 45
D. 35
Answer» D. 35
discuss
84.
Euro is official currency of _____ member states.
A. 25
B. 28
C. 19
D. 18
Answer» C. 19
discuss
85.
In Spot market, exchange of currencies take place on ___________
A. T +1
B. T+2
C. T+0
D. T+4
Answer» B. T+2
discuss
86.
An account which is held within a domestic country by a foreign bank, in the currency of
domestic country _________________
A. Loro
B. Nostro
C. Vostro
D. SWIFT
Answer» C. Vostro
discuss
87.
SBI Account with HSBC in Uk is an example of ___________
A. Loro
B. Nostro
C. Vostro
D. SWIFT
Answer» B. Nostro
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88.
Spot rate is also called as ________________
A. Future Price
B. Forward Price
C. Swap Price
D. Current Market Price
Answer» D. Current Market Price
discuss
89.
Inverse quote for “1GBP = 99.1100/9900 INR is INR GBP____________
A. 0.0101/0.0100
B. 0.0100/0.0105
C. 0.0105/0.0100
D. 0.0100/0.0101
Answer» D. 0.0100/0.0101
discuss
90.
If USD SGD 1.5423/33; SGD GBP 0.3323/33; GBP USD quotation is __________________
A. 1.9512/444
B. 1.9441/512
C. 1.9444/512
D. 1.9512/441
Answer» B. 1.9441/512
discuss
91.
Inverse quote for USD / DKK 5.7935 – 5.8085 is _________________
A. DKK /USD 0.1722-0.1726
B. USD / DKK 0.1722-0.1726
C. DKK / USD 0.1726-0.1722
D. USD / DKK 0.1726-0.1722
Answer» A. DKK /USD 0.1722-0.1726
discuss
92.
Holgate principle, if bid > Ask, Swap points for forward rate are to be_________
A. Added
B. Subtracted
C. Multiplied
D. Divided
Answer» B. Subtracted
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93.
_________ is the smallest unit by which a currency quotation can change.
A. PIP
B. Bid
C. Ask
D. Spread
Answer» A. PIP
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94.
_________ deal in currencies to benefit from movements in currency exchange markets.
A. Arbitrageurs
B. Hedgers
C. Speculators
D. Spread
Answer» C. Speculators
discuss
95.
Currently the largest foreign exchange market in the world is ____________-.
A. New York
B. Tokyo
C. Frankfurt
D. London
Answer» D. London
discuss
96.
__________ is real time gross settlement funds transfer system operated by the United
states Federal reserve banks.
A. Swift
B. Chips
C. Chaps
D. Fedwire
Answer» D. Fedwire
discuss
97.
Spot used INR 60- and six-months forward is USD INR 61.AFM is ____________
A. 3.33%
B. 1.13%
C. 2.33%
D. 4.33%
Answer» A. 3.33%
discuss
98.
SWIFT stands for ____________
A. System of World Interbank Financial Transportation
B. Society wide interest & financial telecommunications
C. Society for worldwide interbank Financial transportation
D. Society for Worldwide interbank Financial Tr
Answer» A. System of World Interbank Financial Transportation
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99.
_________ is market where foreign currencies are bought and sold.
A. Stock Market
B. Forex Market
C. Capital Market
D. Debt Market
Answer» C. Capital Market
discuss
100.
_________ theory states that the exchange rate between currencies of two countries should
be equal to the ratio of the countries price levels.
A. IRP
B. PPP
C. Fisher`s
D. T Bills
Answer» B. PPP
101.
Money market instruments include all the following, except _____________
A. Commercial papers
B. T -Bills
C. Certificate of Deposit
D. Equity shares
Answer» D. Equity shares
discuss
102.
In Quote of 1$ = Rs.61, __________ is a home country.
A. India
B. US
C. France
D. Australia
Answer» A. India
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103.
If USD /CAD 1.1630, 3 months forward 1. 1675.Annualized interest rate CAD 6%, USD 4%.
Arbitrage gain will be_____________
A. 0
B. 1078
C. 1087
D. 1870
Answer» C. 1087
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104.
PPP theory ____________government intervention.
A. Ignores
B. Includes
C. Requires
D. Fishers
Answer» A. Ignores
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105.
________ theory states that exchange rate between two currencies is directly affected by
their interest rates.
A. IRP
B. PPP
C. Fisher`s
D. Home Foreign
Answer» C. Fisher`s
discuss
106.
If formula I of Fishers effect is positive, Borrow ___________ , invest __________.
A. Foreign, Home
B. Foreign, Foreign
C. Home, Home
D. Home Foreign
Answer» D. Home Foreign
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107.
__________ is a standardized contract to exchange one currency for another at a special
date in the future at a price (exchange rate) that is fixed on the purchase date.
A. Futures Contract
B. Options Contract
C. Swaps
D. Forward contract
Answer» A. Futures Contract
discuss
108.
The _______ requires that an upfront margin to trade on an exchange.
A. Currency forwards
B. Currency options
C. Currency FTF`s
D. Currency Futures
Answer» D. Currency Futures
discuss
109.
Which of the following is false ________
A. Futures contracts trade on a financial exchange
B. Futures contracts are more liquid than forward contracts
C. Futures contracts are marked to market
D. Futures contracts allow fewer delivery options than forward contracts
Answer» B. Futures contracts are more liquid than forward contracts
discuss
110.
Which of the following does the most to reduce default risk for futures contracts_________
A. High liquidity
B. Flexible delivery arrangements
C. Marking to market
D. Credit checks for both buyers and sellers
Answer» C. Marking to market
discuss
111.
Foreign currency forward market is ___________
A. An over the counter unorganized market
B. Organized market without trading
C. Organized listed market
D. Unauthorized listed market
Answer» A. An over the counter unorganized market
discuss
112.
Which of the following financial instruments is primarily used to transfer risk _____________
A. Bonds
B. Home Mortgages
C. Futures Contract
D. Stocks
Answer» C. Futures Contract
discuss
113.
An option giving the buyer of the option the right but not the obligation to buy a currency is
_____________
A. Call option
B. Put option
C. Forward option
D. Future option
Answer» A. Call option
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114.
Regulation _________ of federal Reserve Act imposed a ceiling on interest rates that could
be paid on deposits by Banks in the US.
A. P
B. Q
C. R
D. M
Answer» B. Q
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115.
__________ bond is issued in a local market by a foreign borrower, denominated in local
currency.
A. Foreign
B. Euro
C. Domestic
D. Euro Credit
Answer» A. Foreign
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116.
___________ once issued bonds with coupon rates tied to its financial performance.
A. Electrolux
B. Wait Disney
C. Japan
D. Infosys
Answer» B. Wait Disney
discuss
117.
______________ is type of security listed on Luxembourg.
A. ADR
B. GDR
C. IDR
D. CDR
Answer» B. GDR
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118.
Level _________ ADR `s must comply with various SEC rule, including full registration and
reporting requirements of SEC.
A. I
B. II
C. III
D. IV
Answer» C. III
discuss
119.
ADR `s are dominated in _______ currency.
A. US $
B. Euro
C. GBP
D. INR
Answer» A. US $
discuss
120.
In ADR and GDR process, _______ issues the depository Receipts in Foreign Markets.
A. Custodian bank
B. Depository Bank
C. Issuing Company
D. Lead manager
Answer» B. Depository Bank
discuss
121.
The Dow Jones Industrial Average (DJIA) contains _________ of the largest and most
influential companies (blue chip companies) is the US__________
A. 35
B. 25
C. 40
D. 30
Answer» D. 30
discuss
122.
Required Return from an investment =____________
A. Risk free return + Risk premium
B. Risk free Return – Risk Premium
C. Risk free return x Risk premium
D. Risk free Return / Risk Premium
Answer» A. Risk free return + Risk premium
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123.
IPO stands for ____________
A. Indian Profit Organization
B. Investment and Public Offering
C. Initial Public Offering
D. Initial Prospectus Offering
Answer» C. Initial Public Offering
discuss
124.
An unsponsored ADR, __________
A. Complies with regulatory reporting
B. Is listed on International stock exchanges
C. Trades in OTC market
D. Is issued by a bank on behalf of foreign company whose equity serves as underlying
asset
Answer» C. Trades in OTC market
discuss
125.
________ was introduced at a time when forex reserves of the country were low.
A. FERA
B. FEMA
C. GATT
D. IMF
Answer» A. FERA
126.
As per FEMA, no person, other than ________ would enter in any transactions of the foreign
currency.
A. Offshore banks
B. Parliament
C. Government
D. Authorized Dealer
Answer» D. Authorized Dealer
discuss
127.
The monetary penalty payable under FERA was nearly ___________times the amount
involved.
A. Three
B. Five
C. Two
D. Six
Answer» B. Five
discuss
128.
__________ implies investment made with an intent of obtaining an ownership stake in an
enterprise domiciled in a country by an enterprise situated in some other country.
A. FDI
B. FPI
C. Two
D. Six
Answer» B. FPI
discuss
129.
RBI has granted license to certain established firms, hotels and other organizations
permitting them to deal in foreign currency notes, coins and travelers’ cheques. They are
termed as ___________
A. Authorized Banks
B. Authorized Dealers
C. Authorized Money changers
D. Authorized shopkeeper
Answer» C. Authorized Money changers
discuss
130.
FEDAI stands for _____________
A. Foreign Exchange dealers act of India
B. Foreign Exchange direct association of India
C. Foreign exchange dealers association Index
D. Foreign exchange dealers association of India
Answer» D. Foreign exchange dealers association of India
discuss
131.
____________ can authorize a person / company to deal in foreign exchange.
A. SEBI
B. RBI
C. IRDA
D. Parliament
Answer» B. RBI
discuss
132.
__________ is the process of analyzing and ranking proposed projects to determine which
ones deserving of an investment.
A. IPO
B. Debt financing
C. Capital Budgeting
D. Budgeting
Answer» C. Capital Budgeting
discuss
133.
Walmart opening a new retail outlet is an example of _______________ project.
A. Expansion
B. Regulatory
C. Replacement
D. R&D
Answer» A. Expansion
discuss
134.
Net amount of all cash flowing in and out of the business, from all sources is ____________
cash flow.
A. Incremental
B. Total
C. Terminal
D. Capital budgeting
Answer» B. Total
discuss
135.
_________ are the initial outlays required to analyse a project that cannot be recovered
even if a project is accepted.
A. Opportunity cost
B. Externally
C. Cannibalization
D. Sunk cost
Answer» D. Sunk cost
discuss
136.
___________ means transfer of corporate money from a foreign country back to its home
country.
A. Repatriation
B. Capital Budgeting
C. Withholding
D. Holding
Answer» A. Repatriation
discuss
137.
Lower the better applies to ___________ capital budgeting method.
A. NPV
B. Payback period
C. IRR
D. Profitability Index
Answer» B. Payback period
discuss
138.
Formula of profitability index is ___________
A. PV of cash inflow / PV of cash outlay
B. Pv of cash inflow – PV of cash outlay
C. PV of cash inflow + Pv of cash outlay
D. PV of cash outlay / PV of cash inflow
Answer» A. PV of cash inflow / PV of cash outlay
discuss
139.
__________ monitors the balance of payments of its member nations.
A. World Bank
B. IMF
C. WTO
D. IFC
Answer» B. IMF
discuss
140.
________ deals with the global rules of trade between nations.
A. WTO
B. IFC
C. World Bank
D. IMF
Answer» A. WTO
discuss
141.
_________ supporters’ sustainable investments in the private sector.
A. IFC
B. World Bank
C. IMF
D. WTO
Answer» A. IFC
discuss
142.
_____________ includes risk of loss from uniform political and government issues.
A. Political Risk
B. International Finance
C. Imperfect Market
D. Foreign Exchange risk
Answer» A. Political Risk
discuss
143.
Due to imperfection in markets ___________ are restricted by a limit to invest and manage
their portfolio.
A. Investors
B. Creditors
C. Debtors
D. Consumers
Answer» A. Investors
discuss
144.
____________ to promote domestic investment and growth through capital Market.
A. International Finance
B. World Bank
C. WTO
D. IFC
Answer» A. International Finance
discuss
145.
_________ it increases in flow of capital and investment to developing economics.
A. Globalization
B. Privatization
C. Liberalization
D. Balance of payment
Answer» A. Globalization
discuss
146.
________ control over the monetary system of India.
A. RBI
B. IFC
C. IMF
D. WTO
Answer» A. RBI
discuss
147.
_________ records all international transactions that involve creation of assets and liabilities
in foreign currencies.
A. Capital Account
B. Reserve Account
C. Current Accountant
D. Saving Account
Answer» A. Capital Account
discuss
148.
_____________ leads to increasingly the standard of living of developing economics.
A. Privatization
B. Globalization
C. Liberalization
D. Bank of Trade
Answer» B. Globalization
discuss
149.
__________ also relates to international assets and liabilities for such transactions which the
country’s monetary authorities use to such transactions which the country’s monetary
authorities use to settle the deficits and surpluses.
A. Reserve Account
B. Capital Account
C. Saving Account
D. Current Account
Answer» A. Reserve Account
discuss
150.
___________is a statistical residence.
A. Balance of payment
B. Balance of Trade
C. Omissions
D. Errors and omissions
Answer» D. Errors and omissions
151.
Difference between except and import of goods and services______________.
A. Balance of Trade
B. Balance of Payment
C. Capital Account
D. Profit
Answer» A. Balance of Trade
discuss
152.
Balance of Trade =Net earnings on exports ___________
A. Net payment of Import
B. Net payment of export
C. Cost of Goods Sold
D. Income Tax
Answer» A. Net payment of Import
discuss
153.
Balance of Trade is a _________ concept.
A. Wider
B. Small
C. Narrow
D. Favorable
Answer» C. Narrow
discuss
154.
BOP Stands for ___________
A. Balance of Profit
B. Balance of Payment
C. Balance of Positive impact
D. Balance of Profit in Trade
Answer» B. Balance of Payment
discuss
155.
balance of payment = Current Account + balancing Item _____________
A. Saving Account
B. Fixed Deposit Account
C. Capital Account
D. Reserve Account
Answer» C. Capital Account
discuss
156.
Balance of payment Identity equation ______________
A. FA + RA + CA =0
B. RA + CA+ FA = 0
C. CA + FA+ RA = 0
D. CA + FA = 0
Answer» C. CA + FA+ RA = 0
discuss
157.
Balance of payment is a statement that records all __________ transactions between a
country and the rest of the world.
A. Goods
B. Cash
C. Credit
D. Monetary
Answer» D. Monetary
discuss
158.
IIP is a subset of the national _____________
A. Statement
B. Profit and Loan Account
C. Balance sheet
D. Financial Asset and Liability
Answer» C. Balance sheet
discuss
159.
___________ was the first university implemented system for valuing currencies.
A. Gold Exchange
B. Gold Standard
C. Silver Coin
D. Bullions
Answer» B. Gold Standard
discuss
160.
International Monetary fund which was given the task of implementing and monitoring
the__________
A. BWS
B. IBRD
C. Nixon Stock
D. BSW
Answer» A. BWS
discuss
161.
BWS came into effect in July______________
A. 1939
B. 1945
C. 1944
D. 1970
Answer» C. 1944
discuss
162.
EURO is single currency of the European Monetary Union adopted on _______________
A. January 1,1999
B. January 1, 2000
C. January 1, 1997
D. January 1 1996
Answer» A. January 1,1999
discuss
163.
__________ supports sustainable investments in the private sector in developing countries.
A. IFC
B. IMF
C. World Bank
D. RBI
Answer» A. IFC
discuss
164.
Foreign Investment are recorded in the _________ of balance of payments.
A. Current Account
B. Saving Account
C. Capital Account
D. Fixed Deposit Account
Answer» C. Capital Account
discuss
165.
___________ is widely used by Government for formulating policies for economy.
A. BOP
B. BOT
C. FDI
D. SDR
Answer» A. BOP
discuss
166.
Under gold standard system, countries gold reserves were required to be in custody of
_________
A. Swiss Bank
B. Central Bank
C. Foreign Bank
D. Reserve Bank
Answer» B. Central Bank
discuss
167.
________ is also known as price quotation.
A. Direct Quote
B. Indirect Quote
C. Spot Quote
D. Spread Quote
Answer» A. Direct Quote
discuss
168.
_________ is also known as price Quantity Quote.
A. Forward Quote
B. Indirect Quote
C. Spot Quote
D. Spread Quote
Answer» B. Indirect Quote
discuss
169.
_____ is todays quote.
A. Spot Quote
B. Forward Quote
C. Inter Bank Quote
D. Mid Quote
Answer» A. Spot Quote
discuss
170.
___________ is also known as Bid office spread.
A. Direct Quote
B. Mid Quote
C. Spread Quote
D. Cross Currency Quote
Answer» C. Spread Quote
discuss
171.
___________ is also known as reference rate.
A. Interbank Quote
B. Cross Currency Quote
C. Mid Quote
D. Bid and Ask Quote
Answer» C. Mid Quote
discuss
172.
Price of _________-- currency in terms of national currency.
A. Home
B. Foreign
C. National
D. Direct Rate
Answer» B. Foreign
discuss
173.
US Dollar serves as a _________ Currency.
A. Vehicle
B. Foreign
C. National
D. Forex Market
Answer» A. Vehicle
discuss
174.
Bid rate is lesser than _____________ rate.
A. Inverse
B. Ask
C. Cross
D. Foreign
Answer» B. Ask
discuss
175.
If two banks are quoting the following GBP rates: Bank A: Rs.78.9810-79.1110 and Bank B:
Rs.79.0110-19.2350. The arbitrage opportunity will be _________________
A. 100
B. 0
C. 124
D. 142
Answer» B. 0
176.
If Quote of Bank ABC is EUR INR 68.00 /30 and Quote of Bank PQR is INR EUR
1.4550/1.4600, arbitrage opportunity will be ___________-
A. 2828
B. 0
C. 2882
D. 2288
Answer» A. 2828
discuss
177.
Effect of falling domestic exchange rate ___________
A. Reduces Profitability for importers
B. Increases Profitability for importers
C. Exposure
D. Economic
Answer» A. Reduces Profitability for importers
discuss
178.
___________ refers to the size or scope of potential loss.
A. Risk
B. Uncertainty
C. Exposure
D. Tr
Answer» A. Risk
discuss
179.
____________ risk is also called as “According Exposure”.
A. Transaction
B. Economic
C. Translation
D. Exposure
Answer» C. Translation
discuss
180.
Internal techniques of managing forex risk includes all of the following, except
_______________
A. Leading and Lagging
B. Matching
C. Split Currency invoicing
D. Forward and Future contracts
Answer» D. Forward and Future contracts
discuss
181.
When a company has receipts and payments in the same foreign currency due at the same
time, it can use ___________technique of managing forex risk.
A. Risk Sharing Agreement
B. Lagging
C. Leading
D. Matching
Answer» D. Matching
discuss
182.
_________ is a tax levied on passive income earned by an individua; or corporation of one
country within the tax jurisdiction of another country.
A. Income Tax
B. Withholding Tax
C. Value added tax
D. Poll Tax
Answer» B. Withholding Tax
discuss
183.
____________ is also known as secrecy jurisdiction.
A. Tax haven
B. Transfer Pricing
C. Foreign affiliate
D. Tax
Answer» A. Tax haven
discuss
184.
A strategy used to reduce tax liabilities by pricing goods and services within a group
structure in way that it does not reflect the arm’s length transaction_______________.
A. Thin Capitalization
B. Repatriating Profits
C. Transfer Pricing
D. Tax haven
Answer» C. Transfer Pricing
discuss
185.
____________ is a Tax avoidance technique whereby multinational subsidiaries are
financed primarily by debt from the parent company instead of equity capital.
A. Thin Capitalization
B. Repatriating Profits
C. Transfer Pricing
D. Tax haven
NEW MCQ
1.
Ultimately ………………was replaced by the …………….on 1st Jan 1995
A. gats, wto
B. wto, gatt
C. gatt, wto
D. imf, gatt
Answer» C. gatt, wto
discuss
2.
_______ is the first step in the internationalization process.
A. license
B. foreign investment
C. sales
D. export
Answer» A. license
discuss
3.
In the foreign exchange market, the ________ of one country is traded for the ________ of
another country.
A. currency; currency
B. currency; financial instruments
C. currency; goods
D. goods; goods
Answer» A. currency; currency
discuss
4.
By definition, currency appreciation occurs when
A. the value of all currencies falls relative to gold.
B. the value of all currencies rises relative to gold.
C. the value of one currency rises relative to another currency.
D. the value of one currency falls relative to another currency
Answer» C. the value of one currency rises relative to another currency.
discuss
5.
Hedging is used by companies to:
A. decrease the variability of tax paid
B. decrease the spread between spot and forward market quotes
C. increase the variability of expected cash flows
D. decrease the variability of expected cash flows
Answer» D. decrease the variability of expected cash flows
discuss
6.
Exchange rates
A. are always fixed
B. fluctuate to equate the quantity of foreign exchange demanded with the quantity
supplied
C. fluctuate to equate imports and exports
D. fluctuate to equate rates of interest in various countries
Answer» B. fluctuate to equate the quantity of foreign exchange demanded with the quantity
supplied
discuss
7.
If the U.S. dollar appreciates relative to the British pound,
A. it will take fewer dollars to purchase a pound
B. it will take more dollars to purchase a pound
C. it is called a weakening of the dollar
D. both a & c
Answer» A. it will take fewer dollars to purchase a pound
discuss
8.
A floating exchange rate
A. is determined by the national governments involved
B. remains extremely stable over long periods of time
C. is determined by the actions of central banks
D. is allowed to vary according to market forces
Answer» D. is allowed to vary according to market forces
discuss
9.
In a quote exchange rate, the currency that is to be purchase with another currency is called
the
A. liquid currency
B. foreign currency
C. local currency
D. base currency
Answer» D. base currency
discuss
10.
An economist will define the exchange rate between two currencies as the:
A. amount of one currency that must be paid in order to obtain one unit of another
currency
B. difference between total exports and total imports within a country
C. price at which the sales and purchases of foreign goods takes place
D. ratio of import prices to export prices for a particular country
Answer» A. amount of one currency that must be paid in order to obtain one unit of another
currency
discuss
11.
India is facing continuous deficit in its balance of payments. In the foreign exchange market
rupee is expected to
A. depreciate.
B. appreciate.
C. show no specific tendency.
D. depreciate against currencies of the countries with positive balance of payment and
appreciate against
Answer» A. depreciate.
discuss
12.
The demand for domestic currency in the foreign exchange market is indicated by the
following transactions in balance of payment
A. export of goods and services
B. import of goods and services.
C. export of goods and services and capital inflows.
D. import of goods and services and capital outflows.
Answer» C. export of goods and services and capital inflows.
discuss
13.
The price at which a market maker is prepared to buy (a currency) or borrow (money) is
termed as
A. spot rate
B. bid rate
C. ask price
D. forward rate
Answer» B. bid rate
discuss
14.
The __________ is especially well suited to offer hedging protection against transactions
risk exposure.
A. forward market
B. spot market
C. transactions market
D. inflation-rate market
Answer» A. forward market
discuss
15.
Difference between buying and selling rates in an exchange rate is known as
A. strike price
B. spread
C. swap points
D. spot rate
Answer» B. spread
discuss
16.
Exchange rate between currency A and currency B, given the values of currencies A and B
with respect to a third currency is known as
A. golden standard
B. flexible exchange rate
C. fixed exchange rate
D. cross exchange rate
Answer» D. cross exchange rate
discuss
17.
The swap arrangement where principal amounts are not exchanged, but periodical
payments will be
A. currency swap
B. cross currency interest swap
C. interest rate swap.
D. non-financial swap.
Answer» C. interest rate swap.
discuss
18.
What is FEMA?
A. first exchange management act
B. foreign exchequer management act
C. foreign exchange management act
D. foreign evaluation management act
Answer» C. foreign exchange management act
discuss
19.
______________ involve the exchange of currency the second day after the date on which
the two foreign exchange traders agree to the transaction.
A. spot transactions
B. outright forward transactions
C. fx swaps
D. reverse transactions
Answer» A. spot transactions
discuss
20.
Outright forward transactions involve the exchange of currency beyond three days at a fixed
exchange rate, known as the:
A. spot rate.
B. forward rate
C. fx swap rate.
D. reverse transaction rate
Answer» B. forward rate
discuss
21.
The biggest market for foreign exchange is which of the following?
A. new york
B. tokyo
C. london
D. china
Answer» C. london
discuss
22.
The ______________ is the price at which the trader is willing to buy foreign currency.
A. offer
B. bid
C. spread
D. cross rate
Answer» B. bid
discuss
23.
Which of the following is the price at which the trader is willing to sell foreign currency?
A. bid
B. spread
C. offer
D. cross rate
Answer» C. offer
discuss
24.
.………is only a legal agreement and it is not an institution, but ….. is a permanent
institution.
A. gatt, wto
B. wto, gatt
C. wto, imf
D. imf, gatt
Answer» A. gatt, wto
discuss
25.
The WTO was established to implement the final act of Uruguay Round agreement of ……
A. mfa
B. gatt
C. trip’s
D. uno
Answer» B. gatt
26.
WTO stands for
A. world technology association
B. world time organization
C. world trade organization
D. world tourism organization
Answer» C. world trade organization
discuss
27.
What is the name of the international organization that fosters monetary and financial
cooperation and serves as a bank for central banks?
A. wto
B. eu
C. world bank
D. bank for international settlements
Answer» D. bank for international settlements
discuss
28.
Which of the following are institutional banks that provide financial support and professional
advice for developing countries?
A. multilateral development banks
B. central banks
C. investment banks
D. barclays bank
Answer» A. multilateral development banks
discuss
29.
In the foreign exchange market, the ________ of one country is traded for the ________ of
another country.
B. currency; financial instruments
C. currency; goods
D. goods; goods
Answer» B. currency; financial instruments
discuss
30.
Which of the following examples definitely illustrates a depreciation of the U.S. dollar?
A. the dollar exchanges for 1 pound and then exchanges for 1.2 pounds.
B. the dollar exchanges for 250 yen and then exchanges for 275 francs.
C. the dollar exchanges for 100 francs and then exchanges for 120 yen.
D. the dollar exchanges for 120 francs and then exchanges for 100 francs
Answer» D. the dollar exchanges for 120 francs and then exchanges for 100 francs
discuss
31.
Interest rate swaps are usually possible because international financial markets in different
countries are
A. efficient
B. perfect
C. imperfect
D. both a & b
Answer» C. imperfect
discuss
32.
The exchange rate is the
A. total yearly amount of money changed from one country’s currency to another
country’s currency
B. total monetary value of exports minus imports
C. amount of country’s currency which can exchanged for one ounce of gold
D. price of one country’s currency in terms of another country’s currency
Answer» D. price of one country’s currency in terms of another country’s currency
discuss
33.
A speculator in foreign exchange is a person who
A. buys foreign currency, hoping to profit by selling it a a higher exchange rate at some
later date
B. earns illegal profit by manipulation foreign exchange
C. causes differences in exchange rates in different geographic markets
D. none of the above
Answer» A. buys foreign currency, hoping to profit by selling it a a higher exchange rate at
some later date
discuss
34.
Under a gold standard,
A. a nation’s currency can be traded for gold at a fixed rate
B. a nation’s central bank or monetary authority has absolute control over its money
supply
C. new discoveries of gold have no effect on money supply or prices
D. a&b
Answer» A. a nation’s currency can be traded for gold at a fixed rate
discuss
35.
The Bretton Woods accord
A. of 1879 created the gold standard as the basis of international finance
B. of 1914 formulated a new international monetary system after the collapse of the gold
standard
C. of 1944 formulated a new international monetary system after the collapse of the gold
standard
Answer» C. of 1944 formulated a new international monetary system after the collapse of the
gold standard
discuss
36.
The current system of international finance is a
A. gold standard
B. fixed exchange rate system
C. floating exchange rate system
D. managed float exchange rate system
Answer» D. managed float exchange rate system
discuss
37.
Ask quote is for
A. seller
B. buyer
C. hedger
D. speculator
Answer» A. seller
discuss
38.
A simultaneous purchase and sale of foreign exchange for two different dates is called
A. currency devalues
B. currency swap
C. currency valuation
D. currency exchange
Answer» B. currency swap
1.Skip to
Indiaclass
1.The globalization of business activities have _________ the complexity as well as the
importance of the financial managers’ duties.
A. Increased
B. Decreased
C. Ignored
D. Vanished
View Answer
A. Increased
Due to globalization, the financial management function has become _________.
A. Less demanding and complex
B. More demanding and complex
C. Less important and complex
D. Outdated and complex

View Answer
B. More demanding
International finance mainly discusses the issues related with monetary interactions of at
least__________.
A. one country
B. two or more countries
C. five countries
D. None of the above
View Answer
International finance is concerned with__________
A. exchange rates of currencies
B. monetary systems of the world
C. foreign direct investment
D. all of the above
View Answer
D. all of the above
________ maintains the foreign exchange reserves in India?
A. State Bank of India
B. Reserve Bank of India
C. Finance Ministry of India
D. EXIM India
View Answer
India’s foreign exchange rate system is _______
A. Fixed target of band
B. Free float
C. Fixed system
D. Managed float
View Answer
D. Managed float
India is facing continuous deficit in its balance of payments in the foreign exchange market
rupee is expected to _______
A. Appreciate
B. Depreciate
C. Show no specific tendency
D. All of the above
View Answer
B. Depreciate
_____ is not a characteristic of speculation.
A. Hedging
B. Risk taking
C. Profit motive
D. Exchange rate fluctuation
View Answer
A. Hedging
The responsibility for administration of of FEMA is vested with ________
A. Central government
B. State government
C. RBI
D. National banks
View Answer
C. RBI
A source of supply of foreign exchange is ________
A. Imports
B. Exports
C. Donations
D. Gifts
View Answer
B. Exports
The foreign direct investment includes __________
A. tangible good
B. intangible good
C. intellectual property
D. human resources
View Answer
A. tangible good
The three disputes of FDI are over _______
A. hobby
B. interest
C. regard
D. concern
View Answer
B. interest
More expansion of foreign direct investment can boost _______
A. demand
B. money circulation
C. employment
D. unemployment
View Answer
C. employment
Who determines foreign exchange rates in India?
A. RBI
B. FEDAI
C. market forces of demand and supply
D. finance ministry of India
View Answer
Who regulates the foreign trade in India?
A. SEBI
B. FEDAI
C. RBI
D. DGFT
View Answer
A. SEBI
The statutory authority which administers the exchange control in India _____
A. RBI
B. ministry of commerce
C. DGFT
D. FEDAI
View Answer
A. RBI
The main objective of international financial Management is to arrange sufficient funds for
meeting the _____________ goals of an organisation.
A. short term
B. long term
C. medium term
D. all of the above
View Answer
D. all of the above
Which Indian industries have been hit by globalization?
A. Jute
B. toy making
C. information technology
D. cement
View Answer
B. toy making
When did government remove the barrier for investment in India?
A. 1193
B. 1992
C. 1991
D. 1990
View Answer
C. 1991
Foreign income received in India during the previous year is taxable in the case of ________
A. Non resident
B. resident
C. not ordinarily resident
D. all of the above
View Answer
D. all of the above
CCIL stands for __________
A. The clearance code of India
B. The clearing corporation of India
C. The clearing committee of India
D. The clearing consignment of India
View Answer
______ refers to converting illegal on money into legitimate money.
A. money laundering
B. tax evasion
C. black money
D. demonetization
View Answer
A. money laundering
If portable device made in India are imported into the United States, the Indian manufacturer
is paid with _______
A. euros
B. dollars
C. international monetary credits
D. rupees
View Answer
D. rupees
Which of the following is known as the paper gold?
A. Bitcoin
B. US dollar
C. demand draft
D. special drawing right
View Answer
Tax on imports can be treated as _______
A. foreign trade
B. collateral trade
C. trade barriers
D. terms of trade
View Answer
C. trade barriers
IMS is the full form of _________
A. International monetary source
B. International monetary system
C. International monetary structure
D. International monetary society
View Answer
____offers the exporter the greatest level of safety.
A. Cash in advance
B. Letter of credit
C. Wire transfer
D. UPI
View Answer
B. Letter of credit
Q1. Trade between two countries can be useful if cost ratios of goods are:
A. Undetermined
B. Decreasing
C. Equal
D. Different
Answer: D
Q2. The term Euro Currency market refers to
A. The international foreign exchange market
B. The market where the borrowing and lending of currencies take place outside the country
of issue
C. The countries which have adopted Euro as their currency
D. The market in which Euro is exchanged for other currencies
Answer: B
Q3. Which of the following theories suggests that firms seek to penetrate new markets over
time?
A. Imperfect Market Theory
B. Product cycle theory
C. Theory of Comparative Advantage
Answer: D
Q4.Dumping refers to:
A. Reducing tariffs
B. Sale of goods abroad at a lower price, below their cost and price in their home market
C. Buying goods at low prices abroad and selling at higher prices locally
D. Expensive goods selling for low prices
Answer: B
Q5. International trade and domestic trade differ because of:

A. Different government policies
B. Immobility of factors
C. Trade restrictions
D. All of the above
Answer: D
Q6. The margin for a currency future should be maintained with the clearing house by
A. The seller
B. The buyer
C. Either the buyer or the seller as per the agreement between them
D. Both the buyer and the seller
Answer: D
Q7.The following statement with respect to currency option is wrong
A. Foreign currency- Rupee option is available in India
B. An American option can be executed on any day during its currency
C. Put option gives the buyer the right to sell the foreign currency
D. Call option will be used by exporters
Answer: D
Q8. Govt. policy about exports and imports is called:
A. Commercial policy
B. Fiscal policy
C. Monetary policy
D. Finance policy
Answer: A
Q9.Which of the following is international trade?

A. Trade between countries
B. Trade between regions
C. Trade between provinces
D. Both (b) and (c)
Answer: A
Q10. Market in which currencies buy and sell and their prices settle on is called the
A. International bond market
B. International capital market
C. Foreign exchange market
D. Eurocurrency market
Answer: C
MCQs:
Q1. Trade among 2 nations can be helpful if the price ratios of products are:
Equal
Decreasing
Undetermined
Different
Answer: D- Different
Q2. The word Euro Exchange rate refers to
The foreign exchange market is an international one.

The countries that use the Euro as their money.
The exchange market where the Euro is traded for other currencies, such as the dollar.
The market where the borrowing and lending of currencies take place outside the country of
issue
Answer: D-The market where the borrowing and lending of currencies take place outside the
country of issue
Q3. This question is about one of the following theories: Which one says firms try to get into
new markets over time?
Theory of Comparative Advantage

Product cycle theory
Imperfect Market Theory
None of the above
Answer: D None of the above
Q4.the Dumping word refers to
1.Tariffs should be cut to make more money.

2.A lower-priced sale of goods abroad is below the cost and price of their home market.
3.Buying goods at low prices in another country and selling them at a higher price here.
4.Expensive goods are being sold at low prices.
Answer: D A lower-priced sale of goods abroad, below the cost and price in their home
market.
Q5. Domestic trade and International trade differ because of:
Trade restrictions
Immobility of factors
Different government policies
All of the above
Answer: D All of the above
Q6. The margin for a currency long term must be retained with the repository by
The buyer
The seller
Both the buyer and the seller
None
Answer: C. Both the buyer and the seller
Q7.which one of the following sentences with regard to the currency option is wrong.
1.An American option can be bought or sold on any day of the week or month during its
currency.
2.Foreign currencies can be exchanged for Indian rupees in India.
3.The put option allows you to sell the foreign currency if you don’t want to keep it.
4.The call option will be used by exporters.
Answer: D. Call option will be used by exporters
Q8. Government. strategy regarding exporters and importers is called:
Commercial policy
Monetary policy
Fiscal policy
Finance policy
Answer: A. Commercial policy
Q9.Which one of the following is international trade?
Trade between regions

Trade between countries
Trade between provinces
Both a and c
Answer: B-Trade between countries
Q10. Market wherein exchange rates sell and buy and one‘s prices resolve on is called the
International capital market

International bond market
Foreign exchange market
None
Answer: C. Foreign exchange market
Q11 made several rounds of bargaining through which tariffs have been reduced.
GATT
NAFTA
IMF
IBRD
Answer : 1. GATT
Q12 what occurs once Imported products are more than exported goods.
Trade deficit
Trade barrier
Trade surplus
None
Answer A-Trade deficit
Q13 Trade between countries can indeed be useful if the price ratios of products are:
Different
Decreasing
Undetermined
Equal
Answer A. Different
Q14 Which one of the following ideas implies that businesses seek to penetrate new
marketplaces over time?

all of the above
Answer: 1. Product cycle theory
Q15 Term Dumping called
1.Tariffs should be cut to make more money.

2.Buying goods at low prices in another country and selling them at a higher price here.
3.Expensive goods are being sold at low prices.
4.Sale of goods abroad at low a price, below their cost and price in the home market
Answer: D-Sale of goods abroad at low a price, below their cost and price in the home
market
Q16 Global commerce and domestic trade differ because of:
Different government policies

Trade restrictions
All of the above
Answer – 4. All of the above
Q17The margin for just a currency future should be retained with the clearing house by
The buyer
The seller
Both the buyer and the seller
None
Answer D. Both the buyer and the seller
Q18, which one of the following options is incorrect
1. People who buy put options can sell the foreign currency at a certain price.
2.It is possible to buy and sell American options on any day during its currency.
3.Foreign currencies can be exchanged for Indian rupees in India.
4.The call option will be used by exporters.
Answer: D. Call option will be used by exporters
Q19 The percentage of trade to GDP was just as high as ________ in 1913.
25
13
87
21
Answer A – 25
Q20 Trade around two or more different countries is called ________.
International Trade
External Trade
Internal Business
Unilateral Trade
Answer A. International Trade
Q1. The current system of international finance is a ____.

A.
gold standard
B.
fixed exchange rate system
C.
floating exchange rate system
D.managed float exchange rate system ✓
Q2. A simultaneous purchase and sale of foreign exchange for two different dates is
called___.
A.
currency devalue
B.currency swap✓
C.currency valuation
D.
currency exchange
Q3. Hedging is used by companies to:
A.
Decrease the variability of tax paid
B.Decrease the variability of expected cash flowsC.✓
Increase the variability of expected cash flows
D.
Decrease the spread between spot and forward market quotes
Q4. Derivative securities includes:
A.
swap contract
B.
futures contract
C.
option contract
D.All of the above✓
Q5. By definition, currency appreciation occurs when:
A.
the value of all currencies fall relative to gold.
B.
the value of all currencies rise relative to gold.
C.the value of one currency rises relative to another currency.D.✓
the value of one currency falls relative to another currency.
Q6. If purchasing power parity were to hold even in the short run, then:
A.
quoted nominal exchange rates should be stable over time.
B.
real exchange rates should tend to increase over time.
C.real exchange rates should be stable over time.✓
D.
real exchange rates should tend to decrease over time.
Q7. In the foreign exchange market, the ________ of one country is traded for the________
of another country.
A. currency; currency✓
B.currency; financial instruments
C.
currency; goods
D.
goods; goods
Q8. A floating exchange rate ____.
A.
is determined by the national governments involved
B.
remains extremely stable over long periods of time
C.
is determined by the actions of central banks
D.is allowed to vary according to market forces✓
Q9. The date of settlement for a foreign exchange transaction is referred to as:
A.
Clearing date
B.
Swap date
C.
Maturity date
D.Value date✓
Q10. Which one of the following is not a type of foreign exchange exposure?
A. Tax exposure✓
B.
Translation exposure
C.
Transaction exposure
D.
Balance sheet exposure
Q11. Which of the methods below may be viewed as most effective in protecting
againsteconomic exposure?
A.
Futures market hedging
B.
Forward contract hedges
C.Geographical diversification✓
D.
Money market hedges
Q12. The impact of Foreign exchange rate on firm is called as:
A. Operating Exposure✓
B.
Transaction exposure
C.
Translation exposure
D.
Business risk
Q13. Foreign currency forward market is ____.
A. An over the counter unorganized market✓
B.
Organized market without trading
C.
Organized listed market
D.
Unorganized listed market
Q14. An economist will define the exchange rate between two currencies as the:
A. Amount of one currency that must be paid in order to obtain one unit of another currency✓
B.
Difference between total exports and total imports within a country
C.
Price at which the sales and purchases of foreign goods takes place
D.
Ratio of import prices to export prices for a particular country
Q15. The Purchasing Power Parity should hold:
A.
Under a fixed exchange rate regime
B.Under a flexible exchange rate regime✓
C.
Under a dirty exchange rate regime
D.
Always
Q16. Covered interest rate parity occurs as the result of:
A.
the actions of market-makers
B.interest rate arbitrage✓
C.
purchasing power parity
D.
stabilising speculation
Q17. Arbitrageurs in foreign exchange markets:
A.
attempt to make profits by outguessing the market
B.
make their profits through the spread between bid and offer rates of exchange
C.
need foreign exchange in order to buy foreign goods
D.take advantage of the small inconsistencies that develop between markets✓
Q18. The forward market is especially well-suited to offer hedging protection against
A.
translation risk exposure.
B.transactions risk exposure✓
.C.
political risk exposure.
D.
taxation.
Q19. Financial management process deals with ____.
A.
Investments
B.Financing decisions✓
C.
Both a and b
D.
None of the above
Q20. It is very difficult to interpret news in foreign exchange markets because:

A.
very little information is publicly available
B.
most of the news is foreign
C.it is difficult to know which news is relevant to future exchange rates✓
D.
It is difficult to know whether the news has been obtained legallyPlease
International Financial Management
1.Which of the following is a legitimate reason for international investment?

1.Dividends from a foreign subsidiary are tax exempt in the United States.
2.Most governments do not tax foreign corporations.
3.There are possible benefits from international diversification.✓
4.International investments have less political risk than domestic investments.
2.By definition, currency appreciation occurs when

1- the value of all currencies fall relative to gold.
2-the value of all currencies rise relative to gold.
3-the value of one currency rises relative to another currency.✓
4-the value of one currency falls relative to another currency.
3.Theory which considers change in exchange rate with fluctuations in inflation rates is
classified as
1-liquidated power parity
2-purchasing power parity✓
3-selling power parity
4-volatile power parity
4.If purchasing power parity were to hold even in the short run, then:
1-real exchange rates should tend to decrease over time.
2-quoted nominal exchange rates should be stable over time.
3-real exchange rates should tend to increase over time.
4-real exchange rates should be stable over time.✓
5.Given a home country and a foreign country, purchasing power parity suggests that:
1.the home currency will appreciate if the current home inflation rate exceeds the current
foreign inflation rate.
2.the home currency will depreciate if the current home interest rate exceeds the current
foreign interest rate
3.the home currency will depreciate if the current home inflation rate exceeds the current foreign
inflation rate✓
4.the home currency will depreciate if the current home inflation rate exceeds the current
6.Interest Rate Parity (IRP) implies that:

1.Interest rates should change by an equal amount but in the opposite direction to the
difference in inflation rates between two countries
2.The difference in interest rates in different currencies for securities of similar risk and maturity
should be consistent with the forward rate discount or premium for the foreign currency✓
3.The interest rates between two countries start in equilibrium, any change in the differential
rate of inflation between the two countries tends to be offset over the longterm by an equal
but opposite change in the spot exchange rate
4.In the long run real interest rate between two countries will be equal
5.Nominal interest rates in each country are equal to the required real rate plus
compensation for expected inflation
7.In equilibrium position, spread between foreign and domestic rate of interest must be equal
to spread of
1.domestic rates
2.forward and spot exchange rates✓
3.forward rate
4.spot rates
8.Rule which states that similar set of goods and services produced in various countries
should have equal price is classified as
1.law of similar mortgage rate
2.law of one type manufacturing
3.law of similar labor rules
4.law of one price✓
9.Example of derivative securities includes

1.swap contract
2.option contract
3.futures contract
4.all of above✓
10.Authority which intervenes directly or indirectly in foreign exchange markets by altering

interest rates is considered as
1.central government✓
2.centralized stocks
3.central corporations
4.centralized instruments
11.The forward market is especially well-suited to offer hedging protection against

1.translation risk exposure.
2.transactions risk exposure.✓
3.political risk exposure.
4taxation.
12.Suppose that the Japanese yen is selling at a forward discount in the forward-exchange
market. This implies that most likely
1.this currency has low exchange-rate risk.
2.this currency is gaining strength in relation to the dollar.
3.interest rates are higher in Japan than in the United States.✓
4.interest rates are declining in Japan.
13.Hedging is used by companies to:

1.Decrease the variability of tax paid
2.Decrease the spread between spot and forward market quotes
3.Increase the variability of expected cash flows
4.Decrease the variability of expected cash flows.✓
5.Increase the variability of tax paid
14.Which of the following is true of foreign exchange markets?

1.The futures market is mainly used by hedgers while the forward market is mainly used for
speculating.
2.The futures market and the forward market are mainly used for hedging.
3.The futures market is mainly used by speculators while the forward market is mainly used for
hedging.✓
4.The futures market and the forward market are mainly used for speculating.
15.Exchange rates
1.are always fixed
2.fluctuate to equate the quantity of foreign exchange demanded with the quantity supplied✓
3.fluctuate to equate imports and exports
4.fluctuate to equate rates of interest in various countries
16.An arbitrageur in foreign exchange is a person who

1.earns illegal profit by manipulating foreign exchange
2.causes differences in exchange rates in different geographic markets
3.simultaneously buys large amounts of a currency in one market and sell it in another market✓
4.None of the above
17.A speculator in foreign exchange is a person who

1.buys foreign currency, hoping to profit by selling it a a higher exchange rate at some later date✓
2.earns illegal profit by manipulation foreign exchange
4.None of the above
18.A floating exchange rate

1.is determined by the national governments involved
2.remains extremely stable over long periods of time
3.is determined by the actions of central banks
4.is allowed to vary according to market forces✓
19.The current system of international finance is a
1.gold standard
2.fixed exchange rate system
3.floating exchange rate system
4.managed float exchange rate system✓
20.A simultaneous purchase and sale of foreign exchange for two different dates is called
1.currency devalue
2.currency swap✓
3.currency valuation
4.currency exchange
1. On which day the New Development Bank (NDB) floated by the BRICS nations, including
India started its operations at its headquarters in Shanghai?
- Published on 08 Sep 15
a. 20th July’15
b. 1st July’15
c. 21st July’15
d. 19th July’15
Answer Explanation Related Ques
ANSWER: 21st July’15
Explanation:
Chinese Finance Minister Lou Jiwei, Shanghai Mayor Yang Xiong and the bank's President
K V Kamath attended the opening ceremony. Kamath will be the bank's President for the
first five years.
NDB was step up for infrastructure funding in the emerging economies formally
2) Which of the following is the correct definition of Hot Money?

- Published on 20 Jul 15
a. This is the fund which is dumped into a country to get the advantage of a favourable
interest rate
b. This is the fund which is provided by a bank in US $ at very short notice and at a very high
rate of interest and for a longer period of repayment
c. This is the fund which is pushed into market through illegal methods
d. None of the above
ANSWER: This is the fund which is dumped into a country to get the advantage of a
favourable interest rate
Explanation:
It can move in and out of the market very quickly leading to market instability.
3) Where is the Bank of International Settlement headquartered?
a. Belgium
b. France
c. Germany
d. Switzerland
ANSWER: Switzerland
Explanation:
The Bank of International Settlement (BIS) was established on May 17, 1930.
4) Which one of the following is the special drawing right given by the International
Monetary Fund to its member countries?
a. Cold money
b. Hot money
c. Paper gold
d. None of these
ANSWER: Paper gold
Explanation:
It is an accounting entry. It is used only among governments and IMF for balance of payment
settlements.
5) Which one of the following does not belong to regulatory bodies in India?
a. FMC
b. IRDA
c. PFRDA
d. SEBI
Answer Explanation
ANSWER: SEBI
Explanation:
Reserve Bank of India, Insurance Regulatory and Development Authority, Forward Market
Commission India, Pension Fund Regulatory and Development Authority are the regulatory
bodies in India.
6) When was the Export Credit Guarantee Corporation of India established?

a. 1938
b. 1957
c. 1973
d. 1971
Answer Explanation
ANSWER: 1957
Explanation:
On 30 July 1957, Export Credit Guarantee Corporation of India Ltd. ( ECGC ) was
established. It provides export credit insurance facilities to exporters and banks in India. It
functions under the administrative control of Ministry of Commerce & Industry.
7) When was the Indian Mercantile Insurance established?

a. 1907
b. 1938
c. 1957
d. 1973
Answer Explanation
ANSWER: 1907
Explanation:
The first company to transact all classes of general insurance business was the Indian
Mercantile Insurance.
8) When was Life Insurance sector nationalised?

a. 1834
b. 1907
c. 1938
d. 1956
Answer Explanation
ANSWER: 1956
Explanation:
Life Insurance Corporation came into existence in 1956.
9) Which of the following is the Federal regulatory agency that charters and supervises
Federal credit unions?
a. AIRCSC
b. ARC
c. CAG
d. NCUA
Answer Explanation
ANSWER: NCUA
Explanation:
NCUA stands for National Credit Union Administration.
10) What is the full form of LIBOR?

a. Local Indian Bank Offered Rate

b. London-India Bureau Of Regulations
c. Liberal International Bank Official Ratio
d. London Inter Bank Offered Rate
ANSWER: London Inter Bank Offered Rate
11. Where is NDB headquartered?

a. Beijing
b. Chengdu
c. Hong Kong
d. Shanghai
Answer Explanation
ANSWER: Shanghai
Explanation:
The New Development Bank is multilateral development bank. It is operated by BRICS
states (Brazil, Russia, India, China and South Africa).
12) What is the full form of FIMMDA?

- Published on 19 Oct 15
a. Fixed Income Money Markets & Derivatives Association

b. Foreign Income Money Markets & Derivatives Association
c. Floating Income Money Markets & Derivatives Association
d. Fixed Income Money Markets & Derivatives Affiliation
Answer Explanation
ANSWER: Fixed Income Money Markets & Derivatives Association
Explanation:
FIMMDA is a voluntary market body for the bond, money and derivative markets.
13) Which of the following does not belong to the major general insurance private sector
companies in India?
- Published on 19 Oct 15
a. Bajaj Allianz General Insurance

b. Reliance General Insurance
c. Royal Sundaram Alliance Insurance
d. The Oriental Insurace Company
Answer Explanation
ANSWER: The Oriental Insurace Company
Question 1: Countertrade represents foreign trade:

(a) restrictions imposed by the government on imports from another country.
(b) restrictions imposed by the government on exports sent from the country.
(c) transactions that force the sales of goods of one country to be linked to the purchase or
exchange of goods from the country.
(d) financing provided to an exporter in exchange for goods provided to the creditor by the
exporter.
Hide Answer
Answer. (c)
Question: A(n) _____ is an unconditional promise drawn by one party, instructing the buyer
to pay the face amount upon presentation.
(a) draft
(b) bill of lading
(c) trade acceptance
(d) letter of credit
Hide Answer
Answer. (a)
Question: Covered interest arbitration involves both
(a) the purchase of a foreign asset and a forward contract in the market for foreign
exchange.
(b) the purchase of a domestic asset and a spot contract in the market for foreign exchange.
(c) the sale of a foreign asset and the purchase of a forward contract in the market for
foreign exchange.
(d) the sale of domestic stocks and the purchase of foreign bonds.
(e) None of the above.
Hide Answer
Answer. (d)
Question: Concerning a country’s business cycle, rapid growth of production and

employment is commonly associated with:
(a) Large or growing trade deficits and current account deficits
(b) Large or growing trade deficits and current account surpluses
(c) Small or shrinking trade deficits and current account deficits
(d) Small or shrinking trade deficits and current account surpluses
Hide Answer
Answer. (a)
Related: multiple choice quiz on Globalization
Question: Reducing a current account surplus requires a country to:

(a) Increase the government’s deficit and increase private investment relative to saving
(b) Increase the government’s deficit and decrease private investment relative to saving
(c) Decrease the government’s deficit and increase private investment relative to saving
(d) Decrease the government’s deficit and decrease private investment relative to saving
Hide Answer
Answer. (a)
Question: All else equal and under a system of floating exchange rates, if a country enters a
period of exceptionally strong growth,
(a) the pressure on its currency is to revalue.
(b) the pressure on its currency is to devalue.
(c) the pressure on its currency is to depreciate.
(d) the pressure on its currency is to appreciate.
(e) Both A and D.
Hide Answer
Answer. (a)
Question: Consider an exporter that sells its accounts receivables off to another firm that
becomes responsible for obtaining cash from the various importers. This reflects:
(a) accounts receivable financing.
(b) consignment.
(c) factoring.
(d) a letter of credit.
Hide Answer
Answer. (c)
Question: In balance of payments accounting, a credit entry for the home country is
(a) an international transaction in which foreigners make payments to residents of the home
country
(b) one in which residents of the home country make payments to foreigners
(c) one which results from an import of goods into the home country
(d) one which results from an outflow of capital from the home country to a foreign country
Hide Answer
Answer. (a)
Related: equity shares can be bought back mcq
Question: The burden of a current account deficit would be the least if a nation uses what it
borrows to finance:
(a) Unemployment compensation benefits
(b) Social Security benefits
(c) Expenditures on food and recreation
(d) Investment in plant and equipment
Hide Answer
Answer. (d)
Question: Consider an exporter that is willing to send goods to the importer without a
guaranteed payment by the bank. The bank provides a loan to the exporter that is backed by
the value of the exported goods. This reflects:.
(b) for faulting.
(c) factoring.
Hide Answer
Answer. (a)
Question: Which of the following is not a payment method used for international trade?
(a) consignment.
(b) open account.
(c) factoring.
(d) draft.
(e) letter of credit.
Hide Answer
Answer. (c)
Question: On the balance-of-payments statements, merchandise imports are classified in
the:
(a) Current account
(b) Capital account
(c) Unilateral transfer account
(d) Official settlement account
Hide Answer
Answer. (a)
Related: microeconomics quiz questions and answers
Question: Multinational firms face exposure to many different types of international risk.
Which of the following is not a type of exposure?
(a) diversifiable risk
(b) political risk
(c) foreign economies
(d) exchange rate movements
Hide Answer
Answer. (c)
Question: A ________ provides a summary of freight charges and conveys title to the
merchandise.
(a) letter of credit
(b) banker’s acceptance
(c) bill of lading
(d) bill of exchange
Hide Answer
Answer. (c)
Question: The balance of international indebtedness is a record of a country’s international:
(a) Investment position over a period of time
(b) Investment position at a fixed point in time
(c) Trade position over a period of time
(d) Trade position at a fixed point in time
Hide Answer
Answer. (b)
Question: When a country realizes a deficit in its current account:

(a) Its net foreign investment position has become positive.
(b) It has become a net demander for funds from other countries.
(c) It realizes an excess of imports over exports of goods and services
(d) It becomes a net supplier of funds to other countries
Hide Answer
Answer. (b)
Related: equity market technical analysis quiz
Question: With _______, the exporter ships the goods to the importer while still retaining
actual title to the merchandise.
(a) a letter of credit arrangement
(b) an open account arrangement
(c) a draft arrangement
(d) a consignment arrangement
Hide Answer
Answer. (d)
Question: Which of the following exchange rate policies uses a target exchange rate, but
allows the target to change?
(a) fixed exchange rate
(b) flexible exchange rate
(c) crawling peg
(d) moving target
Hide Answer
Answer. (c)
Question: Which of the following is not true regarding letters of credit?

(a) They are issued by banks on behalf of the importer promising to pay the exporter.
(b) A revocable letter of credit can be canceled or revoked at any time without prior
notification to the beneficiary.
(c) They guarantee that the goods shipped are the goods purchased.
(d) All of the above are true.
Hide Answer
Answer. (c)
Question: Reducing a current account deficit requires a country to:
(a) Increase private saving relative to investment
(b) Increase private consumption relative to saving
(c) Increase private investment relative to consumption
(d) Increase private investment relative to saving
Hide Answer
Answer. (a)
Related: macroeconomics test questions and answers
Question: A firm that buys foreign exchange in order to take advantage of higher foreign
interest rates is
(a) speculating.
(b) demonstrating purchasing power parity.
(c) engaging in interest rate arbitrage.
(d) responding to fluctuations in the business cycle.
(e) ignoring the nominal rate of exchange.
Hide Answer
Answer. (b)
Question: A bill of exchange requesting the bank to pay the face amount upon presentation
of documents is:
(a) banker’s acceptance.
(b) time draft.
(c) letter of credit.
(d) sight draft.
Hide Answer
Answer. (d)
Question: A banker’s acceptance is a draft drawn on and accepted by a(n) _______.
(a) bank
(b) importer
(c) exporter
(d) none of the above
Hide Answer
Answer. (a)
Question: In order to protect against foreign exchange risk, firms can use
(a) the spot market for foreign exchange.
(b) interest rate arbitrage.
(c) purchasing power parity.
(d) the forward market for foreign exchange.
(e) the J-curve.
Hide Answer
Answer. (b)
Related: quiz on money in Economy
Hide Answer
Answer. (d)
1. European Economic Community founded in___________

1958
1957
1963
1968
Answer: 1957
2. Japan yen denominated Bond issued in Japan domestic Market________________

Samurai Bond
Bull dog Bond
Yankee Bond
Dual Bond
Answer: Samurai Bond
3. Determination of forward rates is explained by____________

Uncovered interest arbitrage
Demand and Supply for spot currency
Purchasing power parity theory
demand and supply of currency in future
Answer: Purchasing power parity theory
4. International Monetary Fund is headquartered in____________

New York City, United States
Geneva, Switzerland
Washington, United States
Avenue Du Mont Blanc, Switzerland
Answer: Washington, United States
5. In India currency-notes issue system is based on________________

Minimum Reserve System
Fixed Exchange Rate System
Proportional Reserve System
Fully Convertibility System
Answer: Minimum Reserve System
6. The margin for a currency future should be maintained with the clearing house
by______________
The seller
The buyer
All of above
None
Answer: All of above
7. Which of the following institutions cannot be included in the international financial and
monetary system?
Bank for International Settlements
IMF
WTO
World BanK
Answer: WTO
8. The world’s four major trading currencies are all free to float against each other. They
include all the following except.
The Japanese Yen
The British Pound
The US Dollar
The Spanish Peso
Answer: The Spanish Peso
9. US Dollar denominated bond issued in US domestic Market__________

Bull dog Bond
Samurai Bond
Yankee Bond
Dual Bond
Answer: Yankee Bond
10. The marking to market of a futures contract is done_________

Weekly, based on the opening price for the week
Daily, based on the opening price for the day
Weekly based on the closing price for the previous week
Daily, based on the closing price for the previous day
Answer: Daily, based on the closing price for the previous day
11. Cash and carry arbitrage explains the determination of___________

Spot rates for currencies
Forward Rates for currencies
All of above
None of above
Answer: Forward Rates for currencies
12. Not a profit maximizing business is________

International bank for Reconstruction and Development
International Financial Corporation
International Monetary Fund
World Trade Organization
Answer: International bank for Reconstruction and Development
13. Which of the following theories suggests that firms seek to penetrate new markets over
time?
None of the above
Answer: Product cycle theory
14. For contingency exposure of foreign exchange, the best derivative that can be used to
hedge is__________________
Futures
Options
Forwards
Swaps
Answer: Options
15. The intrinsic value of a Call option is__________

Underlying price – Strike Price
Strike price > Underlying price
Strike price – Underlying Price
Strike price < Underlying price
Answer: Underlying price – Strike Price
16. The marking to market in respect of a currency future refers to____________

Adjusting the margin money of buyer and seller to reflect the current value of futures
Quoting rates for different maturities
Putting up for sale specific lot of futures
Allotting futures among different brokers
Answer: Adjusting the margin money of buyer and seller to reflect the current value of
futures
17. Gifts and Relief are____________

Service Payment
Transfer payment
Merchandise Payment
Factory Income
Answer: Transfer payment
18. The external method of hedging transaction exposure does not include______________
Money market hedge
Cross hedging
Forward contact hedge
Future hedging
Answer: Cross hedging
19. Which of the countries did not become a member of the Economic and Monetary Union
as on Jan 1 1999.
France
Britain
Italy
Germany
Answer: Britain
20. The acronym CIRCUS stands for_____________

Circular Currency Swap
Combined Income Range Currency Swap
Combined Interest Rate and Currency Swap
Current Interest Rate Swap
Answer: Combined Interest Rate and Currency Swap
21. Nations that have major economic expansion attract_____________

Direct Foreign Investment
Privatization
Imports
Exports
Answer: Direct Foreign Investment
22. Euro is the official currency of________________

All the states of European Union
Only 12 of the states of European Union
Only 10 of the States of European Union
All the States of Europe
Answer: All the states of European Union
23. In a quote exchange rate, the currency that is to purchase with another currency is
called_______________
Local Currency
Foreign Currency
Liquid currency
Base currency
Answer: Base currency
24. Under the interest rate option, the buyer_________________

Gains from favorable movement in interest rates
Avoids unfavourable movement in interest rates
All of above
None
25. FRAs can’t be used for_____________

Arbitraging
Speculating
Hedging
Any of the these
Answer: Any of the these
26. The term Euro currency Market refers to__________

The market in which Euro is exchanged for other currencies
issue
The countries which have adopted Euro as their currency
The international foreign exchange market
Answer: The market where the borrowing and lending of currencies take place outside the
country of issue
27. IMF is firm of____________

182 Member Countries
Answer: 183 Member Countries
28. The cost of hedging through option includes_______________

Option premium
Interest on option premium till due date of the contract
All of these
None
Answer: All of these
29. An interest rate cap is a series of____________

Put options
Periodical payment
Call options
Differential payments
Answer: Call options
30. Bond issued simultaneously in several global financial center is___________

Foreign Bond
Global Bond
Domestic Bond
Euro Bond
Answer: Global Bond
31. This is not established method of translation________________

Monetary/Non-monetary method
Temporary method
Current rate method
Current/Non-current method
Answer: Temporary method
32. For the purpose of translation exposure, historical rate is the rate prevalent on the
date_______________
The foreign subsidiary was established
The investment in the subsidiary was made by the parent company
The parent company was established
The asset was acquired or the liability was incurred
Answer: The asset was acquired or the liability was incurred
33. The __________ is especially well suited to offer hedging protection against transactions
risk exposure
spot market
transactions market
forward market
inflation-rate market
Answer: forward market
34. The first Indian company raised the fund by issuing Bond in US dollar in United States.
TATA
Aircel
Airtel
Reliance
Answer: Reliance
35. International Financial Corporation established in the year________________

1952
1962
1948
1956
Answer: 1956
36. Which of the following is not an example of an international trade draft?

Time draft
Sight draft
All of above
None
37. Forward contract is an agreement to buy or sell an assets on__________________

Specified time
Specified date
Specified price
Specified volume
Answer: Specified price
38. Two tier exchange rate system is a form of____________

Fixed rate
Flexible rate
Different exchange rate
Multiple exchange rate
Answer: Multiple exchange rate
39. Which of the following is not a reason for international investment?

To produce products and/or services more efficiently than possible domestically
To gain access to important raw materials
To provide an expected risk-adjusted return in excess of that required
International investments have less political risk than domestic investment
Answer: International investments have less political risk than domestic investment
40. Foreign currency exposures can be avoided by______________

Denominating the transaction in domestic currency
Exposure netting
Entering into forward contracts
Maintaining foreign currency account
Answer: Denominating the transaction in domestic currency
1. Su Trade between two countries can be useful if cost ratios of goods are:
(A) Undetermined
(B) Decreasing (C) Equal
(D) Different
Answer
Answer: (D)
2. The term Euro Currency market refers to
(A) The international foreign exchange market
(B) The market where the borrowing and lending of currencies take place outside the country
of issue
(C) The countries which have adopted Euro as their currency
(D) The market in which Euro is exchanged for other currencies
Answer Answer: (B)
3. Which of the following theories suggests that firms seek to penetrate new
markets over time? (A) Imperfect Market Theory
(B) Product cycle theory

(C) Theory of Comparative Advantage
(D) None of the above
▼Answer Answer: (B)
4. Dumping refers to: (A) Reducing tariffs
(B) Sale of goods abroad at low a price, below their cost and price in home market (C)
Buying goods at low prices abroad and selling at higher prices locally (D) Expensive goods
selling for low prices
▼Answer Answer: (B)
5. International trade and domestic trade differ because of (A) Different government policies
(C) Trade restrictions (D) All of the above
▼Answer Answer: (D)
6. The margin for a currency future should be maintained with the clearing
house by (A) The seller
(B) The buyer
(C) Either buyer or the seller as per the agreement between them
(D) Both the buyer and the seller
▾ Answer
Answer: (D)
7. The following statement with respect to currency option is wrong (A) Foreign currency-
Rupee option is available in India (B) An American option can be executed on any day
during its currency (C) Put option gives the buyer the right to sell the foreign currency
(D) Call option will be used by exporters
Answer Answer: (D)
8. Govt. policy about exports and imports is called:
(A) Commercial policy (B) Fiscal policy

(C) Monetary policy
(D) Finance policy
▾ Answer
Answer: (A)
9. Which of the following is international trade: (A) Trade between countries
(B) Trade between regions (C) Trade between provinces
(D) Both (B) and (C)
Answer Answer: (A)
10. Market in which currencies buy and sell and their prices settle on is called
the
(A) International bond market (B) International capital market
(C) Foreign exchange market
(D) Eurocurrency market
▾ Answer
Answer: (C)
1. Which of the following is a legitimate reason for international investment?
There are possible benefits from international diversification.
International investments have less political risk than domestic investments.
2. Interest-rate parity refers to the concept that, where market imperfections are few,
the same goods must sell for the same price across countries.
interest rates across countries will eventually be the same.

there is an offsetting relationship between interest rate differentials and differentials
in the forward spot exchange market.
there is an offsetting relationship provided by costs and revenues in similar
market environments.
3. The forward market is especially well- suited to offer hedging protection against
Otranslation risk exposure
transactions risk exposure.
political risk exposure
taxation
4. Suppose that the Japanese yen is selling at a forward discount in the forward-exchange
this currency has low exchange rate risk.
Othis currency is gaining strength in relation to the dollar
interest rates are higher in Japan than in the United States.
Ointerest rates are declining in Japan.
20:26
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146.1
0 KB/S
5. Following FASB Statement No. 52, gains or losses from currency translation are shown:
Oon the income statement as currency gains (or losses).
on the balance sheet as an adjustment to owners' equity.
on the balance sheet as an adjustment to cash.
nowhere because gains or losses from currency changes need not be shown..
6. All of the following are hedges against exchange-rate risk EXCEPT
Obalancing monetary assets and liabilities
use of spot market.
foreign-currency swaps.
adjustment of funds commitments between countries
7. A multinational can centralize cash management and attempt to reduce exchange rate
risk exposure through the use of
a reinvoicing center.
O a bill of lading
O a time draft.
countertrade.
8. Forfaiting most closely resembles
export factoring
countertrade.
Onetting
Oreinvoicing
9. The euro is the name for
O a currency deposited outside its country of origin.
Ca bond sold internationally outside of the country in whose currency the bond is
denominated.
20:26
Vol 0 LTE2 KB/S
..il 46.
Ocountertrade.
8. Forfaiting most closely resembles

export factoring
countertrade.
Onetting
Creinvoicing
9. The euro is the name for
Oa currency deposited outside its country of origin.
Oa bond sold internationally outside of the country in whose currency
the bond is denominated.
a common European currency.
O a type of sandwich.
10. Assume that a Big Mac hamburger is selling for 1.99 in the United Kingdom, the same
hamburger is selling for $2.71 in the United States, and the actual exchange rate (to buy
$1.00 with British pounds) is 0.63. According to the US dollar. the British pound is
Opurchasing power parity; undervalued
interest-rate parity;
purchasing power parity; overvalued
interest-rate parity; overvalued
Multiple Choice
Identify the choice that best completes the statement or answers the question.
1. The commonly accepted goal of the MNC is to:
a. maximize short term earnings.
b. maximize shareholder wealth. c. minimize risk.
d. A and C.
maximize international sales. e.

ANSWER: B POINTS: 1/1
B 2. Which of the following is not a form of corporate control that could reduce agency
problems for an MNC? a. stock options.
b. hostile takeover threat. c. investor monitoring.
d. all of the above are forms of corporate control that could reduce agency problems for an
MNC.
ANSWER: D POINTS: 0/1
time?
a. theory of comparative advantage.
product cycle theory. d. none of the above
b. imperfect markets theory.
ANSWER: C POINTS: 0/1
4. Licensing is the process by which a firm provides its technology (copyrights, patents,
trademarks, or trade names)
in exchange for fees or some other specified benefits.
a. true.
b. false.
ANSWER: A POINTS: 0/1
5. According to the text, products and services are generally becoming standardized across
countries, which
tends to the globalization of business.
a. more; encourage b. more; discourage
c. less; discourage
d. less; encourage
ANSWER: A
POINTS: 0/1
6. The Single European Act of 1987:
4. reduced competition in most industries. b. eliminated competition in many industries,
c. reduced efficiency in most industries.
d. increased competition in most industries.
7.
are most commonly classified as a direct foreign investment.
a. Foreign acquisitions b. Purchases of international stocks
c. Licensing agreements d. Exporting transactions
8. Which of the following is not mentioned in the text as a constraint interfering with the MNC
goal?
a. economic constraints.
c. regulatory constraints. d. ethical constraints.
b. environmental constraints.
ANSWER: A POINTS:
9. Which of the following is not a way in which agency problems can be reduced through
corporate control? a. executive compensation. c. acquisition of a foreign subsidiary. d.
monitoring by large shareholders.
b. threat of hostile takeover.
10. Due to the larger opportunity set of funding sources around the world from which an
MNC can choose, an MNC may be able to obtain capital at a lower cost than a purely
domestic firm. a. true. h. false.
11. One of the most prevalent factors conflicting with the realization of the goal of an MNC is
the existence of agency
problems.
a. true.
b. false.
12. A centralized management style for an MNC results in relatively high agency costs. true.
b. false.
ANSWER: B POINTS: 0/1.
Multiple Choice Identify the choice that hest completes the statement or answers the
question. 1.
Recently, the UK experienced an annual balance of trade representing a a. large surplus

(exceeding £100 billion)
c. level of zero d. deficit
b. small surplus
pressure on the home currency value, other things
2. An increase in the current account deficit will place
equal. a. upward
b. downward
C.
по
d. upward or downward (depending on the size of the deficit)
3. Which of the following would likely have the least direct influence on a country's current
account? a. inflation.
b. national income. c. exchange rates.
d. e a tax on income earned from foreign stocks.

ANSWER: E POINTS: 0/1
4. The North American Free Trade Agreement (NAFTA) increased restrictions on:
d. trade between Canada and Mexico.
b. trade between Canada and the U.S. c. direct foreign investment in Mexico by U.S. firms.
d. none of the above.
5. The primary component of the current account is the:
a. balance of trade. b. balance of money market flows.
c. balance of capital market flows. d. unilateral transfers.
6. A General Agreement on Tariffs and Trade (GATT) accord in 1993 called for:
a. increased trade restrictions outside of North America.
b. lower trade restrictions around the world. c. uniform environmental standards around the
world.
d. uniform worker health laws.
7.
is (are) income received by investors on foreign investments in financial assets (securities).
a. Portfolio income c. Unilateral transfers
b. Direct foreign income
d. Factor income
8. The World Bank's Multilateral Investment Guarantee Agency (MIGA):
a. offers various forms of export insurance. b. offers forms of import insurance. c. offers
various forms of exchange rate risk insurance.
d. provides loans to developing countries, e. offers various forms of political risk insurance.
ANSWER: E POINTS: 0/1
9. A weakening of the U.S. dollar with respect to the British pound would likely reduce the
U.S. exports to Britain and increase U.S. imports from Britain.
a. true.
h. false.
10. Changes in country ownership of long term and short term assets are measured in the
balance of payments with the capital account. b. false.
a. true.
11. Direct foreign investment by UK-based MNCs occurs primarily in the Bahamas and
Brazil. a. true. b. false.
12. A tariff is a maximum limit on imports.
a. true.
b. false.
ANSWER: B
POINTS: 0/1
13.Assume that a bank's bid rate on Swiss

francs is £0.25 and its ask rate is £0.26. Its bid-ask percentage spread is:
1.4.00
2.4.26
3.about 3.83
4.about 4.17
ANSWER: C
14.Batak percentage spread -100.26 0.25 0.20-15%

The forward rate is the exchange rate used for immediate exchange of currencies.
1.true
2.false
ANSWER: B 0/1
15.Assume the Canadian dollar is equal to £0.51 and the Peruvian Sol is equal to
£0.16. The value of the Peruvian Sol in
Canadian dollars is:
a .about 3621 Canadian dallam
B.about 3137 Canadian della
C.about 2.36 Canadian dollars
d .about 2.51 Canadian dollars.
ANSWER: B
POINTS: 0/1
17.is not a bank characteristic important to customers in need of foreign
1.exchange.
2. Quote competitiveness
3.forecasting advice
4. Advice about current marker conditions
5.All of the above are important bank characteristics to customer need of form change
ANSWER: E POINTS: #1
18.LIBOR is: the interest rate commonly charged for eks
1.the average inflation rate in European countries
2.the maximum loan rate ceiling on loans in the internal money market
3.the masinam deposit rate calling on deposits in the international money market
4.the maxiom interest rate offered in hands that are issued in London
ANSWER A POINTS: 8/1

1.Skip to
Indiaclass
1.The globalization of business activities have _________ the complexity as well as the
importance of the financial managers’ duties.
A. Increased
B. Decreased
C. Ignored
D. Vanished
View Answer
A. Increased
Due to globalization, the financial management function has become _________.
A. Less demanding and complex
B. More demanding and complex
C. Less important and complex
D. Outdated and complex
View Answer
B. More demanding
International finance mainly discusses the issues related with monetary interactions of at
least__________.
A. one country
C. five countries
View Answer
International finance is concerned with__________
B. monetary systems of the world
C. foreign direct investment
D. all of the above
View Answer
D. all of the above
________ maintains the foreign exchange reserves in India?
C. Finance Ministry of India
D. EXIM India
View Answer
India’s foreign exchange rate system is _______
A. Fixed target of band
B. Free float
C. Fixed system
D. Managed float
View Answer
D. Managed float
India is facing continuous deficit in its balance of payments in the foreign exchange market
rupee is expected to _______
A. Appreciate
B. Depreciate
C. Show no specific tendency

D. All of the above
View Answer
B. Depreciate
_____ is not a characteristic of speculation.
A. Hedging
B. Risk taking
C. Profit motive
View Answer
A. Hedging
The responsibility for administration of of FEMA is vested with ________
A. Central government
B. State government
C. RBI
D. National banks
View Answer
C. RBI
A source of supply of foreign exchange is ________
A. Imports
B. Exports
C. Donations
D. Gifts
View Answer
B. Exports
The foreign direct investment includes __________
A. tangible good
B. intangible good
D. human resources
View Answer
A. tangible good
The three disputes of FDI are over _______
A. hobby
B. interest
C. regard
D. concern
View Answer
B. interest
More expansion of foreign direct investment can boost _______
A. demand
C. employment
D. unemployment
View Answer
C. employment
Who determines foreign exchange rates in India?
A. RBI
B. FEDAI
View Answer
Who regulates the foreign trade in India?
A. SEBI
B. FEDAI
C. RBI
D. DGFT
View Answer
A. SEBI
The statutory authority which administers the exchange control in India _____
A. RBI
C. DGFT
D. FEDAI
View Answer
A. RBI
The main objective of international financial Management is to arrange sufficient funds for
meeting the _____________ goals of an organisation.
A. short term
B. long term
C. medium term
D. all of the above
View Answer
D. all of the above
Which Indian industries have been hit by globalization?
A. Jute
B. toy making
C. information technology
D. cement
View Answer
B. toy making
When did government remove the barrier for investment in India?
A. 1193
B. 1992
C. 1991
D. 1990
View Answer
C. 1991
Foreign income received in India during the previous year is taxable in the case of ________
A. Non resident
B. resident
C. not ordinarily resident
D. all of the above
View Answer
D. all of the above
CCIL stands for __________
A. The clearance code of India
C. The clearing committee of India
D. The clearing consignment of India
View Answer
______ refers to converting illegal on money into legitimate money.

A. money laundering
B. tax evasion
C. black money
D. demonetization
View Answer
A. money laundering
If portable device made in India are imported into the United States, the Indian manufacturer
is paid with _______
A. euros
B. dollars
C. international monetary credits
D. rupees
View Answer
D. rupees
Which of the following is known as the paper gold?
A. Bitcoin
B. US dollar
C. demand draft
View Answer
Tax on imports can be treated as _______
A. foreign trade
B. collateral trade
C. trade barriers
D. terms of trade
View Answer
C. trade barriers
IMS is the full form of _________
View Answer
____offers the exporter the greatest level of safety.
A. Cash in advance
B. Letter of credit
C. Wire transfer
D. UPI
View Answer
B. Letter of credit
International Financial Management
1.Which of the following is a legitimate reason for international investment?

3.There are possible benefits from international diversification.✓
4.International investments have less political risk than domestic investments.
2.By definition, currency appreciation occurs when

1- the value of all currencies fall relative to gold.
2-the value of all currencies rise relative to gold.
3-the value of one currency rises relative to another currency.✓
4-the value of one currency falls relative to another currency.
3.Theory which considers change in exchange rate with fluctuations in inflation rates is
classified as
1-liquidated power parity
2-purchasing power parity✓
3-selling power parity
4-volatile power parity
4.If purchasing power parity were to hold even in the short run, then:
1-real exchange rates should tend to decrease over time.
2-quoted nominal exchange rates should be stable over time.
3-real exchange rates should tend to increase over time.
4-real exchange rates should be stable over time.✓
5.Given a home country and a foreign country, purchasing power parity suggests that:
1.the home currency will appreciate if the current home inflation rate exceeds the current
2.the home currency will depreciate if the current home interest rate exceeds the current
3.the home currency will depreciate if the current home inflation rate exceeds the current foreign
inflation rate✓
4.the home currency will depreciate if the current home inflation rate exceeds the current
6.Interest Rate Parity (IRP) implies that:

1.Interest rates should change by an equal amount but in the opposite direction to the
2.The difference in interest rates in different currencies for securities of similar risk and maturity
should be consistent with the forward rate discount or premium for the foreign currency✓
3.The interest rates between two countries start in equilibrium, any change in the differential
rate of inflation between the two countries tends to be offset over the longterm by an equal
but opposite change in the spot exchange rate
4.In the long run real interest rate between two countries will be equal
5.Nominal interest rates in each country are equal to the required real rate plus
7.In equilibrium position, spread between foreign and domestic rate of interest must be equal
to spread of
1.domestic rates
2.forward and spot exchange rates✓
3.forward rate
4.spot rates
8.Rule which states that similar set of goods and services produced in various countries
1.law of similar mortgage rate
2.law of one type manufacturing
3.law of similar labor rules
4.law of one price✓
9.Example of derivative securities includes

1.swap contract
2.option contract
3.futures contract
4.all of above✓
10.Authority which intervenes directly or indirectly in foreign exchange markets by altering

1.central government✓
2.centralized stocks
3.central corporations
4.centralized instruments
11.The forward market is especially well-suited to offer hedging protection against

1.translation risk exposure.
2.transactions risk exposure.✓
3.political risk exposure.
4taxation.
12.Suppose that the Japanese yen is selling at a forward discount in the forward-exchange
1.this currency has low exchange-rate risk.
2.this currency is gaining strength in relation to the dollar.
3.interest rates are higher in Japan than in the United States.✓
4.interest rates are declining in Japan.
13.Hedging is used by companies to:

1.Decrease the variability of tax paid
2.Decrease the spread between spot and forward market quotes
3.Increase the variability of expected cash flows
4.Decrease the variability of expected cash flows.✓
5.Increase the variability of tax paid
14.Which of the following is true of foreign exchange markets?

1.The futures market is mainly used by hedgers while the forward market is mainly used for
speculating.
2.The futures market and the forward market are mainly used for hedging.
3.The futures market is mainly used by speculators while the forward market is mainly used for
hedging.✓
4.The futures market and the forward market are mainly used for speculating.
15.Exchange rates
1.are always fixed
2.fluctuate to equate the quantity of foreign exchange demanded with the quantity supplied✓
3.fluctuate to equate imports and exports
4.fluctuate to equate rates of interest in various countries
16.An arbitrageur in foreign exchange is a person who

1.earns illegal profit by manipulating foreign exchange
3.simultaneously buys large amounts of a currency in one market and sell it in another market✓
4.None of the above
17.A speculator in foreign exchange is a person who

1.buys foreign currency, hoping to profit by selling it a a higher exchange rate at some later date✓
2.earns illegal profit by manipulation foreign exchange
4.None of the above
18.A floating exchange rate

1.is determined by the national governments involved
2.remains extremely stable over long periods of time
3.is determined by the actions of central banks
4.is allowed to vary according to market forces✓
19.The current system of international finance is a

1.gold standard
2.fixed exchange rate system
3.floating exchange rate system
4.managed float exchange rate system✓
20.A simultaneous purchase and sale of foreign exchange for two different dates is called
1.currency devalue
2.currency swap✓
3.currency valuation
4.currency exchange
Question 1: Countertrade represents foreign trade:

(a) restrictions imposed by the government on imports from another country.
(b) restrictions imposed by the government on exports sent from the country.
(c) transactions that force the sales of goods of one country to be linked to the purchase or
exchange of goods from the country.
(d) financing provided to an exporter in exchange for goods provided to the creditor by the
exporter.
Hide Answer
Answer. (c)
Question: A(n) _____ is an unconditional promise drawn by one party, instructing the buyer
to pay the face amount upon presentation.
(a) draft
(b) bill of lading
(c) trade acceptance
(d) letter of credit
Hide Answer
Answer. (a)
Question: Covered interest arbitration involves both
(a) the purchase of a foreign asset and a forward contract in the market for foreign
exchange.
(b) the purchase of a domestic asset and a spot contract in the market for foreign exchange.
(c) the sale of a foreign asset and the purchase of a forward contract in the market for
foreign exchange.
(d) the sale of domestic stocks and the purchase of foreign bonds.
(e) None of the above.
Hide Answer
Answer. (d)
Question: Concerning a country’s business cycle, rapid growth of production and

employment is commonly associated with:
(a) Large or growing trade deficits and current account deficits
(b) Large or growing trade deficits and current account surpluses
(c) Small or shrinking trade deficits and current account deficits
(d) Small or shrinking trade deficits and current account surpluses
Hide Answer
Answer. (a)
Related: multiple choice quiz on Globalization
Question: Reducing a current account surplus requires a country to:

Hide Answer
Answer. (a)
Question: All else equal and under a system of floating exchange rates, if a country enters a
period of exceptionally strong growth,
(a) the pressure on its currency is to revalue.
(b) the pressure on its currency is to devalue.
(c) the pressure on its currency is to depreciate.
(d) the pressure on its currency is to appreciate.
(e) Both A and D.
Hide Answer
Answer. (a)
Question: Consider an exporter that sells its accounts receivables off to another firm that
becomes responsible for obtaining cash from the various importers. This reflects:
(b) consignment.
(c) factoring.
Hide Answer
Answer. (c)
Question: In balance of payments accounting, a credit entry for the home country is
(a) an international transaction in which foreigners make payments to residents of the home
country
(b) one in which residents of the home country make payments to foreigners
(c) one which results from an import of goods into the home country
(d) one which results from an outflow of capital from the home country to a foreign country
Hide Answer
Answer. (a)
Related: equity shares can be bought back mcq
Question: The burden of a current account deficit would be the least if a nation uses what it
borrows to finance:
(a) Unemployment compensation benefits
(b) Social Security benefits
(c) Expenditures on food and recreation
(d) Investment in plant and equipment
Hide Answer
Answer. (d)
Question: Consider an exporter that is willing to send goods to the importer without a
guaranteed payment by the bank. The bank provides a loan to the exporter that is backed by
the value of the exported goods. This reflects:.
(b) for faulting.
(c) factoring.
Hide Answer
Answer. (a)
Question: Which of the following is not a payment method used for international trade?
(a) consignment.
(b) open account.
(c) factoring.
(d) draft.
(e) letter of credit.
Hide Answer
Answer. (c)
Question: On the balance-of-payments statements, merchandise imports are classified in
the:
(a) Current account
(b) Capital account
(c) Unilateral transfer account
(d) Official settlement account
Hide Answer
Answer. (a)
Related: microeconomics quiz questions and answers
Question: Multinational firms face exposure to many different types of international risk.
Which of the following is not a type of exposure?
(a) diversifiable risk
(b) political risk
(c) foreign economies
(d) exchange rate movements
Hide Answer
Answer. (c)
Question: A ________ provides a summary of freight charges and conveys title to the
merchandise.
(a) letter of credit
(b) banker’s acceptance
(c) bill of lading
(d) bill of exchange
Hide Answer
Answer. (c)
Question: The balance of international indebtedness is a record of a country’s international:
(a) Investment position over a period of time
(b) Investment position at a fixed point in time
(c) Trade position over a period of time
(d) Trade position at a fixed point in time
Hide Answer
Answer. (b)
Question: When a country realizes a deficit in its current account:

(a) Its net foreign investment position has become positive.
(b) It has become a net demander for funds from other countries.
(c) It realizes an excess of imports over exports of goods and services
(d) It becomes a net supplier of funds to other countries
Hide Answer
Answer. (b)
Related: equity market technical analysis quiz
Question: With _______, the exporter ships the goods to the importer while still retaining
actual title to the merchandise.
(a) a letter of credit arrangement
(b) an open account arrangement
(c) a draft arrangement
(d) a consignment arrangement
Hide Answer
Answer. (d)
Question: Which of the following exchange rate policies uses a target exchange rate, but
allows the target to change?
(a) fixed exchange rate
(b) flexible exchange rate
(c) crawling peg
(d) moving target
Hide Answer
Answer. (c)
Question: Which of the following is not true regarding letters of credit?

(a) They are issued by banks on behalf of the importer promising to pay the exporter.
(b) A revocable letter of credit can be canceled or revoked at any time without prior
notification to the beneficiary.
(c) They guarantee that the goods shipped are the goods purchased.
(d) All of the above are true.
Hide Answer
Answer. (c)
(a) Increase private saving relative to investment
(b) Increase private consumption relative to saving
(c) Increase private investment relative to consumption
(d) Increase private investment relative to saving
Hide Answer
Answer. (a)
Related: macroeconomics test questions and answers
Question: A firm that buys foreign exchange in order to take advantage of higher foreign
interest rates is
(a) speculating.
(b) demonstrating purchasing power parity.
(c) engaging in interest rate arbitrage.
(d) responding to fluctuations in the business cycle.
(e) ignoring the nominal rate of exchange.
Hide Answer
Answer. (b)
Question: A bill of exchange requesting the bank to pay the face amount upon presentation
of documents is:
(a) banker’s acceptance.
(b) time draft.
(c) letter of credit.
(d) sight draft.
Hide Answer
Answer. (d)
Question: A banker’s acceptance is a draft drawn on and accepted by a(n) _______.
(a) bank
(b) importer
(c) exporter
(d) none of the above
Hide Answer
Answer. (a)
Question: In order to protect against foreign exchange risk, firms can use
(a) the spot market for foreign exchange.
(b) interest rate arbitrage.
(c) purchasing power parity.
(d) the forward market for foreign exchange.
(e) the J-curve.
Hide Answer
Answer. (b)
Related: quiz on money in Economy

Hide Answer
Answer. (d)
.
A.
The British Pound

B.
The Japanese Yen

C.
The Spanish Peso

D.
The US Dollar
Answer & Solution Discuss in Board Save for Later

Answer & Solution
Answer: Option C
Solution:
The world’s four major trading currencies are all free to float against each other. They
include all the following except The Spanish Peso.
2.
A.
International Monetary Fund

B.
International bank for Reconstruction and Development

C.
International Financial Corporation

D.
World Trade Organisation

Answer & Solution
Answer: Option B
Solution:
International bank for Reconstruction and Development is not a profit maximizing business.
The International Bank for Reconstruction and Development (IBRD) is an international
financial institution that offers loans to middle-income developing countries. The IBRD is the
first of five member institutions that compose the World Bank Group, and is headquartered in
Washington, D.C. in the United States.
3.
A.
Merchandise Payment
B.
Service Payment
C.
Factory Income
D.
Transfer payment
Answer & Solution
Answer: Option D
Solution:
Gifts and Relief are Transfer payment. A transfer payment is money paid to an individual
who has not performed any service or rendered any goods for it. Transfer payments are
ways for local, state, and federal governments to redistribute money to those in need.
Transfer payments are considered income and are potentially taxable.
4.
A.
Imports
B.
Direct Foreign Investment

C.
Exports
D.
Privatization
Answer & Solution
Answer: Option B
Solution:
Nations that have major economic expansion attract Direct Foreign Investment. Foreign
direct investment (FDI) is an investment made by a firm or individual in one country into
business interests located in another country.
5.
A.
The countries which have adopted Euro as their currency

B.
The market in which Euro is exchanged for other currencies

C.
issue
D.
The international foreign exchange market

Answer & Solution
Answer: Option C
Solution:
The term Euro currency Market refers to the market where the borrowing and lending of
currencies take place outside the country of issue. The eurocurrency market is the money
market in which currency held in banks outside of the country where it is legal tender is
borrowed and lent by banks.
6.
A.
Domestic Bond
B.
Foreign Bond
C.
Global Bond
D.
Euro Bond
Answer & Solution
Answer: Option C
Solution:
Bond issued simultaneously in several global financial center is Global Bond. A global bond
is a type of bond that can be traded in a domestic or European market. It is a bond issued
and traded outside the country where the currency of the bond is denominated. This type of
bond is issued by a non-European company but sells in a European country or any other
foreign market.
7.
A.

B.

C.

D.

Answer & Solution
Answer: Option D
Solution:
IMF is firm of 183 Member Countries. The International Monetary Fund is a cooperative
international monetary organization whose members currently include 183 countries of the
world. It was established together with the World Bank in 1945 as part of the Bretton Woods
conference convened in the aftermath of World War II.
8.
A.
Liquid currency
B.
Foreign Currency
C.
Local Currency
D.
Base currency
Answer & Solution
Answer: Option D
Solution:
In a quote exchange rate, the currency that is to purchase with another currency is called
Base currency. The base currency – also called the transaction currency is the first currency
appearing in a currency pair quotation, followed by the second part of the quotation, called
the quote currency or the counter currency.
9.
A.

B.

C.

D.
None of the above

Answer & Solution
Answer: Option C
Solution:
Product cycle theory suggests that firms seek to penetrate new markets over time. The
International Product Life Cycle Theory was authored by Raymond Vernon in the 1960s to
explain the cycle that products go through when exposed to an international market. The
cycle describes how a product matures and declines as a result of internationalization.
10.
A.
Yankee Bond
B.
Bull dog Bond

C.
Samurai Bond
D.
Dual Bond
Answer & Solution
Answer: Option A
Solution:
Yankee Bond is the US Dollar denominated bond issued in US domestic Market. Yankee
bonds are registered & monitored by Securities & Exchange Commission (SEC). These
bonds are usually issued by foreign banks, corporations & government.
Multiple Choice Tutorial

Chapter 20
International Finance
1. The exchange rate is the

a. total yearly amount of money changed from one country’s currency to another country’s
currency
b. total monetary value of exports minus imports
c. amount of country’s currency which can exchanged for one ounce of gold
d. price of one country’s currency in terms of
D. If one American dollar is worth two French francs, the exchange rate is two to one.
2. The balance of payments summarizes the transactions that occur during a given time
period between
a. the government of one country and the government of another country
b. the national government and local governments in the same country
c. individuals, firms, and government of one country and individuals, firms, and governments
throughout the rest of the world
C. The balance of payments is the measure of all money coming into a country as
compared to the total flow of money out of the country.
3-Which of the following is not included in the balance of payments?

a. final consumer goods exported to another country.
b. tourism on the part of people from other countries.
c. financial transactions such as U.S. firms purchasing foreign assets to achieve a higher
rate of return.
d. increased money supply by the Federal Reserve in the United States.
D. The balance of payments involves the flow of money in and out of the country. The Fed
increasing the money supply has nothing to do with international trade.
4. The balance of payments is a
a. flow variable measuring only transactions which involve payments of money
b. flow variable measuring all economic transactions, even if no exchange of money occurs
c. flow variable which is in equilibrium only when exports equal imports
B. The balance of payments measures all money flows, not just those dealing with imports
and exports. If the total amount of dollar transactions was equal in terms of a country’s
debits and credits, no money need change hands.
5. The value of a country’s exports is listed in its balance of payments account as a(an)
a. credit
b. debit
c. payment
d. investment
A. An export is considered
The merchandise trade balance

a. reflects trade in intangibles such as insurance and tourism
b. includes personal gifts to friends abroad
c. records the flow of financial assets such as stocks and bonds
d. equals the value of tangible products exported minus the value of tangible products
imported
D. Whereas the balance of trade involves the flow of money in and out of a country via trade,
the merchandise trade balance measures the actual products imported and exported.
7. In the balance of payments, services

a. are not counted
b. include only tangible products
c. are always included as a credit
d. include income earned from foreign investments
D-include income earned from foreign investments
8-Net exports refers to

a. total exports minus total imports
b. total imports minus total exports
c. exports of merchandise minus imports of merchandise
d. total exports of capital minus depreciation
A. Exports and imports measure goods and services, not just goods. If exports are greater
than imports, a country has positive net exports. More money is entering a country than
leaving a country via trade.
9. Which of the following is not considered a unilateral transfer?

a. foreign aid from one government to another
b. income earned from foreign investments
c. personal gifts to friends in foreign countries
d. donations to foreign countries from non-government domestic charities
B. A unilateral transfer occurs when there is an actual exchange of a good or service
between two countries. This is not happening when income is made from a foreign
investment.
10. United States net unilateral transfers have been

a. positive every year since 1950
b. negative every year since 1950
c. positive every year since 1950 except 1991, during the Persian Gulf War
d. negative every year since 1950 except 1991, during the Persian Gulf War
D. Unilateral trade transfers involves the gifts and grants received from abroad by residents
of a country minus the unilateral trade transfers residents send abroad.
11. When net unilateral transfers are added to the net exports of goods and services, the
result is called the
a. merchandise trade balance
b. official reserve transactions account
c. balance of payments
d. balance on current account
12. The capital account records international transaction involving

a. all of the following
b. intangible commodities like transportation and tourism
c. the flow of financial assets such as borrowing or lending
d. unilateral transfers
C. Financial capital is the money used to purchase capital, (buildings, machines and tools).
Because all money invested in capital has to come from savings, capital accounts refer to
financial assets.
13. In the balance of payments, a net inflow of capital shows up as a

a. surplus in the capital account
b. deficit in the capital account
c. surplus in the current account
d. deficit in the current account
A. Capital in this sense means financial capital. When more money enters a country then
leaves the country, there is a surplus in the capital account.
14. The world’s largest net debtor nation is

a. Russia
b. China
c. Brazil
d. The United States
D. The United States used
15. The net amount of gold, major currencies, and SDRs (Special Drawing Rights) that shift
among central banks to settle international transactions is known as the
a. net foreign investment
b. capital account balance
c. currency appreciation
d. official reserve transactions account
D. The IMF (International Monetary Fund) now issues paper substitutes for gold called
Special Drawing Rights (SDRs) which function as international reserves. The value of a unit
of SDR is a weighed average of the values of the major national currencies.
16. The statistical discrepancy

a. is always positive
b. is always negative
c. must be reduced to zero and eliminated from the balance of payments before the records
become official
d. is a residual factor which indicates the
D. Regardless of how sophisticated we become in doing statistical analysis, there will

always be errors made. Therefore, it is necessary to factor into the equation an estimate of
that perceived error.
0
17. If a country runs a deficit in its current account, it is because
a. exports exceed imports
b. imports exceed exports
c. net unilateral transfers are negative
d. foreign currency received from exports and transfers is less than the foreign exchange
needed to pay for imports and to make unilateral transfers
D. Current account includes all transactions in currently produced goods and services plus
net unilateral transfers. It can be negative, reflecting a current account deficit; positive,
reflecting a current account surplus; or zero.
18. Exchange rates

a. are always fixed
b. fluctuate to equate the quantity of foreign exchange demanded with the quantity supplied
c. fluctuate to equate imports and exports
d. fluctuate to equate rates of interest in various countries
B. The value of a major country’s currency is determined by the supply and demand of that
currency on the world market. If the demand is greater than the quantity supplied, the value
will increase; if the demand is less than the quantity supplied, the value of the currency will
decline on the world market.
19. If the U.S. dollar appreciates relative to the British pound,
a. it will take fewer dollars to purchase a pound
b. it will take more dollars to purchase a pound
c. it is called a weakening of the dollar
A. The term appreciate means that something becomes more valuable; the term depreciate,
means something is worth less than previously. If the dollar becomes more valuable in
relation to the British pound, it will take fewer dollars when exchanging these two currencies.
20. If the U.S. dollar depreciated relative to the British pound,

a. British products are cheaper to import to the U.S.
b. British products are more expensive to import to the U
c. the price of imported British products does not change
B. If it takes more dollars to exchange for British pounds than used to be the case, British
products will become more expensive to Americans because when exchanging dollars for
pounds, fewer dollars will be received. This is because a country’s products can only be
bought with that country’s currency.
21. Which of the following is a reason that residents of other countries desire to acquire
dollars?
a. foreigners need dollars to purchase U.S. goods and services
b. dollars can be used as a safe way of storing value when the foreigner’s own currency is
unstable
c. dollars are often accepted as an international medium of exchange
d. all of the above
D. Dollars are needed to buy goods and services in America, the dollar is more stable than
most currencies, and the dollar is a standard currency for international trade.
22. Assume the United States has only one trading partner. The U.S. demand curve for
foreign currency is drawn while holding constant all of the following factors except
a. incomes of U.S. consumers
b. the exchange rate
c. the expected rate of inflation in the U.S.
d. the foreign prices of foreign goods
B. A county’s exchange rate is the price of one country’s currency measured in terms of
another country’s currency. If it takes six French francs to equal one American dollar, then
the exchange rate between the two currencies is one to six.
23. Other things constant, as the dollar-per-pound exchange rate increases,

a. the price of U.S. bonds increases in Britain
b. it takes fewer dollars to purchase one pound
c. the amount of U.S. bonds demanded by those in Great Britain increases
C. Pound is the name of the British currency just as dollar is the name of the U.S. currency.
When the value of the pound increases in relation to the value of the dollar, American goods
and services become less expensive to the British. One example of a good becoming less
expensive is the price of an American bond bought by a Brit.
24. An increase in U.S. income which increases American demand for all normal goods
(including imports from Britain) will shift
a. the U.S. demand curve for foreign exchange to the right, causing an increase in the
dollar-per-pound exchange rate
b. the U.S. demand curve for foreign exchange to the left, causing a decrease in the dollar-
per-pound exchange rate
c. the U.S. supply curve for foreign exchange to the right, causing a decrease in the dollar-
per-pound exchange rate
A. In order to buy more goods from Britain, Americans must exchange their dollars for
British pounds. As the demand for pounds increases, its value increases.
25. The U.S. dollar will appreciate when

a. there is a decrease in the U.S. quantity demanded of foreign exchange
b. there is a decrease in the U.S. quantity supplied of foreign exchange
c. the U.S. central bank sells dollars to purchase foreign currency
A. The value of the American dollar on the world market is determined by the same demand
and supply forces that determine the value of anything in the market. In a free market, a
lower quantity of a product translates into a higher price for that product.
26. An arbitrageur in foreign exchange is a person who

a. earns illegal profit by manipulating foreign exchange
b. causes differences in exchange rates in different geographic markets
c. simultaneously buys large amounts of a currency in one market and sell it in another
market
C. If you buy one currency with another currency and the value of the currency you bought
increases relative to the one you sold, the difference is a net gain for you. If you do this
professionally, you are called an arbitrageur.
27- A speculator in foreign exchange is a person who

a. buys foreign currency, hoping to profit by selling it a a higher exchange rate at some later
date
b. earns illegal profit by manipulation foreign exchange
c. causes differences in exchange rates in different geographic markets
A. If a person buys a French franc with American dollars, for example, and then buys
American dollars with the French francs at a time when the value of the Franc has increased
in relation to the dollar, the person profits from the change in currency values.
28. The Purchasing Power Parity (PPP) theory is a good predictor of

a. all of the following:
b. the long-run tendencies between changes in the price level and the exchange rate of two
countries
c. interest rate differentials between two countries when there are strong barriers preventing
trade between the two countries
B. The purchasing power parity theory recognizes that exchange rates between two
countries will adjust in the long run to reflect price level differences between two countries
29-According to the Purchasing Power Parity (PPP) theory,

a. Exchange rates between two national currencies will adjust daily to reflect price level
differences in the two countries
b. In the long run, inflation rates in different countries will equalize around the world
c. In the long run, the exchange rates between two national currencies will reflect price-level
C. If inflation in France is more than the inflation rate in the U.S., then the value of the
French franc will decline in relation to the value of the dollar on the international market.
30. According to many studies of internationally traded goods, the U.S. dollar is often
a. undervalued relative to the currencies of Canada and Mexico, and overvalued compared
to the yen and the mark
b. overvalued relative to the currencies of Canada and Mexico, and undervalued compared
to the yen and the mark
c. overvalued relative to all other currencies
B. The dollar may be undervalued in relation to the yen, the franc, and the mark, and the
pound, but many other currencies are undervalued relative to the dollar, such as currencies
from Australia, Canada, Mexico, and most of the emerging-market and developing
economies.
31. A floating exchange rate

a. is determined by the national governments involved
b. remains extremely stable over long periods of time
c. is determined by the actions of central banks
d. is allowed to vary according to market forces.
D. The word float means that a country’s currency is allowed to fluctuate according to market
forces. This is compared to a fixed exchange rate; the situation where the government will
try to determine the value of its currency.
32. A fixed exchange rate is enforced by

a. national governments, who establish appropriate trade barriers for each country with
whom they trade
b. national governments, who manipulate gold reserves appropriately
c. central banks, who buy and sell appropriate currencies
C. A country’s central bank can increase the value of its currency on the world market by
buying the currency, it can decrease the value on the world market by selling the currency.
Buying and selling involves exchanging one currency for the other.
33. Devaluation of a domestic currency

a. is also called revaluation
b. refers to an increase in the floating exchange rate
c. refers to an decrease in the floating exchange rate
d. refers to an increase in the fixed exchange rate
D. When there is an increase in the exchange rate of a country’s currency it means that
more of that country’s currency is needed when exchanging for another country’s currency.
A country cannot devalue its currency if it is a floating currency.
34. The international financial system operated under a gold standard

a. from the 1500’s through the present
b. from 1879 through the present
c. from 1879 to 1914
d. from 1914 to 1939
C. The gold standard is an arrangement whereby the currencies of most countries are
convertible into gold at a fixed rate. For example, the U.S. dollar could be redeemed at the
U.S. Treasury for one-twentieth of an ounce of gold. The British pound could be redeemed at
the British treasury for one-fourth of an ounce of gold. Therefore, one pound exchanged for
five dollars.
35. Under a gold standard,

a. a nation’s currency can be traded for gold
at a fixed rate
b. a nation’s central bank or monetary authority has absolute control over its money supply
c. new discoveries of gold have no effect on money supply or prices
A. The idea was that if each country knew what its currency was worth in relation to gold,
then each country would know what its currency was worth to one another. In turn, this
would facilitate international trade.
36. The Bretton Woods accord

a. of 1879 created the gold standard as the basis of international finance
b. of 1914 formulated a new international monetary system after the collapse of the gold
standard
c. of 1944 formulated a new international monetary system after the collapse of the gold
standard
C. The new international monetary system was the where all exchange rates were fixed in
relation to the American dollar. The U.S. stood ready to convert foreign holding of dollars into
gold at a fixed rate of $35 an ounce.
37. The current system of international finance is a

a. gold standard
b. fixed exchange rate system
c. floating exchange rate system
d. managed float exchange rate system
D. The value on the international market of major currencies are basically determined by
market forces. However, there are things a country can do to influence the demand or supply
of the currency, thus influencing the value of the currency on the world market.
The END
MCQs
International Finance 305-Fin (2019 Pat)
Sr. Question No.
Answer
1
Which of the following is not seen as an advantage of the gold standard?
A. For a given stock of gold, a rise in real money supply can only occur if the price level
declines.
B. Inflation is unlikely to emerge as a significant problem.
C. No country needs to serve at the centre of this fixed exchange rate
system.
D. The monetary mechanism has credibility.
A
2
The Bretton Woods System is referred to as the "gold exchange standard" because...
A. ...it replaced sterling which had been the silver exchange standard.
B. ..gold was the fundamental standard of value based on the ability of
the US to maintain the parity of $35 per ounce.
C. ...all central banks exchanged their foreign exchange reserves for
gold to become members of the system.
D. ...gold could be exchanged between countries, all other capital was
controlled.
B
3
The functions of the International Monetary Fund include all of the following except...
A. ...to provide emergency loans to countries facing balance of payments problems
B. ...to monitor macroeconomic developments continuously in member countries.
C. ...to serve as the world central bank.
D. ...to provide a line of credit for each member country.
C
4
Which of the following best describes the existing legacy of structural adjustment policies?
A. Structural adjustment policies have been largely successful in achieving their aims of
macroeconomic security in the developing world.
B. The neoliberal principles on which structural adjustment policies have been based have
proven well suited to promoting human welfare in developing countries.
C. Neoliberal based adjustment policies have caused great and unnecessary hardship in
developing countries and there is still no evidence they achieved their objectives for
macroeconomic stability and growth.
D. There is significant evidence that structural adjustment policies have
promoted economic growth and macroeconomic stability in the countries in which they were
applied
C.
5
Which of the following are economic objectives of IMF adjustment policies?
A. Devaluation to promote exports and reduce demand for imports by raising their prices.
B. Tighter monetary and credit policies with higher interest rates to reduce overall demand,
and thus demand for imports; to limit or reduce the rate of inflation.
C. All of the above.
D. Public spending cuts to reduce the budget deficit and slow the growth of
government debt.
C.
6
What, according to Classical economic theory, was the purpose of Mercantilism in the 18th
century?
A. Mercantilism was a means by which to strengthen the sovereign state, and inherently
linked to international conflict.
B. Mercantilism was a means by which to promote societal security for the populations of
states.
C. Mercantilism was a route to increasing imports and transnational trade.
D. Mercantilism was not a significant economic theory until after the 18th
century.
A.
7
How have the World Bank and International Monetary Fund, as international financial
institutions (IFIs), affected the development of poorer countries?
A. Financial policies advocated by the World Bank and IMF were readily adopted by
developing countries that sought to bring their economic development into line with wealthier
nations. The IFIs focus has been on achieving human security and the promotion of
development at a societal level.
B. Through the implementation of specific financial policies adopted at the bequest of global
financial institutions, many developing countries have gained economic prosperity and the
correlating levels of human security.
C. The World Bank and IMF tend to operate in an economic arena that includes only major
financial institutions and wealthy states; coupled with a respect for sovereignty, the scope of
such institutions does not reach to interference in national politics.
D. IFIs identified the economic failings of developing countries as being the result of political
problems. Thus, IFIs adopted an approach that involved
D.
Prof. Nilambari Moholkar www.dimr.edu.in
DNYANSAGAR INSTITUTE OF MANAGEMENT AND RESEARCH

political and economic restructuring of these states, coercing governments into the adoption
of specific financial policies designed to promote debt
repayment and economic development.
8
Which of the following statements best describes our understanding of the term
'globalization'?
A. Globalization refers to the process by which shared hegemonic values pervade societies
across the globe, drawing them into an ideological community, most often based on the
economic principles of capitalism.
B. Best described as intensification of worldwide social relations and increasing
interdependence, globalization is the result of the compression of space and time through
the development of new technologies.
C. Globalization is best described as the 'shrinking' of the global community, drawing people
into closer contact with one another primarily at the economic and technical levels. This
process began in the early 20th century and was based on the ideological expeditions that
originated from western Europe.
D. Globalization has occurred since the 1980s, originating in Western Europe as a centre of
political power and technological advancement. The process is a direct result of
technological advancement in communications and travel industries that facilitate the
efficient transportation of physical objects, people and ideas across the globe.
B.
9
In the context of globalization, how can we best define the term 'development'?
A. The term development refers to the human condition in which there is freedom from fear
and want; there are sufficient resources to sustain life and this life can exist in a state free
from the threat, or perceived threat, of sudden interruption.
B. To be considered as developed, a nation must have achieved certain economic and
political status within the global state system; the criterion for what constitutes a 'developed'
state is thus defined by those requirements of interaction in this system.
C. Development is a means to address the inequalities that accompany neoliberal
globalization. In this context, development refers to the ability of a population or community
to effectively utilize resources and increase efficiency in production and distribution,
promoting the more equitable distribution of income within society.
D. Development of a community refers to the ideological and ethical value systems to which
its population subscribes. In the globalised international system this refers to the adoption of
western liberal democratic ideology and free market economics.
C.
10
The commonly accepted goal of the MNC is to:
A. maximizeshort-termearnings. B. maximizeshareholderwealth. C. minimizerisk.
D. A and C.
B
11 are most commonly classified as a direct foreign investment. A Prof. Nilambari Moholkar
www.dimr.edu.in

A. Foreignacquisitions
B. Licensingagreements
C. Purchases of international stocks D. Exportingtransactions
12
An increase in the current account deficit will place pressure on the home currency value,
other things equal.
A. upward
B. downward
C. no
D. upward or downward (depending on the size of the deficit)
B
13
Which of the following would likely have the least direct influence on a country's current
account?
A. inflation
B. nationalincome
C. exchangerates
D. a tax on income earned from foreign stocks
D
14
A General Agreement on Tariffs and Trade (GATT) accord in 1993 called for
A. increased trade restrictions outside of North America.
B. lower trade restrictions around the world
C. uniform environmental standards around the world
D. uniform worker health laws
B
15
is (are) income received by investors on foreign investments in financial assets (securities).
A. Portfolioincome
B. Direct foreign income C. Unilateraltransfers D. Factorincome
D
16
Assume that a bank's bid rate on Swiss francs is £0.25 and its ask rate is £0.26. Its bid-ask
percentage spread is:
A. 4.00%
B. 4.26%
C. about3.85% D. about 4.17%
C
17
The forward rate is the exchange rate used for immediate exchange of currencies.
A. TRUE
B. FALSE C. NA
D. Can’t say
B
18
From 1944 to 1971, the exchange rate between any two currencies was typically:
A. fixed within narrow boundaries
B. floating, but subject to central bank intervention
C. floating, and not subject to central bank intervention
A

D. nonexistent; that is currencies were not exchanged, but gold was used to pay for all
foreign transactions
19
Futures contracts are typically ; forward contracts are typically .
A. sold on an exchange; sold on an exchange
B. offered by commercial banks; sold on an exchange
C. sold on an exchange; offered by commercial banks
D. offered by commercial banks; offered by commercial banks
C
20
Which of the following are true regarding the options markets?
A. Hedgers and speculators both attempt to lower risk.
B. Hedgers attempt to lower risk, while speculators attempt to
make riskless profits.
C. Hedgers and speculators are both necessary in order for the
market to be liquid.
D. all of the above
C
21
Which of the following is true of options?
A. The writer decides whether the option will be exercised.
B. The writer pays the buyer the option premium.
C. The buyer decides if the option will be exercised.
D. More than one of these.
C
22
The purchase of a currency put option would be appropriate for which of the following?
A. Investors who expect to buy a foreign bond in one month.
B. Corporations who expect to buy foreign currency to finance foreign
subsidiaries.
C. Corporations who expect to collect on a foreign account receivable in one
month.
D. all of the above
B
23
The exchange rate mechanism (ERM) crisis in 1992 represents the
in German interest rates that caused other European interest rates to
, and resulted in less aggregate spending. A. increase;increase
B. increase;decrease C. decrease;decrease D. decrease;increase
A
24
Currency options are only traded on exchanges. That is, there is no over-the- counter
market for options.
A. TRUE
B. FALSE
C. NA
D. Full information has not provided.
B
25
A primary result of the Bretton Woods Agreement was:
A. the establishment of the European Monetary System (EMS).
B. establishing specific rules for when tariffs and quotas could be imposed
by governments.
C. establishing that exchange rates of most major currencies were to be
C

allowed to fluctuate 1% above or below their initially set values.
D. establishing that exchange rates of most major currencies were to be
allowed to fluctuate freely without boundaries (although the central banks did have the right
to intervene when necessary).
26
Due to , market forces should realign the relationship between the interest rate differential
of two currencies and the forward premium (or discount) on the forward exchange rate
between the two currencies.
A. forward realignment arbitrage B. triangulararbitrage
C. covered interest arbitrage
D. locationalarbitrage
C
27
Based on interest rate parity, the larger the degree by which the foreign interest rate
exceeds the UK interest rate, the:
A. larger will be the forward discount of the foreign currency.
B. larger will be the forward premium of the foreign currency.
C. smaller will be the forward premium of the foreign currency.
D. smaller will be the forward discount of the foreign currency
A
28
If interest rate parity (IRP) exists, then the rate of return achieved from covered interest
arbitrage should be equal to the rate available in the foreign country.
A. TRUE
B. FALSE
C. NA
D. Full information has not provided.
B
29
Assume a two-country world: Country A and Country B. Which of the following is correct
about purchasing power parity (PPP) as related to these two countries?
A. If Country A's inflation rate exceeds Country B's inflation rate, Country A's currency will
weaken.
B. If Country A's interest rate exceeds Country B's inflation rate, Country A's currency will
weaken.
C. If Country A's interest rate exceeds Country B's inflation rate, Country A's currency will
strengthen.
D. If Country B's inflation rate exceeds Country A's inflation rate, Country A's currency will
weaken.
A
30
Which of the following forecasting techniques would best represent the use of today's
forward exchange rate to forecast the future exchange rate?
A. fundamentalforecasting B. market-basedforecasting C. technicalforecasting
D. mixedforecasting
B
31
If a particular currency is consistently declining substantially over time, then a market-
based forecast will usually have:
A. underestimated the future exchange rates over time
B. overestimated the future exchange rates over time
C. forecasted future exchange rates accurately
B

D. forecasted future exchange rates inaccurately but without any bias toward consistent
underestimating or overestimating
32
Which of the following is not a forecasting technique mentioned in text?
A. accounting-basedforecasting B. technicalforecasting
C. fundamentalforecasting
D. market-basedforecasting
A
33
If a foreign country's interest rate is similar to the UK rate, the forward rate premium or
discount will be , meaning that the forward rate and spot rate will provide forecasts.
A. substantial;similar
B. substantial;verydifferent C. close to zero; similar
D. close to zero; very different
C
34
Factors such as economic growth, inflation, and interest rates are an integral part of
forecasting.
A. technical
B. fundamental
C. market-based
B
35
Foreign exchange markets appear to be strong-form efficien
A. True
B. False
C. NA
D. Can’t say
B
36
If a particular currency is consistently declining substantially over time, then a market-based
forecast will usually have:
A. underestimated the future exchange rates over time
B. overestimated the future exchange rates over time
C. forecasted future exchange rates accurately
D. forecasted future exchange rates inaccurately but without any bias toward
consistent underestimating or overestimating
B
37
Which of the following is true according to the text?
A. Forecasts in recent years have been very accurate.
B. Use of the absolute forecast error as a percent of the realized value is a
good measure to use in detecting a forecast bias
C. Forecasting errors are smaller when focused on longer term periods
D
38
The balance of payments summarizes the transactions that occur during a given time period
between
A. the government of one country and the government of another country
B. the national government and local governments in the same country
C. individuals, firms, and government of one country and individuals, firms, and governments
throughout the rest of the world
C

39
The balance of payments is a
A. flow variable measuring only transactions which involve payments of money
B. C. D.
flow variable measuring all economic transactions, even if no exchange of money occurs
flow variable which is in equilibrium only when exports equal imports
none of the above
B
40
The Purchasing Power Parity (PPP) theory is a good predictor of
A. the long-run tendencies between changes in the price level and the exchange rate of two
countries
B. interest rate differentials between two countries when there are strong barriers preventing
C. All of the above
A
41
According to the Purchasing Power Parity (PPP) theory
A. Exchange rates between two national currencies will adjust daily to reflect price level
B. In the long run, inflation rates in different countries will equalize around the world
C. In the long run, the exchange rates between two national currencies will reflect price-level
C
42
Interest-rate parity refers to the concept that, where market imperfections are few
A. the same goods must sell for the same price across countries.
B. interest rates across countries will eventually be the same.
C. there is an offsetting relationship between interest rate differentials and
differentials in the forward spot exchange market.
D. "there is an offsetting relationship provided by costs and revenues in
similar market environments
C
43
The forward market is especially well-suited to offer hedging protection against
A. translation risk exposure.
B. transactions risk exposure
C. political risk exposure
D. taxation
B
44
"If inflation goes up in the India relative to other countries, its currency value is
expected to"
A. fall
B. mayincreaseordecrease C. increase
D. remain the same
A
45 Interest-rate parity refers to the concept that, where market B Prof. Nilambari Moholkar
www.dimr.edu.in

A. Same goods must sell for the same price across countries
B. Real interest rates across countries will eventually be the
C. Nominal interest rate across countries will be eventually the same
D. Bank fixed deposits rate for similar maturity will be same.
46
An investment that is hedged against transaction foreign exchange risk is said to be
A. covered B. exposed C. risky
D. arbitraged
A
47
Interest rate parity opportunities for covered interest arbitrage.
A. precludes
B. increases
C. decreases
D. does not affect
C
48
A higher in one country indicates the fact that the country’s currency was expected to
depreciate.
A. nominal interest rate
B. level of deflation
C. expected real rate of return
D. PPP
A
49
Special drawing rights are not
A. a credit line allocated by the IMF to member countries according to each country's quota.
B. backed by US dollars
C. the IMF's unit of account.
D. a basket of four currencies
B
50
If inflation goes up in the India relative to other countries, its currency value is expected to
A. fall
B. mayincreaseordecrease C. increase
D. remain the same
A
51
According to the International Fisher effect, if investors in all countries require the same real
rate of return, the differential in nominal interest rates between any two countries:
A. Nodifference
B. Real rate of return cannot be same
C. Governed by the change in exchange rate between these two countries
D. Because of difference in inflation rate
D
52
Forecasting techniques that do not rely directly on the predictions embodied in forward
rates and interest rates can be split into two main categories:
A. fundamental analysis and technical analysis
B. fundamentalanalysisandchartistanalysis
C. macroeconomic analysis and technical analysis
A

D. macroeconomic analysis and chartist analysis
53
The fatal flaw of the Bretton Woods system was that
A. sterling was overvalued and the French franc was undervalued leading to a loss of gold
reserves by Great Britain.
B. the growth of the global economy brought with it a demand for dollars to be held as
international reserves that exceeded the US gold reserve
C. the World Bank was underfunded by member central banks.
D. it was too weak to survive simultaneous speculative attacks on the Italian
and UK currencies in 1992.
B
54
The functions of the International Monetary Fund include all of the following except
A. to provide emergency loans to countries facing balance of payments problems.
B. to monitor macroeconomic developments continuously in member countries.
C. to serve as the world central bank.
D. to provide a line of credit for each member country
C
55
If the USD fixed deposit rate for 1 year is deposit rate is 3% per year while Pound Sterling
fixed deposit rate is 6% per year, by how much Pound Sterling is expected to to devalue in
the coming year?
A. 2.00% B. 0.30% C. 3.00% D. 2.90%
D
56
Interest-rate parity refers to the concept that, where market
A. Same goods must sell for the same price across countries.
B. Real interest rates across countries will eventually be the same.
C. Nominal interest rate across countries will be eventually the same
D. Bank fixed deposits rate for similar maturity will be same
B
57
The currency used to buy imported goods is
A. the currency of a third country
B. the buyer's home currency
C. special drawing rights
D. the seller's home currency
D
58
"Which of the following statements is correct?
I. The exchange rate is a price.
II. The exchange rate is different from other prices because it is NOT determined by supply
and demand."
A. onlyI
B. onlyII
C. IandII
D. neitherInorII
A
59
"When the value of one currency falls relative to another currency, the exchange rate for
the first currency has"
A. revalued B. depreciated
B

C. appreciated D. demanded
60
"Suppose that the exchange rate between the dollar and the peso changed from 6 pesos
per dollar to
8 pesos per dollar. This change means that the
A. pesoappreciated
B. pesodepreciated
C. dollardepreciated
D. Both answers A and B are correct
B
61
"Suppose the exchange rate of the U.S. dollar was 1.00 euro = $0.50 on Thursday, and on
Friday the exchange rate was $1.00 = 2.10 euros. Which of the following best explains what
has happened between Thursday and Friday?"
A. The U.S. dollar depreciated against the euro.
B. The U.S. dollar appreciated against the euro.
C. The euro appreciated against the U.S. dollar.
D. Both answers B and C are correct.
B
62
With everything else the same, in the foreign exchange market
A. the higher the exchange rate, the cheaper are U.S.-produced goods and services.
B. the lower the exchange rate, the smaller is the expected profit from buying dollars
C. larger the value of U.S. exports, the greater is the quantity of dollars demanded
D. lower the exchange rate, the smaller the amount of U.S. exports
C
63
When the U.S. exchange rate rises, foreign goods become and U.S. imports .
A. moreexpensive;decrease B. less expensive; decrease C. moreexpensive;increase D. less
expensive; increase
D
64
"If the exchange rate between the dollar and Japanese yen is below the equilibrium
exchange rate,
there will be a of dollars, and the exchange rate will ."
A. shortage; change only when the supply curve shifts leftward
B. shortage; rise to the equilibrium level
C. surplus; fall to the equilibrium level
D. surplus; rise to the equilibrium level
B
65
"Important factors that change the demand for dollars and shift the demand curve for
dollars
include which of the following?
I. Interest rates around the world.
II. The current exchange rate.
III. The expected future exchange rate."
A. IIonly
C

B. I, II, and III C. IandIII
D. IandII
66
"Which of the following exchange rate policies uses a target exchange rate, but allows the
target to change?"
A. fixed exchange rate B. flexibleexchangerate C. crawlingpeg
D. movingtarget
C
67
Arbitrageurs in foreign exchange markets:
A. make their profits through the spread between bid and offer rates of exchange.
B. take advantage of the small inconsistencies that develop between markets.
C. need foreign exchange in order to buy foreign goods.
D. attempt to make profits by outguessing the market.
B
68
Covered interest rate parity occurs as the result of:
A. the actions of market-makers. B. purchasingpowerparity
C. interest rate arbitrage.
D. stabilisingspeculation
C
69
Which of the following best explains the fact that interest rates on the euro are lower than
those on the pound?
A. Unemployment is higher in the eurozone than in the UK.
B. Inflationary expectations are higher in the UK than in the eurozone
C. British markets are offshore from mainland Europe.
D. The euro is a weaker currency than sterling
B
70
The balance of payments accounts includes the
A. non-performingaccount B. export bank account
C. currentaccount
D. eximbankaccount
C
71
In part, a country's current account measures
A. its current debt as opposed to its long-term debt.
B. "receipts from the sale of goods and services to foreigners and payments
for goods and services bought from foreigners."
C. net increases and decreases in a country's holdings of foreign currency.
D. borrowing and lending activity between the country's residents and foreigners.
B
72
"In the foreign exchange market, the of one country is traded for the of
another country."
A. currency;currency
B. currency; financial instruments C. currency;goods
A

D. goods; goods
73
"Which of the following apply to exchange rates?
I. The exchange rate is a price.
II. The exchange rate for a currency depends on which foreign exchange
market you use.
III. The foreign exchange rate is different from other prices because it is
NOT determined by supply and demand."
A. I
B. IIandIII C. I, II, and III D. IandII
A
74
"The foreign exchange rate is the price at which the of one country exchanges for the
of another country."
A. currency; goods
B. currency;financialinstruments C. currency;currency
D. goods; goods
C
75
"In the foreign exchange market, which of the following results in a movement along the
supply
curve of dollars?"
A. a change in the U.S. interest rate
B. a change in the expected future exchange rate
C. a change in the current exchange rate
D. None of the above answers are correct
C
76
"Which of the following is a factor that determines the amount of dollars supplied in the
foreign exchange market?"
A. the exchange rates
B. interest rates in foreign countries
C. U.S. interest rate
D. All of the above affect the number of dollars supplied in the foreign
exchange market.
D
77
Global bond market consists of all bonds sold by issued companies, governments, or other
firms
A. within their own countries B. outsidetheirowncountries C. toLondonbanks
D. to developing nations only
B
78
More instability in currency is called as
A. countryrisk B. financialrisk C. currencyrisk D. liquidityrisk
C
79 Foreign bonds issued in Japan are known D
A. bulldog bonds
B. dragonbonds C. Yankeebonds D. samurai bonds
80
Largest number of buyers and sellers, greater the
A. liquidity
B. speculation C. hedging
D. forward rate
A
81
Differences in nominal interest rates are removed in exchange rate is
A. fishereffect
B. Leontiefparadox.
C. Combinedequilibriumtheory. D. purchasingpowerparity
A
82
Simplicity with which bondholders and shareholders can change their investments into cash
is known
A. barter
B. hedging C. arbitrage D. liquidity
D
83
Eurobonds are admired because
A. They are less risky than traditional bonds
B. European companies are considered very stable
C. of absence of government regulation
D. they are always denominated in euro
C
84
Bid quote is for
A. seller
B. buyer
C. hedger D. speculator
B
85
Bid-ask spread in foreign exchange market is the
A. price of currency in foreign exchange market
B. difference between bid and ask quotes for a currency
C. price at which a bank will buy a currency
D. price a bank will pay for a currency
B
86
Not aim of international capital market is
A. preserving hard currencies to finance trade deficits
B. reducing cost of money to borrowers
C. reducinginvestorrisk
D. expanding money supply for borrowers
A
87
Which of following causes do investors employ foreign exchange market?
A. currencyhedging
B. currencyspeculation C. currencyconversion D. allofabove
D
88 In 1944 international accord is recognized as A
A. Breton Wood Agreement
Prof. Nilambari Moholkar
www.dimr.edu.in

B. ExchangeAgreement C. InternationalTrade D. Fisher Effect
89
If a company agreement today for several future date of real currency exchange, they will
be building use of a
A. stockrate B. stockrate C. futuresrate D. forward rate
D
90
International Money Market is for about
A. 2years B. 3years C. 5years D. 1 years
D
91
Case of foreign exchange
A. Exchange of claims denominated in another currency.
B. exchange of bank deposits
C. Exchange of cash issued by a foreign central bank.
D. All of above.
D
92
Gold standard introduced in
A. 1913 B. 1990 C. 1876 D. 1944
C
93
Market in which currencies buy and sell and their prices settle on is called the
A. Eurocurrencymarket
B. Internationalcapitalmarket C. International bond market D. Foreign exchange market
D
94
International capital market
A. innovative financial instruments
B. information technology
C. deregulation
D. foreign exchange rates
A
95
Q. 21 International capital market
A. limits available set of lending opportunities
B. increases overall portfolio risk for investors
C. allows investors to reduce risk by holding international
A. securities whose price move independently
D. is easily accessible to everyone
C
96
Ask quote is for
A. seller
B. buyer
C. hedger D. speculator
A

97
A firm that purpose to connect sellers and buyers of foreign currency denominated bank
deposits is entitled
A. awholesaler B. abroker
C. abank
D. an investor
B
98
A simultaneous purchase and sale of foreign exchange for two different dates
A. currencydevalue B. currencyswap
C. currencyvaluation D. currency exchange
B
99
If your local currency is in variable form and foreign currency is in fixed form quotation will
be:
A. indirect
B. direct
C. localform D. foreign form
B
100
In a quote exchange rate, currency that is to be purchase with another currency is called:
A. liquidcurrency B. foreigncurrency C. localcurrency D. base currency
D
101
Holding an inventory have
A. buyingcost
B. sellingcost
C. opportunitycost D. exchange rate risk
C
102
Today, important factor that result in augmentation in international bond market is
A. low interest rates
B. high interest rates
C. moderate interest rates
D. all of above
A
103
Governments enforce currency limitations to
A. protect a currency from speculators
B. keep resident individuals and businesses from investing in other nations
C. preserve hard currencies to finance trade deficits or repay debts
A. D. all of above
D
104
In primary markets, the first time issued shares to be publicly traded, in stock markets is
considered as
A. tradedoffering
B. publicmarkets
C. issuanceoffering
D. initial public offering
D
105 The exchange markets and over the counter markets are considered as two C Prof.
Nilambari Moholkar www.dimr.edu.in

types of
A. floatingmarket B. riskymarket
C. secondarymarket D. primary market
106
The current market price of common stock is $15 and the conversion rate received on
conversion is $320 to calculate
A. $3,800 B. $2,800 C. $4,800 D. $5,800
C
107
The transaction cost of trading of financial instruments in centralized market is classified as
A. flexiblecosts
B. low transaction costs
C. high transaction costs
D. constant costs
B
108
The bonds that are backed by cash flow from project and are sold to finance particular
project are classified as
A. financebonds B. revenuebonds C. financingbonds D. project bonds
B
109
The equation that shows the relationship between expected inflation, real interest rates,
and nominal interest rates is called the
A. interest rate parity equation. B. Fisherequation.
C. GDPdeflator.
D. net inflation index.
B
110
Which of the following is not an example of a frequently used Euro- instrument?
A. Eurobond B. Euronote C. Eurostock
D. Euro commercial paper
C
111
When was IMF established?
A. Dec. 27, 1945 B. Jan. 30, 1947 C. Jan.1, 1946 D. Sept. 24, 1947
A
112
Export of goods is called trade in:
A. Visiblegoods B. Invisiblegoods C. Basicgoods
D. Non-real good
B
113 It helps countries to meet deficit in balance of payments: A Prof. Nilambari Moholkar
www.dimr.edu.in

A. IMF
B. WTO
C. WorldBank D. UNO
114
Balance of payments of a country includes:
A. Balanceoftrade
B. Capital receipts and payments
C. Saving and investment account
D. Both (a) and (b)
D
115
Foreign Exchange transactions involve monetary transactions
A. among residents of the same country
B. between residents of two countries only
C. between residents of two or more countries
D. among residents of at least three countries
B
116
Under FEMA, the RBI has been authorised to make ------- to carry out the provisions of the
Act.
A. rules
B. regulations
C. both rules and regulations D. notifications
B
117
The international parity conditions consist of
A. CIRP and UIRP only
B. UIRP, PPP, and the Fisher hypothesis only
C. UIRP, PPP, CIRP, and the Fisher hypothesis only
D. CIRP, UIRP, PPP, Mac PPP, and the Fisher hypothesis only
C
118
'Non-resident Bank Accounts' refer to
A. nostroaccount
B. vostroaccount
C. accounts opened in offshore centres D. none of the above
B
119
Non-resident bank accounts are maintained in
A. the permitted currencies
B. the currency of the country of the bank maintaining the
account
C. the currencies in which FCNR accounts are permitted to be
maintained
D. Indian Rupee
D
120
The statutory basis for administration of foreign exchange in India is
A. Foreign Exchange Regulation Act, 1973
B. Conservation of foreign Exchange and Prevention of
Smuggling Act.
C. Foreign Exchange Management Act, 1999
D. Exchange Control Manual
C

121
Full-fledged money changers are authorized to undertake
A. onlysaletransactions
B. onlypurchasetransactions
C. all types of foreign exchange transactions
D. purchase and sale of foreign currency notes, coins and
travellers’ cheques
D
122
The acronym FEDAI stands for
A. Foreign Exchange Dealers' Association of India
B. Federal Export Dealers' Association of India
C. Fixed Earners' Draft Agreement on Interest
A
123
An authorised person under FEMA does not include
A. an authorised dealer
B. an authorised money changer
C. an off-shore banking unit
D. an exchange broker
D
124
The authorised dealers under FEMA are classified into ------categories
A. Three B. one C. two D. four
A
125
The term 'loro account' means
A. our account with you B. youraccountwithus C. their account with them D. none of the
above
C
126
The term 'Nostro account' means
A. our account with you B. youraccountwithus C. their account with them D. none of the
above
A
127
The term 'Vostro account' means
A. our account with you B. youraccountwithus C. their account with them D. noneoftheabove
B
128
The market forces influencing the exchange rate are not fully operational under
A. floatingexchangeratesystem B. speculative attack on the market C. fixed exchange rate
system
D. current regulations of IMF
C
129
According to classification by IMF, the currency system of India falls under
A. managedfloating
B. independentlyfloating C. crawlingpeg
A

D. pegged to basket of currencies
130
Under fixed exchange rate system, the currency rate in the market is maintained through
A. officialintervention
B. rationingofforeignexchange
C. centralising all foreign exchange operations with central
bank of the country D. none of the above
A
131
The reduction in the value of a currency due to market forces is known as
A. revaluation B. depreciation C. appreciation D. inflation
B
132
The largest foreign exchange market in the world is
A. Newyork B. London C. Japan
D. Swiss
B
133
Foreign exchange market is considered 24 hours market because
A. it is open all through the day
B. all transactions are to be settled with in 24 hours
C. due to geographical dispersal at least one market is active
at any point of time
D. minimum 24 hours must lapse before any transaction is
settled
C
134
The major players in the foreign exchange market are
A. commercialbanks
B. corporates
C. exchangebrokers
D. central bank of the country and the central government
A
135
Speculation in foreign exchange market refers to
A. buying or selling of currencies in large volumes
B. booking of forward contracts without intention to execute C. buying or selling with a view
to make profits from
movement in rates
D. buying or selling with a view to making riskless profits
C
136
Arbitrageur in a foreign exchange market
A. buys when the currency is low and sells when it is high
B. buys and sells simultaneously the currency with a view to
making riskless profit
C. sells the currency when he has a receivable in future
D. buys or sells to make advantage of market imperfections
B
137
The acronym SWIFT stands for
A. Safety Width in Financial Transactions
B. Society for Worldwide International Financial
Telecommunication
C

C. Society for Worldwide Interbank Financial Telecommunication
D. Swift Worldwide Information for Financial Transactions
138
Indirect rate in foreign exchange means -
A. the rate quoted with the units of home currency kept fixed
B. the rate quoted with units of foreign currency kept fixed
C. the rate quoted in terms of a third currency
A
139
Indirect rate of exchange is quoted in India for -
A. sale of foreign travellers’ cheque
B. sale of rupee travellers’ cheques
C. purchase of personal cheques
D
140
In direct quotation, the unit kept constant is -
A. the local currency
B. the foreign currency
C. the subsidiary currency
B
141
The maxim 'buy low; sell high' is applicable for
A. quotation of pound-sterling B. indirectrates
C. directrates
D. US dollars
C
142
In Mumbai, US Dollar is quoted as under: USD 1 = Rs.43.6725/6875. It means
A. The buying rate is Rs.43.6725 and selling rate is Rs.43.6875.
B. The buying rate is Rs.43.6875 and selling rate is Rs.43.6725
C. The dollar is appreciating in value.
D. The dollar is depreciating in value
A
143
In foreign exchange markets, 'American Quotation' refers to
A. quotation by a US based bank
B. quotation in New York foreign exchange market
C. quotation in which the value of foreign currency is expressed per US
dollar.
D. quotation in which the value of US dollar is expressed per unit of foreign
currency
D
144
Forward margin is
A. the profit on forward contract
B. commission payable to exchange brokers.
C. difference between the spot rate and forward rate
C
145
In the following quote: Spot USD 1 = Rs.45.6500/650 Spot September 100/150 September
forward buying rate for dollar is
A. Rs.45.6800 B. Rs.45.6600 C. Rs.45.7500
B

D. Rs.45.6500
146
The transaction where the exchange of currencies takes place two days after the date of
the contract is known as
A. readytransaction B. value today
C. spottransactions D. value tomorrow
C
147
The transaction where the exchange of currencies takes place on the same date is known as
A. tom
B. readytransaction C. spottransactions D. value tomorrow
B
148
A Transaction in which the currencies to be exchanged the next day of the transaction is
known as
A. readytransaction B. value today
C. spottransactions D. Value tomorrow
D
149
The transaction in which the exchange of currencies takes place at a specified future date,
subsequent to the spot date is known as a
A. swaptransaction
B. forwardtransaction
C. futuretransaction
D. non-deliverable forwards
B
150
One-month forward contract entered into on 22nd March will fall due on
A. 21th April B. 22ndApril C. 23rdApril D. 24th April
D
151
Which of the following statements is true?
A. Exchange exposure leads to exchange risk
B. exchange risk leads to exchange exposure
C. exchange exposure and exchange risk are unrelated
A
152
A currency future is not
A. traded on futures exchanges
B. a special type of forward contract
C. of standard size
D. available in India
D
153
Normally forward purchase contract booked should be used by the customer
A. for executing the export order for which the contract was booked
B. for any export order from the same buyer
C. for any export order for the same commodity
D. for any export order
A
154 The bank should verify the letter of credit/sale contract for booking a B Prof. Nilambari
Moholkar www.dimr.edu.in

A. Forward sale contract
B. Forward purchase contract
C. Cancellingaforwardcontract D. None of the above
155
Under the forward exchange contract
A. the exchange rate is determined on the future date
A. B. the parties agree to meet at a future date for finalisation
foreign exchange is done on a predetermined B. futuredate
C. delivery of
C
156
The term risk in business refers to
A. chance of losing business
B. chance of making losses
C. uncertainty associated with expected event leading to losses
or gains
D. threat from competitors
C
157
Derivatives can be used by an exporter for managing
A. currencyrisk B. cargorisk
C. creditrisk D. all the above
A
158
Indirect quotation is also known as
A. home currency quotation B. foreigncurrencyquotation C. Europeanquotation
D. American quotation
B
159
In indirect quotation the principle adopted by the bank is to
A. buylowonly
B. buy low; sell high
C. buy high; sell low
D. sell low only
C
160
In direct quotation the principle adopted by the bank is to
A. buylowonly
B. buy low; sell high
C. buy high; sell low
D. sell low only
B
161
Direct quotation is also known as
A. home currency quotation
B. foreign currency quotation
C. currencyquotation D. American quotation
A
162
The difference between buying rate and selling rate is the gross profit for the bank and is
known as the
A. bidrate B. offerrate C. spread
C

D. swap
163
The selling rate is also known as
A. bidrate B. offerrate C. spread D. swap
B
164
The buying rate is also known as the
A. bidrate B. offerrate C. spread D. swap
A
165
Which of the following is not contained in the notes to the financial statements under IAS 1?
A. Measurement basis used
B. A statement of compliance with IFRS
C. Details of specific accounting policies used
D. Numbers of employees
D
166
What is the term used to describe the time between the acquisition of assets for processing
and their realization in cash or cash equivalents?
A. Processingcycle B. Turnover
C. Operatingcycle D. Turnaround
C
167
Under IAS 1, which of the following must be disclosed on the face of the statement of
financial position?
A. Property, Plant and Equipment B. BiologicalAssets
C. Provisions
D. All of the above
D
168
Which sections of an annual report do IFRSs apply to?
A. Managementreport B. Financialstatements C. Auditorsreport
D. Entire annual report
B
169
Which of the following is true?
A. IAS 1 stipulates the order in which items should be presented
B. IAS 1 stipulates that material items that are different in nature must be
presented separately
C. IAS 1 stipulates that material items may be aggregated
B
170
How many formats are permitted for income and expense items under IAS 1?
A. One B. Two C. Three
B

D. Four
171
Where should extraordinary items appear in an entity’s Statement of Comprehensive
Income?
A. Other Comprehensive Income B. IncomeStatement
C. Notes
D. Nowhere
D
172
Which of the following is not a component of a Statement of Financial Position?
A. Non-currentassets B. RetainedEarnings C. Cost of goods sold D. Deferred tax
C
173
Which of the following is not a requirement in the financial statements under IAS 1
A. Name of the entity
B. Chairman’s commentary on performance C. Theaccountingperiods
D. Presentation currency
B
174
An entity shall recognise revenue to depict the transfer of promised goods or services to
customers in the amount that reflects the consideration to which the entity expects to be
entitled in exchange for those goods or services. subscription who will be personally liable
A. Net
B. Residual C. Gross
D. Cumulative
C
175
Which of the following is an exception for application of IFRS 15?
A. Leasecontracts
B. Insurancecontracts
C. Pharmaceuticalcontracts D. A and B
D
176
According to IFRS 15, the asset is transferred to a customer
A. When the asset is physically delivered to the customers premises
B. On the day specified by a contract with the customer
C. When the customer obtains control over it.
D. On the day when the entity satisfies all performance
obligations, specified in the contract with the customer
C
177
Changes in accounting policy are considered in depth in:
A. IAS1
B. IAS8
C. IAS10 A. D. IAS 18
A
178 A change in accounting policy is allowed when C
A. An entity decides to change the method of accounting it uses.

B. An entity finds a better method for accounting for something which results in increased
profits.
C. A new standard is issued suggesting a new way of accounting
D. Applying a new way of accounting for a transaction which was not used
in the past because the item was immaterial.
179
Under IAS 16 how often should the useful life of an asset be reviewed?
A. At least at each financial year end B. Everysixmonths
C. At managements discretion
D. Never
A
180
Under IAS 16 if an asset is idle
A. Depreciation is paused
B. Depreciation for the entire period does not apply
C. Depreciation is ignored
D. Depreciation continues
D
181
Which of these is an allowable cost of an asset under IAS 16?
A. General overheads
B. Professional fees
C. Administration expenses D. General overheads
B
182
What is the net amount an entity expects to obtain for an asset at the end of its useful life?
A. Depreciatedvalue B. Residualvalue
C. Presentvalue
D. Fair value
B
183
Under IAS 16, which of the following is not allowable as a directly attributable cost of a
machine?
A. Delivery
B. Sitepreparation
C. Estimated dismantling costs D. Initial test batches
D
184
What is the amount an asset could achieve if sold between knowledgeable, willing parties
in an arm’s length transaction?
A. Current value
B. Net present value C. Written down value D. Fair value
D
185
A company purchases land with an office building. The building has a useful life of 20 years.
How should the land be depreciated?
A. Depreciate over useful life of the land
B. Don’t depreciate the land
C. Valid
D. None of these
B
186 Which of the following is covered by IAS 16 Property, Plant and A Equipment?

A. Officebuildings
B. Assets held for sale
C. Explorationassets
D. Biological assets related to agricultural activity
187
Which of the following disclosures is not required when an asset is revalued?
A. Name of valuer
B. Revaluationsurplus
C. Effective date of revaluation
D. Whether valuer was independent
A
188
Under IAS 16, which two subsequent accounting treatments are allowed subsequently to
initial recognition?
A. Cost model and present value model
B. Cost model and revaluation model
C. Fair value model and revaluation model
D. Fair value model and cost model
B
189
When an asset is sold or disposed of, where is the gain or loss recognised?
A. Asset disposal account B. Profitandloss
C. Revaluationreserve D. Depreciation
B
190
Which of the following is not a component of cost of an asset? A. Purchase price
B. Refundable sales tax
C. Import duties
D. Estimate of compulsory future dismantling cost
B
191
A change in depreciation method is a
A. Changeinaccountingpolicy B. Changeinaccountingestimate C.
Changeinaccountingmethod D. Change in accounting standard
B
192
When an item of property, plant and equipment is revalued, what should be revalued?
A. A selection of assets decided by management
B. A selection of assets picked at random
C. The whole class of assets to which it belongs
D. The individual asset
C
193
Under IAS 16, if assets are exchanged in an arm’s length, commercial transaction, their
value will be measured at
A. Written down value B. Fairvalue
C. Carryingvalue
D. Net present value
B
194
Which of the following is not an asset that falls under the scope of IAS 16?
A. Assets held for sale in the normal course of business B. Tangibleassets
C. Assets expected to be used for more than one period
A

D. Assets held for the production or supply of goods or services
195
How should an asset be initially recognised in the financial statements?
A. Measure at market value
B. Measureatcost
C. Measure at net realisable value D. Measure at fair value
B
196
Where is the amortisation of an intangible asset recognised?
A. Equity
B. Profit or Loss
C. Statement of Financial Position D. Statement of Cash Flows
B
197
What is the initial recognition measurement of an intangible asset?
A. Fairvalue
B. Net present value C. Cost
D. Market value
C
198
When an intangible asset is sold, the gain or loss is recognised
A. in Equity
B. in the Profit or Loss
C. in the Statement of Financial Position D. in the Statement of Cash Flows
B
199
Which of the following is not a requirement to capitalise development costs under IAS 38
Intangible Assets?
A. The commercial feasibility for the asset may be uncertain
B. It must be technically feasible
C. The entity intends to sell the completed intangible asset
D. The entity can demonstrate how the asset will generate future economic
benefits
A
200
An intangible asset with a finite useful life should be amortised over
A. A period determined by management B. Fiveyears
C. Its expected useful life
D. No foreseeable limit
C
201
What are intangible assets?
A. Nonmonetary assets without physical substance
B. Monetary assets without physical substance
C. Monetary assets with physical substance
D. Nonmonetary assets with physical substance
A
202
How often should the useful life of an intangible asset with a finite useful life be reviewed?
A. Everyyear
B. Everysixmonths
C. Everyfiveyears
D. At managements discretion
A
203 Which of the following is an intangible asset under IAS 38? A
A. Patent rights

B. Marketshare
C. Customerloyalty
D. Technical knowledge training
204
Which of the following measurement models is not permitted for the subsequent
measurement of intangible assets under IAS 38?
A. Revaluationmodel
B. Fair value model
C. Cost model
D. Capital Assets pricing model
D
205
Which of the following is not an example of an intangible asset?
A. Cash in bank B. Customerlists C. Trademarkss D. Software patents
A
206
Which of the following is not an example of investment property?
A. Land held for undetermined future use
B. Property leased to another entity under an operating lease C. Property leased to another
entity under a finance lease
D. Property being constructed for future use as an investment
property
C
207
If an entity wishes to change from a cost model to fair value model under IAS 40 Investment
Property, when may it do so?
A. When a change will result in a more appropriate presentation
B. When the board of directors approves a change
C. When the value of the assets will improve with a revised model
D. When the market for these properties is fluctuation
A
208
If an entity uses part of a building for their own use, and rents the remainder. How should
this be treated?
A. All as investment property under IAS 40 Investment Property
B. All under IAS 16 Property Plant and Equipment
C. Account for separately under IAS 16 Property Plant and Equipment and
IAS 40 Investment Property
D. Noneofthese
C
209
An investment property should initially be measured at
A. Cost
B. Marketvalue
C. Fairvalue
D. Net realisable value
A
210
Which of the following is not a transfer from or to investment property under IAS 40
A. Commencement of owner occupation
B. End of construction of development
C. Commencement of development with a view to sale
D. Transfer from undetermined use to an operating lease
D

211
Under IAS 36 what is the recoverable amount of an asset?
A. The lower of its cost and net realisable value
B. The higher of fair value less costs of disposal and value in use.
C. The lower of net present value and cost
D. The higher of net present value and cost
B
212
How often should a cash generating unit to which goodwill has been assigned, be tested for
impairment?
A. Everyyear
B. At managements discretion C. Everysixmonths
D. As often as practicable
A
213
What is the treatment of an impairment loss under IAS 36?
A. Record it in Equity under Revaluations
B. Write it off against profit over a defined period agreed by
management
C. Record a liability in the SOFP for Impairment losses D. Write it off against profit
immediately
D
214
Which of the following is not permitted as a cost to sell under IAS 36?
A. Cost to dismantle machine
B. Standard wages for employees
C. Auctioneersfees
D. Transport costs for machine
B
215
Which of the following is not covered by IAS 36 Impairment?
A. Inventory
B. Property, Plant and Equipment C. MotorVehicles
D. Intangibleassets
A
216
What is the correct treatment for all eligible borrowing costs under IAS 23?
A. Expensed
B. Capitalised
C. Invested
B
217
Which of the following is not a qualifying asset under IAS 23 Borrowing Costs?
A. Manufacturingplants
B. Made to order inventory
C. Mass produced inventory
D. Investment property
C
218
Which of the following is not covered by IAS 20 Government Grants?
A. Employment grants B. Subsidisedloans C. Forgivableloans D. Tax breaks
D
219 If an entity receives a non-monetary asset as a grant, this is accounted for at D
A. Marketvalue B. Presentvalue

C. Discountedvalue D. Fair value
220
Which of the following disclosures is not a requirement of IAS 20?
A. Accounting policy adopted for grants
B. Current grant applications in process
C. Nature and extent of grants recognised in the financial
statements
D. Unfulfilled conditions, contingencies attaching to
recognised grants
B
221
Grants should be recognised at
A. Net realisable value B. Currentvalue
C. Fairvalue
D. Market value
C
222
Which of the following items should be disclosed as per the requirements of IAS 2?
A. Carrying amount of inventories pledged as security for liabilities
B. Average lead time of procurement for major classes of inventories
C. List of major customers to whom the inventories were sold during the reporting period
D. Average holding period of inventories of the entity as at the end of the reporting period
A
224
Which of the following items are excluded from the scope of IAS 2 Inventories?
A. Inventories that are stated at Net Realisable Value
B. Assets held for sale in the ordinary course of business
C. Inventories whose fair value is more than the cost
D. Agricultural produce at the point of harvest
D
225
Under IAS 2, fixed production overheads should be allocated to items of inventory on the
basis of production capacity.
A. Actual
B. Abnormal C. Normal D. Estimated
C
226
Inventory excludes
A. Finishedgoodsproduced
B. Goods purchased for resale
C. Rawmaterials
D. Construction works in progress
D
227
Which of the following costs must be expensed under IAS 2?
A. Selling and distribution overheads incurred in the ordinary course of
business
B. Variable production overheads that are allocated to each unit based on
actual usage
A

C. Import duties on raw materials that are paid to the authorities D. Costs of purchase that
are paid to the suppliers of raw
materials
228
An entity may elect to measure an item of property, plant and equipment at the date of
transition to IFRSs at
A. Its deemed cost and use that deemed cost as its fair value at that date
B. Its amortised cost and use that amortised cost as its deemed cost at that
date
C. Its historical cost and use that historical cost as its fair value at that date
D. Its fair value and use that fair value as its deemed cost at that date
D
229
How does an entity adopt IFRSs for the first time?
A. By reporting on its financial position, financial performance and cash flows in accordance
with IFRSs
B. By issuing its first financial statements in which the entity adopts IFRSs, by an explicit and
unreserved statement of compliance with IFRSs
C. By reporting on its financial position, financial performance and cash flows in accordance
with national requirements, which do not contradict IFRSs
D. By issuing its first financial statements in accordance with national requirements, which
contain explicit and unreserved statement of compliance with IFRSs
B
230
Which of the following does IFRS 1 require an entity to do in the opening IFRS statement of
financial position that it prepares as a starting point for its accounting under IFRSs?
A. Recognise all assets and liabilities whose recognition is required by IFRSs
B. Not recognise items as assets or liabilities if IFRSs do not permit such recognition
C. Apply IFRSs in measuring all recognised assets and
D. All of the above
D
231
Which of the following is the starting point for an entity accounting in accordance with
IFRSs?
A. The date when the decision about adopting IFRS has been made
B. The date of issuance of the first financial statement in accordance with
IFRS
C. The date of transition to IFRSs
D. The date when the explicit and unreserved statement of compliance with
IFRSs has been made
C
232
Does IFRS 8 allow an entity to combine information about operating segments into one
reportable segment?
A. Yes, if the operating segments have similar economic characteristics
B. Yes, if the operating segments share the majority of the aggregation
criteria listed in this IFRS
C. Yes, if the operating segments do not meet the quantitative thresholds
D. All of the above
D
233 An entity may elect to measure an item of property, plant and equipment at D Prof.

the date of transition to IFRSs at message or document
A. Its deemed cost and use that deemed cost as its fair value at that date
B. Its amortised cost and use that amortised cost as its deemed cost at that
date
C. Its historical cost and use that historical cost as its fair value at that date
D. Its fair value and use that fair value as its deemed cost at that date
234
A parent leases an office building to a subsidiary. In which financial statements will the
property appear as investment property?
A. Parent company
B. Subsidiary
C. Consolidated financial statements D. Noneofthese
A
235
According to IAS 21, a foreign operation can be:
A. asubsidiary
B. ajointventure C. abranch
D. all of the above
D
236
Which of the following is the type of currency which the financial statements of the group are
not presented in? denial of service or other attacks by malicious hackers, who demand
money in return for promising to stop the attacks
A. Localcurrency
B. Functionalcurrency C. Presentationcurrency D. None of the above
A
237
According to which IAS are dividends paid at the spot rate?
A. IAS20
B. IAS21
C. 1AS 22
D. Noneofthese
B
238
In which financial statement is foreign currency mainly disclosed?
A. Statement of comprehensive income
B. Statement of financial position
C. Statement of cash flows
C
239
The recoverable amount of an asset is defined as
A. 1. The assets resale value.
B. 2. Its value to the firm as it is stored away in the warehouse.
C. C. 3. Its value to the firm for internal use
D. 1 and 2 only
D
240
Capitalisation is only started when
A. Costs are being incurred for the asset law
B. Borrowingcostsarebeingincurred
C. Action is being taken to prepare the asset for use of sale D. None of these
B
241 The International Accounting Standards Committee was established in B Prof.

A. 1976 B. 1973 C. 1982 D. 2009
242
The process of converting foreign-subsidiary financial statements into the home currency is
known as
A. Reconstruction B. Transmission C. Consolidation D. Transaction
D
243
The global key professional accounting body is
A. The Financial Accounting Standards Board
B. The International Accounting Standards Committee
C. The Institute of Chartered Accountants of India
D. The International Accounting Standards Board
D
244
Accounting in India is governed by the
A. RBI
B. CompanylawBoard C. Income tax department D. ICAI
D
245
The convergence of the Indian Accounting Standards with IFRS began in
A. April2010 B. April2012 C. April2015 D. April2000
C
246
Ind AS will apply to
A. both consolidated as well as standalone financials of the company B.
Onlyconsolidatedfinancials
C. Onlystandalonefinancials
D. Optional
A
247
Total Number of IAS which are notified as of date? government services
A. 40 B. 41 C. 42 D. 43
B
248
Total Number of IFRSs which are notified as of date?
A. 16 B. 17 C. 18 D. 19
B
249
Total Number of IFRIC Interpretations which are notified as of date?
A. 23 B. 24 C. 25 D. 26
A
250 Which of the following countries have conceptual frameworks for accounting?
A. India
B. Singapore
C. Canada
D. All the Above
PDF 2
SAMPLE QUESTIONS
TYBMS INTERNATIONAL FINANCE SEM VI
1. IFRS stands for
a) International Financial Recognition Standards b) International Foreign Reporting
Standards
c) International Financial Reporting Solutions
d) International Financial Reporting Standards 2. Trade restrictions is called as
___________ a) Trade stopper
b) Trade barrier
c) Trade damage
d) Trade booster
3. __________ refers to the price of one currency against another currency
a) Barter
b) Exchange rate
c) Purchase rate
d) Sale rate
4. The central feature of a __________ is that its laws and other measures can be used to
evade or avoid the tax laws or regulations of other jurisdictions.
a) Tax burden
b) Tax avoidance c) Tax heaven d) Tax deduction
5. From the following, which is not a feature of Balance of payment?

a) Systematic record b) All Transactions c) Single entry
d) Double entry
6. From the following, which is not a component of Balance of payment? a) Trade balance
b) Current account balance
c) Capital account balance
d) Production balance
7. Current account _________ will take place when credits are more and debits are less
a) Deficit
b) Profit
c) Loss
d) Surplus
8. __________ account is a summary statement of transactions in a foreign exchange in a
year
a) Cash Flow
b) Trading
c) Balance of payment
d) Profit and Loss
9. __________ transactions include goods imports, imports of services and capital outflows
a) Payments
b) Purchases c) Trade
d) Sales
10. The _____________ is also called the IMF’s fixed exchange rate system
a) Gold Standards System
b) Bretton Woods System
c) Gold System
d) Silver Standard System
11. International bank for Reconstruction and development (IBRD) is known as the
_____________
a) International Bank
b) World Bank
c) Singapore Bank
d) World Trade Organization
12. The gold standard was the ____________ universally implemented exchange rate
system
a) First
b) Second
c) Third
d) Forth
13. In Bretton Woods System, the countries can also earn ____________ on their dollar
reserves
a) Profit
b) Surplus
c) Interest
d) Commission
14. Fixed exchange rate system is also known as __________ exchange rate a) Pegged
b) Flexible
c) Brett
d) Fluctuating
15. Every country was required to establish a central bank to function as the _________ of
the country’s monetary gold reserve
a) Supreme b) Superior c) Custodian d) Owner
16. Foreign exchange market is also referred to as ___________ market
a) Fourange
b) Barter
c) Forex
d) Exforeign
17. The basic function of foreign exchange market is to facilitate the __________ of one
currency into another
a) Conversion
b) Conservation
c) Concentration
d) Consolation
18. ___________ can be described as the arithmetical difference in the interest rates of the
variable and base currencies in annualized percentage terms
a) ATM
b) AFM
c) AMF
d) AEM
19. ____________ transfer is the quickest method of transferring the purchasing power a)
Telegraphic
b) Courier
c) Email
d) Mobile
20. Technical analysis is used by the investors alone or with _______ analysis exclusively
a) Basic
b) Fundamental
c) Inflation
d) Market
21. International _________ market mainly deals in Eurocurrency deposits, Euro credits,
Euro notes, Euro commercial paper etc.
a) Money
b) Capital
c) Bond
d) Share
22. Euro credits are a kind of ______________ extended to corporations in a currency other
than the home currencies
a) Loan
b) Gift
c) Subsidy
d) Scheme
23. Spot stands for _____________ payment options trading in foreign exchange
terminology
a) Double
b) Single
c) Straight
d) Future
24. Main center of Euro Currency markets are _____________ a) Pune
b) Maxico
c) London
d) America
25. The swap agreement defines the __________ when the cash flows are to be paid and
the way they are accrued and calculated.
a) Price
b) Duration
c) Dates
d) Type
26. LIBOR stands for ___________ Interbank Offered Rate.
a) Loan
b) Landmark
c) London
d) Liberia
27. _____________ is a financial institution that accepts foreign currency denominated
deposits and makes foreign currency loans
a) Euro capital
b) Euro bank
c) Dollar bank
d) Dollar capital
28. Rates on ___________ loans are typically lower than those in the domestic market a)
USD Currency
b) Pound Currency
c) Eurocurrency
d) Gold currency
29. _____________ equity markets are an important platform for global finance
a) Foreign
b) Forex
c) Euro
d) International
30. The risk of being unable to sell your investment at a fair price and get your money out
when you want to, is called ____________
a) Concentration risk
b) Liquidity risk
c) Inflation risk
d) Credit risk
31. IDR stands for ____________
a) International Depository Receipt
b) International Deposit Receipt
c) Indian Deposit Receipt
d) Indian Depository Receipt
32. FERA stands for ___________
a) Foreign Existence Regulation Act
b) Foreign Exchange Regulation Act
c) For Exercise Regulation Act
d) Foreign Exercise Regulation Act
33. The overall objective of capital budgeting is to __________ the profitability of a firm or
the return on investment.
a) Minimise
b) Exceed
c) Maximise
d) Deficit
34. ____________ is simply the net amount of all cash flowing in and out of your business,
from all sources
a) Total cash flow
b) Revenue c) Sales
d) Income
35. _______________ are often used by foreign companies engaged in manufacturing and
trading activities in India
a) Subsidiaries
b) MNCs
c) Branch Offices
d) Head Offices
36. _____________ measures the time in which the initial cash flow is returned by the
project
a) NPV
b) Profitability Index
c) Payback Period
d) Cash Inflow
37. ______________ is the discount rate at which net present value of the project becomes
zero.
a) IRR
b) NPV
c) PI
d) PAT
38. ___________ attempt to profit from rising and falling prices a) Arbitrageur
b) Hedger
c) Speculators
d) Manufacturer
39. ____________ is planned in such a way to increase the effective yield an investor gets
from his surplus invested funds
a) Investment Management b) Income Management
c) Portfolio Management
d) Profit Management
40. In the territorial system, only ___________ income from a source inside the country is
taxed
a) Foreign
b) Abroad
c) Local
d) Import
41. In the _____________ system, residents of the country are taxed on their worldwide
income
a) Local
b) Residential
c) Foreign
d) Abroad
42. ___________ has its foundations in the principles of economic efficiency and equity
a) Tax Evasion
b) Tax Burden
c) Tax Neutrality
d) Tax Assessment
43. International business leads to production on a large scale because of ____________
a) Extensive demand
b) Extensive supply
c) External demand
d) External supply
44. International business __________ employment opportunities in an export-oriented
market
a) Discourage
b) Boosts
c) Exceeds
d) Decreases
45. _______________ heavens provide maximum privacy for individuals and corporations
a) Offshore tax
b) Onshore Tax
c) Europe tax
d) American tax
46. ___________ is one of the most important pre-requisites to establish an enterprise a)
Management
b) Tax
c) Branch
d) Finance
47. Real options valuation, also often termed as ___________
a) Real investment
b) Real option analysis
c) Real cash inflow
d) Real option exercise
48. ____________ is an integral part of capital budgeting
a) Capital cost
b) Investment income
c) Investment appraisal
d) Capital appraisal
49. ____________ is a tax levied on passive income earned by an individual or corporation
of one country within the tax jurisdiction of another country
a) Withholding tax
b) Surcharge
c) Foreign tax d) Surrender tax
50. IMF is headquartered in ___________ a) Washington DC

b) New York US
c) Geneva Switzerland
d) Avenue Du Mont Blanc Switzerland
PDF 3
School of Distance Education

University of Calicut School of Distance Education IV Semester M.A. Economics
International Finance Multiple Choice Questions
1. International finance is concerned with__________
B. monetarysystemsoftheworld
C. foreigndirectinvestment
D. all of the above
2. International finance mainly discusses the issues related with monetary interactions of at
least__________.
A. one country
B. twoormorecountries
C. fivecountries
3. ________ maintains the foreign exchange reserves in India?
4. India’s foreign exchange rate system is _______
A. Fixed target of band B. Free float
C. Fixed system
D. Managed float
B. ReserveBankofIndia
C. FinanceMinistryofIndia D. EXIM India
Page 1

5. India is facing continuous deficit in its balance of payments in the foreign exchange
market rupee is expected to _______
A. Appreciate
B. Depreciate
C. Shownospecifictendency
D. All of the above
6. _____ is not a characteristic of speculation.
A. Hedging
B. Risk taking
C. Profit motive
7. The responsibility for administration of of FEMA is vested with ________ A. Central
government
B. State government
C. RBI
D. National banks
8. A source of supply of foreign exchange is ________
A. Imports
B. Exports
C. Donations
D. Gifts
9. The foreign direct investment includes __________
A. tangible good
B. intangible good
D. human resources
10. More expansion of foreign direct investment can boost _______
International Finance Page 2

A. demand
C. employment
D. unemployment
11. Who determines foreign exchange rates in India?
A. RBI
B. FEDAI
12. Who regulates the foreign trade in India?
A. SEBI
B. FEDAI
C. RBI
D. DGFT
13. The statutory authority which administers the exchange control in India _____ A. RBI
C. DGFT
D. FEDAI
14. When did government remove the barrier for investment in India?
A. 1193
B. 1992
C. 1991
D. 1990
15. Which of the following is known as the paper gold?
A. Bitcoin
Page 3

B. US dollar
C. demand draft
16. IMS is the full form of _________
17. The world’s four major trading currencies are all free to float against each other. They
include all the following except.
A. The British Pound
B. TheJapaneseYen
C. TheSpanishPeso
D. The US Dollar
18. The term Euro currency Market refers to
A. The countries which have adopted Euro as their currency
B. ThemarketinwhichEuroisexchangedforothercurrencies
C. The market where the borrowing and lending of currencies take place outside the
country of issue
D. The international foreign exchange market
19. The Bretton Woods System called for:
A. The IMF to promote development
B. FloatingexchangeratesagainsttheJapaneseYen
C. FixedexchangeratesagainsttheUSDollar
D. Floating exchange rates against US Dollar
20. The primary component of the current account is the.
A. balance of trade
B. balanceofmoneymarketflows
C. balanceofcapitalmarketflows
Page 4

D. unilateral transfers
21. Type of risk in which value of liabilities and assets is affected by exchange rate is
classified as
A. economic rates
B. foreignexchangerisk
C. sellingrate
D. buying rates
22. Type of risk in which value of liabilities and assets is affected by exchange rate is
classified as
A. economic rates
B. foreignexchangerisk
C. sellingrate
D. buying rates
23. In the foreign exchange market, the ________ of one country is traded for the ________
of another country.
B. currency;financialinstruments C. currency; goods
D. goods; goods
24. By definition, currency appreciation occurs when
25. Given a home country and a foreign country, purchasing power parity suggests that:
A. the value of all currencies fall relative to gold.
B. thevalueofallcurrenciesriserelativetogold.
C. thevalueofonecurrencyrisesrelativetoanothercurrency. D. the value of one currency falls
relative to another currency
A. the home currency will appreciate if the current home inflation rate exceeds the current
foreign inflation rate;

B. the home currency will depreciate if the current home interest rate exceeds the current
foreign interest rate;
C. the home currency will depreciate if the current home inflation rate exceeds the current
D. the home currency will depreciate if the current home inflation rate exceeds the current
foreign interest rate;
26. If purchasing power parity were to hold even in the short run, then:
A. real exchange rates should tend to decrease over time;
B. quotednominalexchangeratesshouldbestableovertime. C.
realexchangeratesshouldtendtoincreaseovertime;
D. real exchange rates should be stable over time;
27. Interest Rate Parity (IRP) implies that:
A. Interest rates should change by an equal amount but in the opposite direction to the
B. The difference in interest rates in different currencies for securities of similar risk and
maturity should be consistent with the forward rate discount or premium for the foreign
currency
C. The interest rates between two countries start in equilibrium, any change in the
differential rate of inflation between the two countries tends to be offset over the long-term by
an equal but opposite change in the spot exchange rate
D. In the long run real interest rate between two countries will be equal
28. A forward currency transaction:
A. Is always at a premium over the spot rate
B. Means that delivery and payment must be made within one business day (USA/Canada)
or two business days after the transaction date
C. Calls for exchange in the future of currencies at an agreed rate of exchange
D. Sets the future date when delivery of a currency must be made at an unknown spot
exchange rate
29. If one anticipates that the pound sterling is going to appreciate against the US dollar,
one might speculate by _______ pound call options or ______ pound put options.
30. The exchange rate is the

A. buying; buying
B. selling; buying
C. selling; selling
D. buying; selling
A. total yearly amount of money changed from one country’s currency to another country’s
currency
B. total monetary value of exports minus imports
C. amount of country’s currency which can exchanged for one ounce of gold
D. price of one country’s currency in terms of another country’s currency
31. Exchange rates
A. are always fixed
B. fluctuate to equate the quantity of foreign exchange demanded with the quantity supplied
C. fluctuate to equate imports and exports
D. fluctuate to equate rates of interest in various countries
a) earns illegal profit by manipulating foreign exchange
b) causes differences in exchange rates in different geographic markets
c) simultaneously buys large amounts of a currency in one market and sell it in another
market
d) None of the above
33. A speculator in foreign exchange is a person who
A. buys foreign currency, hoping to profit by selling it a higher exchange rate at some later
date
B. earnsillegalprofitbymanipulationforeignexchange
C. causesdifferencesinexchangeratesindifferentgeographicmarkets
Page 7

34. The Purchasing Power Parity (PPP) theory is a good predictor of
A. the long-run tendencies between changes in the price level and the exchange rate of two
countries
B. interest rate differentials between two countries when there are strong barriers preventing
C. eitherborc
35. According to the Purchasing Power Parity (PPP) theory,
A. Exchange rates between two national currencies will adjust daily to reflect price level
B. In the long run, inflation rates in different countries will equalize around the world
C. Inthelongrun,theexchangeratesbetweentwonationalcurrencieswillreflect price level
37. Under a gold standard,
A. is determined by the national governments involved B.
remainsextremelystableoverlongperiodsoftime C. isdeterminedbytheactionsofcentralbanks
D. is allowed to vary according to market forces
A. a nation’s currency can be traded for gold at a fixed rate
B. a nation’s central bank or monetary authority has absolute control over its money supply
C. newdiscoveriesofgoldhavenoeffectonmoneysupplyorprices
D. a&b
38. The Bretton Woods accord
Page 8
A. of 1879 created the gold standard as the basis of international finance
B. of 1914 formulated a new international monetary system after the collapse of the gold
standard

C. of 1944 formulated a new international monetary system after the collapse of the gold
standard
39. The current system of international finance is a
40. A simultaneous purchase and sale of foreign exchange for two different dates is called
41. More instability in currency is called as
42. Largest number of buyers and sellers, greater the
43. Exchange rate entail delivery of trade currency within two business days know as
A. gold standard
B. fixedexchangeratesystem
C. floatingexchangeratesystem
D. managed float exchange rate system
A. currency devalue B. currencyswap
C. currencyvaluation D. currency exchange
A. country risk B. financial risk C. currency risk D. liquidity risk
A. liquidity
B. speculation C. hedging
D. forward rate
A. forward rate B. future rate

C. spot rate D. bid rate
44. Differences in nominal interest rates are removed in exchange rate is
A. fisher effect
B. Leontief paradox.
C. Combined equilibrium theory. D. purchasing power parity
45. In 1944 international accord is recognized as
46. Gold standard introduced in
A. Breton Wood Agreement B. Exchange Agreement
C. International Trade
D. Fisher Effect
A. 1913 B. 1990 C. 1876 D. 1944
47. Market in which currencies buy and sell and their prices settle on is called the
48. Governments enforce currency limitations to
A. Eurocurrency market
B. international capital market C. international bond market D. foreign exchange market
A. protect a currency from speculators
B. keep resident individuals and businesses from investing in other nations
Page 10

C. preserve hard currencies to finance trade deficits or repay debts D. all of above
49. The equation that shows the relationship between expected inflation, real interest
rates, and nominal interest rates is called the A. interest rate parity equation.
B. Fisher equation.
C. GDP deflator.
D. net inflation index.
50. When was IMF established?
51. Balance of payments of a country includes:
52. It helps countries to meet deficit in balance of payments:
A Dec. 27, 1945 B Jan. 30, 1947 C Jan.1, 1946
D Sept. 24, 1947
A. Balance of trade
B. Capital receipts and payments C. Saving and investment account D. Both (a) and (b)
A. IMF
B. WTO
C. World Bank D. UNO
53. GATT stands for __________
A. general agreement on tariffs and trade

B. generalagreementontransportandtrade
C. generalarrangementontariffsandtrade D. general agreement on transport and trade
54. As per Smithsonian Agreement 1 ounce of gold = USD _
A. 30 B. 35 C. 36 D. 38
55. Satistical residue is a part of _______
A. errors and ommissions B. current account
C. capital account
D. reserve account
56. Reserves are held in the following forms, except .
A. foreign currency B. gold
C. sdr
D. silver
57. SDR is an international reserve asset created by .
58. FDI in BOP is covered under . A. official reserve account
A. IMF
B. WTO
C. World Bank D. IBRD
Page 12

B. current account C. capital account D. balancing items
59. Under Exchange rate system, there is no interference of monetary authorities to decide
exchange rate.
A. fixed B. floating C. mixed D. pegged
60. Under Exchange rate system, value of currency is decided by the market forces of
demand and supply.
A. fixed B. floating C. mixed D. pegged
61. Capital account convertibility of the Indian rupee implies
a) That the Indian rupee can be exchanged by authorized dealers for travel
b) That the Indian rupee can be exchanged for any major currency for the purpose of trade
in goods and services
c) That the Indian rupee can be exchanged for any major currency for the purpose of trading
in financial assets
d) None of the above
62. One of the important goals of the economic liberalization policy is to achieve high
convertibility of the Indian rupee. Which of the following is not a benefit of convertibility ?
a) Convertibility of the rupee will stabilize its exchange value against major currencies of
the world.
b) It will attract more foreign capital inflow in India

c) It will help promote exports
d) It will discourage imports to India
63. Which of the following statements is correct with respect to the convertibility of Indian
rupee?
a) It is convertible on capital account
b) It is convertible on current account
c) It is convertible both on current and capital account d) None of the above
64. The Mundell-Fleming framework studies (A) _____ , (B) _________ economies in a
world with (C) _____ financial markets and (D) _____ capital mobility.
a) (A) small; (B) open; (C) integrated; (D) free
b) (A) large; (B) open; (C) integrated; (D) free
c) (A) small; (B) mercantilist; (C) integrated; (D) free d) (A) large; (B) open; (C) restricted; (D)
free
65. Multinational corporations ?
A. increase the transfer of technology between nations
B. makeithardertonationstofosteractivitiesofcomparativeadvantage
C. alwaysenjoypoliticalharmonyinnationswheretheirsubsidiariesoperate D. require
governmental subsidies in order to conduct worldwide operations
66. Firms undertake multinational operations in order to ?
A. hire low-income workers
B. manufactureinnationstheyhavedifficultexportingto C. obtainnecessaryfactorinputs
D. All of the above
67. Which of the following 2 countries are not the participants of the euro zone?
68. Where is the headquarters of the EU?
A. Luxembourg, Malta
B. Denmark and the United Kingdom
C. Austria, Belgium
D. Slovenia, Spain

A. Belgium
B. Netherlands
C. Luxembourg
D. Greece
69. The J-curve effect refers to the observation that ?
70. The most widely traded currency in the foreign exchange market is the ?
A. GDP usually decreases before it increases after a currency depreciation
B. the trade balance usually gets worse before it improves after a currency
depreciation
C. the trade balance usually gets better before it gets worse after a currency
appreciation
D. GDP usually decreases before it increases after a currency appreciation
A. euro
B. Chinese Yuan C. Britishpound D. U.S dollar
71. Which one of the following is the SDR given by the IMF to its member countries?
a) Cold Money b) Hot money
c) Paper Money d) None of these
72. What is unilateral transfer in BOP?
73. Foreign currency forward market is
a) Visible items
b) Invisible items
c) Gifts
d) Income receipts & payments
a) An over the counter unorganized market b) Organized market without trading
c) Organized listed market
d) Unorganized listed market
Page 15

74. Interest-rate parity refers to the concept that, where market imperfections are few,
a) the same goods must sell for the same price across countries. b) interest rates across
countries will eventually be the same.
c) there is an offsetting relationship between interest rate differentials and differentials in the
forward spot exchange market.
d) there is an offsetting relationship provided by costs and revenues in similar market
Environments
75. Under fixed exchange rate system , the currency rate in the market is maintained
through
a) Rationing of foreign exchange
b) Official intervention
c) Centralizing all foreign exchange operations d) None of the above
76. The statutory basis for administration of foreign exchange in India is?
a) Foreign Exchange Regulation Act, 1973
b) Foreign Exchange Management Act , 1999
c) Exchange control Manual
d) Conservation of Foreign Exchange & prevention of Smuggling Act.
77. According to the Purchasing Power Parity theory, the value of a currency should remain
constant in terms of what it can buy in different countries of
a. Bonds b. Stocks c. Goods d. Labor
a) the value of all currencies fall relative to gold.
b) the value of all currencies rise relative to gold.
c) the value of one currency rises relative to another currency.

d) the value of one currency falls relative to another currency.
79. If purchasing power parity were to hold even in the short run, then:
80. The date of settlement for a foreign exchange transaction is referred to as:
81. Foreign currency forward market is
82. Forward exchange rates are useful for those who wish to
a) real exchange rates should tend to decrease over time;
b) quoted nominal exchange rates should be stable over time. c) real exchange rates should
tend to increase over time;
d) real exchange rates should be stable over time;
a) Clearing date b) Swap date
c) Maturity date d) Value date
a) An over the counter unorganized market b) Organized market without trading
c)Organized listed market
d) Unorganized listed market
a. Protect themselves from the risk that the exchange rate will change before a transaction
is completed.
b. Gamble that a currency will rise in value or will fall in value c. Exchange currencies at a
point in time in the future.
d. All of the above.
83. The feature of currency option is that distinguishes it from other derivatives is
a) It carries premium to be paid upfront
b) It is optional to enter into the contract
c) The buyer has only right but no obligation to execute the contract d) The seller has the
right but no obligation to execute the contract
Page 17

84. An investor looking at reducing his risk is known as ______.
85. ______ frames rules and guidelines for Forex Business in India
86. _______ was introduced at a time when forex reserves of the country were low.
87. _______ can authorize a person/company to deal in foreign exchange. A. SEBI
B. RBI
C. IRDA
D. Parliament
88. Systematic record of economic transactions of a country during given period of time is
known as _______.
A. ADR B. BOP C. GDR D. IFRS
89. In quote of 1 USD = INR 60, _______ is a home country A. India
B. USA C. France D. Russia
90. A country may link its exchange rate to the value of a major currency, usually the U.S.
dollar or the French franc. This is called .
A. a currency par
B. acurrencypeg
A. Speculator B. Hedger
C. Arbitrageur D. Trader
A. RBI
B. SEBI C. IRDA D. FEDAI
A. FERA B. FEMA C. GATT D. EXIM
Page 18
C. D. 91.
A.
B. C. D. 92.
A. B. C. D. 93. A. B. C. D. 94.
95. A. B. C. D. 96.
acurrencycomposite a currency basket
Economists regard the creation of the Euro as a new European currency in the international
monetary system as the most important development since .
1953
1963
1973
1983
The decline of the U.S. dollar value in the late 1980s was mainly attributable to the following
agreement .
Louvre Accord
PlazaAccord
SmithsonianAgreement
Jamaica Agreement
The euro began public circulation in ____. 1999
2000
2001
2002
The positive effects of the introduction of the euro include:
A. It eliminates exchange rate risk between euro-zone countries. B. It increases both inflation
and government spending.
C. It facilitates cross-border prices comparisons.
D. A and C.
The managed floating exchange system was established in .
1969
1973
1976
1979
Factors that cause demand and supply schedules for foreign exchange to shift include: A.
relative inflation rates
100.
organizations except
A. B. C. D.
101.
A.
B. C. D. E.
IMF member countries
prescribedorganizations
centralbanks
multinational corporations
SDR interest rates are the weighted average interest rate of . given short-term rates
SDR countries TreasuryBillrates
certificate of deposits (CD) rates IMF member countries
B. relative interest rates
C. different welfare systems
D. relative income levels
97. The objectives of the International Monetary Fund (IMF) are .
A. to promote international monetary cooperation
B. to promote exchange stability
C. to create standby reserves
D. all of the above
98. The quota allotted to a member country of the IMF, which it can borrow at will, is
known as tranche. a. gold
b. basic
c. member d. reserve .
99. The proposal under which a par value of a currency is adjusted intermittently is referred
to as a .
A. B. C. D.
wide band
narrowband
crawlingpeg
crawling band
Special drawing rights are used to settle payments by the following
Page 20

ANSWERS
1.D
21.B
41.B
61.C
2.B
22.B
42.A
62.D
3.B
23.A
43.C
63.B
4.D
24.C
44.A
64.A
5.B
25.C
45.A
65.A
6.A
26.D
46.C
66.D
7.C
27.B
47.D
67.B
8.B
28.C
48.D
68.A
9.A
29.D
49.B
69.B
10.C
30.D
50.A
70.D
11.C
31.B
51.D
71.C
12.C
32.B
52.A
72.C
13.A
33.A
53.A
73.A
14.C
34.A
54.D
74.C
15.D
35.C
55.A
75.B
16.B
36.D
56.D
76.B
17.C
37.A
57.A
77.C
18.C
38.C
58.C
78.C
19.C
39.D
59.B
79.D
20.A
40.B
60.B
80.D
81.A 82.D 83.C 84.B 85.D 86.A 87.B 88.B 89.A 90.D 91.C 92.B 93.D 94.D 95.B 96.C 97.D
98.D 99.C 100.D 101.B
PDF 4
MOCK MCQ TEST

SUBJECT: INTERNATIONAL FINANCIAL MANAGEMENT (IFM)
PAPER CODE: MS 221
FOR PRIVATE CIRCULATION

The Questions and Answers contained in this document have been prepared by the faculty
of the Institute from the sources believed to be reliable. Neither the Institute nor the faculty
gives any guarantee with respect to completeness or accuracy of the contents contained in
the document and shall in no event be liable for any errors, omissions or damages arising
out of use of the matter contained in the document. The Institute and the faculty specifically
disclaim any implied warranty as to merchantability or fitness of the information for any
particular purpose.
MOCK MCQ TEST SUBJECT: INTERNATIONAL FINANCIAL MANAGEMENT

PAPER CODE: MS 221
1. Which of the following is a legitimate reason for international investment?
(a) Dividends from a foreign subsidiary are tax exempt in the United States.
(b) Most governments do not tax foreign corporations.
(c) There are possible benefits from international diversification.
(d) International investments have less political risk than domestic investments.
(a) the value of all currencies fall relative to gold.
(b) the value of all currencies rise relative to gold.
(c) the value of one currency rises relative to another currency.
(d) the value of one currency falls relative to another currency.
3. Theory which considers change in exchange rate with fluctuations in inflation rates is
classified as
(a) liquidated power parity (b) purchasing power parity (c) selling power parity
(d) volatile power parity
4. If purchasing power parity were to hold even in the short run, then: (a) real exchange rates
should tend to decrease over time.
(b) quoted nominal exchange rates should be stable over time. (c) real exchange rates
should tend to increase over time.
(d) real exchange rates should be stable over time.
5. Given a home country and a foreign country, purchasing power parity suggests that:
(a) the home currency will appreciate if the current home inflation rate exceeds the current
foreign inflation rate
(b) the home currency will depreciate if the current home interest rate exceeds the current
(c) the home currency will depreciate if the current home inflation rate exceeds the current
foreign inflation rate
(d) the home currency will depreciate if the current home inflation rate exceeds the current
6. Interest Rate Parity (IRP) implies that:
(a) Interest rates should change by an equal amount but in the opposite direction to the
(b) The difference in interest rates in different currencies for securities of similar risk
and maturity should be consistent with the forward rate discount or premium for
the foreign currency
(c) The interest rates between two countries start in equilibrium, any change in the
differential rate of inflation between the two countries tends to be offset over the
longterm by an equal but opposite change in the spot exchange rate
(d) In the long run real interest rate between two countries will be equal
(e) Nominal interest rates in each country are equal to the required real rate plus
(a) domestic rates
(b) forward and spot exchange rates
(c) forward rate
(d) spot rates
8. Rule which states that similar set of goods and services produced in various countries
(a) law of similar mortgage rate (b) law of one type manufacturing (c) law of similar labor
rules
(d) law of one price
9. Example of derivative securities includes
(a) swap contract (b) option contract (c) futures contract (d) all of above
7. In equilibrium position, spread between foreign and domestic rate of interest must be
equal to spread of
10. Authority which intervenes directly or indirectly in foreign exchange markets by altering
(a) central government
(b) centralized stocks
(c) central corporations (d) centralized instruments
11. The forward market is especially well-suited to offer hedging protection against (a)
translation risk exposure.
(b) transactions risk exposure. (c) political risk exposure.
(d) taxation.
12. Suppose that the Japanese yen is selling at a forward discount in the forward-exchange
(a) this currency has low exchange-rate risk.
(b) this currency is gaining strength in relation to the dollar. (c) interest rates are higher in
Japan than in the United States. (d) interest rates are declining in Japan.
13. Hedging is used by companies to:
(a) Decrease the variability of tax paid
(b) Decrease the spread between spot and forward market quotes (c) Increase the variability
of expected cash flows
(d) Decrease the variability of expected cash flows
(e) Increase the variability of tax paid
14. Which of the following is true of foreign exchange markets?
(a) The futures market is mainly used by hedgers while the forward market is mainly
used for speculating.
(b) The futures market and the forward market are mainly used for hedging.
(c) The futures market is mainly used by speculators while the forward market is
mainly used for hedging.
(d) The futures market and the forward market are mainly used for speculating.
15. Exchange rates

(a) are always fixed
(b) fluctuate to equate the quantity of foreign exchange demanded with the quantity supplied
(c) fluctuate to equate imports and exports
(d) fluctuate to equate rates of interest in various countries
(a) earns illegal profit by manipulating foreign exchange
(b) causes differences in exchange rates in different geographic markets
(c) simultaneously buys large amounts of a currency in one market and sell it in another
market
(d) None of the above
17. A speculator in foreign exchange is a person who
(a) buys foreign currency, hoping to profit by selling it a a higher exchange rate at some
later date
(b) earns illegal profit by manipulation foreign exchange
(c) causes differences in exchange rates in different geographic markets
(a) is determined by the national governments involved (b) remains extremely stable over
long periods of time (c) is determined by the actions of central banks
(d) is allowed to vary according to market forces
19. The current system of international finance is a (a) gold standard
(b) fixed exchange rate system
(c) floating exchange rate system
(d) managed float exchange rate system
20. A simultaneous purchase and sale of foreign exchange for two different dates is called
(a) currency devalue
(b) currency swap
(c) currency valuation (d) currency exchange
21. Investment can be defined.
22. The concept of Financial management is.
23. What is the primary goal of financial management?
24. GST is a consumption of goods and service tax based on.
(a) Person’s dedication to purchasing a house or flat
(b) Use of capital on assets to receive returns
(c) Usage of money on a production process of products and services
(d) Net additions made to the nation’s capital stocks
(a) Profit maximization
(b) All features of obtaining and using financial resources for company operations (c)
Organization of funds
(d) Effective Management of every company
(a) To minimise the risk
(b) To maximise the owner’s wealth
(c) To maximise the return (d) To raise profit
(a) Development (b) Dividend
(c) Destiny
(d) Duration
(e) Destination
25. The finance manager is accountable for.

26. The market value of a share is responsible for.
27. The capital budget is associated with.
28. CAPM stands for.
29. What does financial leverage measure?
(a) Earning capital assets of the company (b) Effective management of a fund
(c) Arrangement of financial resources (d) Proper utilisation of funds
(a) The investment market (b) The government
(c) Shareholders
(d) The respective companies
(a) Long terms and short terms assets (b) Fixed assets
(c) Long terms assets
(d) Short term assets
(a) Capital asset pricing model.
(b) Capital amount printing model. (c) Capital amount pricing model. (d) Capital asset
printing model.
(a) No change with EBIT and EPS
(b) The sensibility of EBIT with % change with respect to output (c) The sensibility of EPS
with % change in the EBIT level
(d) % variation in the level of production
30. From the below-mentioned items which are financial assets?

31. Trade between two countries can be useful if cost ratios of goods are:
32. The term Euro Currency market refers to
(a) Machines (b) Bonds (c) Stocks (d) B and C
(a) Undetermined (b) Decreasing
(c) Equal (d) Different
(a) The international foreign exchange market
(b) The market where the borrowing and lending of currencies take place outside the country
of issue
(c) The countries which have adopted Euro as their currency
(d) The market in which Euro is exchanged for other currencies
time?
(a) Imperfect Market Theory
(b) Product cycle theory
(c) Theory of Comparative Advantage
34. Dumping refers to:
(a) Reducing tariffs
(b) Sale of goods abroad at low a price, below their cost and price in home market (c) Buying
goods at low prices abroad and selling at higher prices locally
(d) Expensive goods selling for low prices
35. International trade and domestic trade differ because of:

36. The margin for a currency future should be maintained with the clearing house by
37. The following statement with respect to currency option is wrong
38. Govt. policy about exports and imports is called:
39. Which of the following is international trade:
(a) Different government policies (b) Immobility of factors
(c) Trade restrictions
(d) All of the above
(a) The seller (b) The buyer
(c) Either the buyer or the seller as per the agreement between them (d) Both the buyer and
the seller
(a) Foreign currency- Rupee option is available in India
(b) An American option can be executed on any day during its currency
(c) Put option gives the buyer the right to sell the foreign currency
(d) Call option will be used by exporters
(a) Commercial policy
(b) Fiscal policy
(c) Monetary policy (d) Finance policy
(a) Trade between countries (b) Trade between regions (c) Trade between provinces (d)
Both (b) and (c)
40. Market in which currencies buy and sell and their prices settle on is called the
41. Purchasing goods from a foreign country is called (a) Import
(b) Entrepot (c) Export
(d) Re-Export
42. Goods imported for the purpose of export is known as
(a) Home trade
(b) Foreign trade
(c) Entrepot
(d) Trade
43. Agents are appointed by?
(a) Manufacturer
(b) Wholesaler
(c) Retailer
(d) Principal
44. Who among these can check the price fluctuations in the market by holding back the
goods when prices fall and releasing the goods when prices rise
(a) Agent
(b) Mercantile agent (c) Wholesaler
(d) Retailer
(a) International bond market
(b) International capital market
(c) Foreign exchange market
(d) Eurocurrency market
45. These are agents whose function is to bring the buyer and the seller into contact. (a)
Commission agent
(b) Selling agent (c) Broker
(d) Stockist
46. Who among the following appoints the agent (a) Principal
(b) Retailer
(c) Manufacturer (d) Wholesaler
47. Which among the following is not concerned with Chambers of Commerce & Industry (a)
CII
(b) FICCI
(c) ICICI
(d) ASSOCHAM
48. One example of Small scale Fixed retailers among these is (a) Pedlars
(b) General stores (c) Hawkers
(d) Cheap Jacks
49. This retail business acts as a universal supplier of a wide variety of products. (a) Multiple
shop
(b) Mail order Business (c) Tele-shopping
(d) Departmental store
50. What is the Bill receivable account?

51. A bill of exchange includes.
52. Which bill is drawn and accepted in the same country?
53. Who draws a bill of exchange?
54. What is the person known as who draws a bill of exchange
(a) Personal Account (b) Machinery Account (c) Real Account
(d) Nominal Account
(a) An order to pay (b) A request to pay
(c) A promise to pay (d) All the above
(a) Trade Bill
(b) Foreign Bill
(c) Inland Bill
(d) Accommodation Bill
(a) Creditor
(b) Debtor
(c) Holder
(a) Drawer
(b) Payee
(c) Drawee
55. What are the three additional days known as that a drawer gives to the drawee for
payment
(a) Conditional days
(b) Additional days (c) Days of grace (d) Days of rebate
56. When the drawee signs the bill, it is considered as
57. What kind of acceptance is known as when the bill is accepted without any condition?
58. When the bill is noted from the notary public, it is known as?
59. What is retiring a bill under rebate means?
(a) Accepted (b) Retired (c) Renewed
(d) Endorsed
(a) Qualified acceptance (b) Conditional acceptance (c) Blank acceptance
(d) General acceptance
(a) Noting
(b) Discounting (c) Accepting
(a) Making a payment of the bill before the due date (b) Dishonoring of a bill
(c) Making a payment of the bill after the due date (d) All of the above
60. The most widely used monetary policy tool among these is.
(a) Open market operations
(b) Issuing of notes
(c) Close market operations
(d) Discount rate
ANSWER KEY
1 c 11 b 21 b 31 d 41 a 51 a 2 c 12 c 22 b 32 b 42 c 52 c 3 b 13 d 23 b 33 b 43 d 53 c 4 d 14
c 24 e 34 b 44 c 54 a 5 c 15 b 25 c 35 d 45 c 55 c 6 b 16 c 26 a 36 d 46 a 56 a 7 b 17 a 27 c
37 d 47 c 57 d 8 d 18 d 28 a 38 a 48 b 58 a 9 d 19 d 29 c 39 a 49 d 59 a
10 a 20 b 30 c 40 c 50 c 60 a
PDF -5
International Finance and Treasury MCQ Quiz PDF

1. European Economic Community founded in___________
1. 1958 2. 1957 3. 1963 4. 1968
Answer: 1957
2. Japan yen denominated Bond issued in Japan domestic Market________________
1. Samurai Bond
2. Bull dog Bond
3. Yankee Bond
4. Dual Bond
Answer: Samurai Bond
3. Determination of forward rates is explained by____________
1. Uncovered interest arbitrage
2. Demand and Supply for spot currency
3. Purchasing power parity theory
4. demand and supply of currency in future
Answer: Purchasing power parity theory
4. International Monetary Fund is headquartered in____________
1. New York City, United States
2. Geneva, Switzerland
3. Washington, United States
4. Avenue Du Mont Blanc, Switzerland
Answer: Washington, United States
5. In India currency-notes issue system is based on________________
1. Minimum Reserve System
2. Fixed Exchange Rate System
3. Proportional Reserve System
4. Fully Convertibility System
Answer: Minimum Reserve System
6. The margin for a currency future should be maintained with the clearing house
by______________
1. The seller
2. The buyer
3. All of above
4. None
7. Which of the following institutions cannot be included in the international financial
and monetary system?
1. Bank for International Settlements
2. IMF
3. WTO
4. World BanK
Answer: WTO
8. The world’s four major trading currencies are all free to float against each other.
They include all the following except.
1. The Japanese Yen
2. The British Pound
3. The US Dollar
4. The Spanish Peso
Answer: The Spanish Peso
9. US Dollar denominated bond issued in US domestic Market__________
1. Bull dog Bond
2. Samurai Bond
3. Yankee Bond
4. Dual Bond
Answer: Yankee Bond
10. The marking to market of a futures contract is done_________
1. Weekly, based on the opening price for the week
2. Daily, based on the opening price for the day
3. Weekly based on the closing price for the previous week
4. Daily, based on the closing price for the previous day
Answer: Daily, based on the closing price for the previous day
11. Cash and carry arbitrage explains the determination of___________
1. Spot rates for currencies
2. Forward Rates for currencies
3. All of above
4. None of above
Answer: Forward Rates for currencies
12. Not a profit maximizing business is________
1. International bank for Reconstruction and Development
2. International Financial Corporation
3. International Monetary Fund
4. World Trade Organization
Answer: International bank for Reconstruction and Development
13. Which of the following theories suggests that firms seek to penetrate new markets
over time?
1. Imperfect Market Theory
2. Product cycle theory
3. Theory of Comparative Advantage
4. None of the above
Answer: Product cycle theory
14. For contingency exposure of foreign exchange, the best derivative that can be used
to hedge is__________________
1. Futures 2. Options 3. Forwards 4. Swaps
Answer: Options
15. The intrinsic value of a Call option is__________
1. Underlying price - Strike Price
2. Strike price > Underlying price
3. Strike price - Underlying Price
4. Strike price < Underlying price
Answer: Underlying price - Strike Price
16. The marking to market in respect of a currency future refers to____________
1. Adjusting the margin money of buyer and seller to reflect the current value of futures
2. Quoting rates for different maturities
3. Putting up for sale specific lot of futures
4. Allotting futures among different brokers
Answer: Adjusting the margin money of buyer and seller to reflect the current value of
futures
17. Gifts and Relief are____________
1. Service Payment
2. Transfer payment
3. Merchandise Payment
4. Factory Income
Answer: Transfer payment
18. The external method of hedging transaction exposure does not
include______________
1. Money market hedge
2. Cross hedging
3. Forward contact hedge
4. Future hedging
Answer: Cross hedging
19. Which of the countries did not become a member of the Economic and Monetary
Union as on Jan 1 1999.
1. France
2. Britain 3. Italy
4. Germany
Answer: Britain
20. The acronym CIRCUS stands for_____________
1. Circular Currency Swap
2. Combined Income Range Currency Swap
3. Combined Interest Rate and Currency Swap
4. Current Interest Rate Swap
Answer: Combined Interest Rate and Currency Swap
21. Nations that have major economic expansion attract_____________
1. Direct Foreign Investment
2. Privatization
3. Imports
4. Exports
Answer: Direct Foreign Investment
22. Euro is the official currency of________________

1. All the states of European Union
2. Only 12 of the states of European Union
3. Only 10 of the States of European Union
4. All the States of Europe
Answer: All the states of European Union
23. In a quote exchange rate, the currency that is to purchase with another currency is
called_______________
1. Local Currency
2. Foreign Currency
3. Liquid currency
4. Base currency
Answer: Base currency
24. Under the interest rate option, the buyer_________________
1. Gains from favorable movement in interest rates
2. Avoids unfavourable movement in interest rates
3. All of above
4. None
25. FRAs can’t be used for_____________
1. Arbitraging
2. Speculating
3. Hedging
4. Any of the these
Answer: Any of the these
26. The term Euro currency Market refers to__________
1. The market in which Euro is exchanged for other currencies
2. The market where the borrowing and lending of currencies take place outside the
country of issue
3. The countries which have adopted Euro as their currency
4. The international foreign exchange market
Answer: The market where the borrowing and lending of currencies take place outside the
country of issue
27. IMF is firm of____________
1. 182 Member Countries

Answer: 183 Member Countries
28. The cost of hedging through option includes_______________
1. Option premium
2. Interest on option premium till due date of the contract
3. All of these
4. None
Answer: All of these
29. An interest rate cap is a series of____________
1. Put options
2. Periodical payment
3. Call options
4. Differential payments
Answer: Call options
30. Bond issued simultaneously in several global financial center is___________
1. Foreign Bond
2. Global Bond
3. Domestic Bond
4. Euro Bond
Answer: Global Bond
31. This is not established method of translation________________
1. Monetary/Non-monetary method
2. Temporary method
3. Current rate method
4. Current/Non-current method
Answer: Temporary method
32. For the purpose of translation exposure, historical rate is the rate prevalent on the
date_______________
1. The foreign subsidiary was established
2. The investment in the subsidiary was made by the parent company
3. The parent company was established
4. The asset was acquired or the liability was incurred
Answer: The asset was acquired or the liability was incurred
33. The __________ is especially well suited to offer hedging protection against
transactions risk exposure
1. spot market
2. transactions market
3. forward market
4. inflation-rate market
Answer: forward market
34. The first Indian company raised the fund by issuing Bond in US dollar in United
States.
1. TATA 2. Aircel
3. Airtel
4. Reliance
Answer: Reliance
35. International Financial Corporation established in the year________________
1. 1952 2. 1962 3. 1948 4. 1956
Answer: 1956
36. Which of the following is not an example of an international trade draft?
1. Time draft
2. Sight draft
3. All of above
4. None
37. Forward contract is an agreement to buy or sell an assets on__________________
1. Specified time
2. Specified date
3. Specified price
4. Specified volume
Answer: Specified price
38. Two tier exchange rate system is a form of____________
1. Fixed rate
2. Flexible rate
3. Different exchange rate
4. Multiple exchange rate
Answer: Multiple exchange rate
39. Which of the following is not a reason for international investment?
1. To produce products and/or services more efficiently than possible domestically
2. To gain access to important raw materials
3. To provide an expected risk-adjusted return in excess of that required
4. International investments have less political risk than domestic investment
Answer: International investments have less political risk than domestic investment 40.
Foreign currency exposures can be avoided by______________
1. Denominating the transaction in domestic currency
2. Exposure netting
3. Entering into forward contracts
4. Maintaining foreign currency account
Answer: Denominating the transaction in domestic currency
PDF - 6
Program: - TYBBI Sem: - V Course: - INTERNATIONAL BANKING AND FINANCE

Sr. No
Question
A
B
C
D
Answer
OPTION
1
Syndicated loan is a loan that is _____
Secured by Mortgages
Unsecured
Provided by Group of Banks
Provided to a Group of Customers
Provided by Group of Banks
C
2
_____ is the provision of banking services by one bank (the“correspondent bank”) to another
bank (the “respondent bank”)
Correspondent banking
International banking
Foreign bank
Domestic Banking
International banking
B
3
A sovereign credit rating is the credit rating of a, _____ i.e., a national government
Sovereign entity
Multinational company
Banks
Firm
Sovereign entity
A
4
LIBOR are used to reflect _____term interest rate across the globe.
Short
Medium
Long
Federal
Short
A
5
___ plays an important role in strengthen the banking sector.
Federal bank
Domestic bank
Central banks
Inter-banks
Domestic bank
B
6
The bank which opens the letter of credit in favour of beneficiary is known as _____
Issuing bank
advising bank
confirming bank
lead bank
Issuing bank
A
7
A letter of credit that can be used for multiple transactions where the credit limit is not fixed is
_____ letter of credit.
revolving
transferable
revocable
clean
revolving
A
8
___ is a rupee denominated NRI account.
NRE
NRO
FCNR
NPA
NRO
B
9
Loan can be provided in ____ currencies as per the borrowers demand in case of loan
syndication.
one
two
multiple
domestic
multiple
C
10
The loan amount contributed by several lenders in a syndicated loan ____
is equal
is double
may or may not be equal
decided by RBI
may or may not be equal
C
11
The risk that the bank will not receive funds from its counter-parties on the due date is called
_____.
Settlement risk
Liquidity Risk
Foreign exchange risk
Political risk
Settlement risk
A
12
_____ risk relates to the inability of a bank to unwind its asset at the market price and meet
its obligation of payment on the due date.
Liquidity
Political
potential payoff
foreign exchange risk
Liquidity
A
Shri Bhausaheb Vartak College of Arts ,Commerce and Science, Borivali (West)
Sr. No
Question
A
B
C
D
Answer
OPTION
13
In options for call and put a right a price called the option _____.
Futures
premium
Liquidity
discount
premium
B
14
_____ risk, as it is otherwise known, arises due to adverse movements of interest rates or
interest rate differentials.
operational risk
Interest rate
political risk
Currency swaps
Interest rate
B
15
_____ gives the buyer the right but not the obligation to buy a given quantity of the
underlying asset, at a given price on or before a given future date.
currency
calls
puts
forward
calls
B
16
When a country experiences ____ its interest rates are likely to fall.
Boom
Depression
Recession
high growth
Recession
C
17
____ is where you can buy or sell a currency, at fixed future date for a pre-determined rate.
forward market
domestic market
currency market
options market
forward market
A
18
The risk that a government may default on its debt obligation _________
political risk
sovereign risk
transfer risk
transaction risk
sovereign risk
B
19
An act which in enacted to regulate payments and foreign exchange in India, is ____.
FERA
FEMA
FEDAI
FIMMDA
FEMA
B
20
____ an act intiated to facilitate external trade and payments and to promote orderly
management of the forex market in the country.
FERA
FEMA
FEDAI
FIMMDA
FEMA
B
21
_____ facilitates the conversion of one country’s currency into another.
Commercial Bank
Foreign Exchange Market
Forex Market
NABARD
Forex Market
C
22
The _____ carry out buy/sell orders from their retail clients
Foreign Exchange Market
Forex Market
Commercial Bank
NABARD
Commercial Bank
C
23
_____ is a foreign exchange rate quoted as the domestic currency
Direct Quote
Exchange rate Quote
Forex market
Futures market
Direct Quote
A
Sr. No
Question
A
B
C
D
Answer
OPTION
24
_____ is the price that a trader will get for selling a single base currency.
Bid price
Ask rate
Spread
Spread %
Bid price
A
25
The difference between the bid price and the ask price in a forex quote is normally called
_____.
Spread
bid rate
Ask rate
Direct rate
Spread
A
26
____ risk arises if a country suddenly suspends or imposes a moratorium on foreign
payments because of Balance of payments or other problems.
Mismatch risk
Transaction risk
Open position risk
Sovereign risk
Sovereign risk
D
27
____ placed mainly in countries other than the one in whose currency the bond is
denominate
Domestic bonds
Foreign bonds
Eurobonds
Global bonds
Eurobonds
C
28
SEBI has set _____ as the lower limit for the IDRs to be issued by the Indian companies.
Rs.5 crores
Rs.50 crores
Rs.500 crores
Rs.5000 crores
Rs.50 crores
B
29
The minimum investment required in the IDR issue by the investors has been fixed at
____by SEBI.
Rs2 lakh
Rs.5lakh
Rs.20lakh
Rs.50Lakh
Rs2 lakh
A
30
_____ is issued locally by a domestic borrower usually denominated in the local currency.
Domestic bonds
Foreign bonds
Eurobonds
Global bonds
Domestic bonds
A
31
A Japanese company issuing bonds in Yen Currency in Japan is an example of ______
Domestic bonds
Foreign bonds
Eurobonds
Global bonds
Domestic bonds
A
32
The main risk associated with domestic bonds is the risk of ____
Bankruptcy
Obsolescence
Exchange
Credit
Bankruptcy
A
33
Straight fixed rate Eurobonds are typically bearer bonds and pay coupon interest ______
Annually
Half yearly
Quarterly
Monthly
Annually
A
34
In the case of ______ offering, the bonds convert into shares of the company that issued the
bonds.
FCCB
FCEB
GDR
ADR
FCCB
A
35
_____ are instruments issued by registered foreign institutional investor (FII) to overseas
investors, who wish to invest in the Indian stock markets without registering themselves with
the market regulator, SEBI.
Participatory notes
Eurobonds
FCCB
FCEB
Participatory notes
A
Sr. No
Question
A
B
C
D
Answer
OPTION
36
The artificial currency created by IMF to be used as supplementary Reserve Asset is called
as
SDR
Gold coins
Paper currency
Bitcoins
SDR
A
37
Broad measure of a country's international trade in goods and services are called
Current account
Capital account
Trade account
Receivable account
Current account
A
38
Account reflecting changes in country ownership of longterm and short-term financial
assets are called
Current account
Capital account
Trade account
Receivable account
Capital account
B
39
When a country experiences ______ its interest rates are likely to fall.
Boom
Depression
Recession
Development
Recession
C
40
International bank for reconstruction and development also popularity called ____
World bank
Monetary fund
European bank
BWS
World bank
A
41
The ____ is an international reserve asset, created by the IMF in 1969 to supplement its
member countries official reserves.
BWS
SDR
ADR
GDR
SDR
B
42
_____ regulates SDRs which would accept as reserves and use for the settlement of
international payments.
IMF
IBRD
ICRA
IFC
IMF
A
43
The Smithsonian agreement was abandoned in March _____
1978
1972
1971
1967
1972
B
44
The collapse of the _____ system is related to Tiffens paradox.
Gold standard
Bretton woods
Snake in the Tunnel
Gold specie
Bretton woods
B
45
_____ is the act of trading different currencies.
Foreign exchange
Arbitrage
Foreign trade
Exports
Foreign trade
C
46
A floating exchange rate are _________
a. Is determined by the national governments involved.
b. Remains extremely stable over long period of times.
Is determined by the actions of central banks.
Is allowed to vary accordingly to market force.
Is allowed to vary accordingly to market force.
D
Sr. No
Question
A
B
C
D
Answer
OPTION
47
The current system of international finance is a _________
Gold standard
Fixed exchange rate system
Floating exchange rate system
Managed float exchange rate system
Managed float exchange rate system
D
48
Who is the first party in ADR Issue
Bank
Issuing Company
Stock exchange
Customer
Issuing Company
B
49
FERA was replaced by
RBI
World bank
FEMA
Commercial Bank
FEMA
B
50
The price which is average of BID & ASK PRICE___
MID
Ask
BID
SPOT
MID
A
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MCQ ( 16-06-2023)

Due to globalization, the financial management function has become _________.

A. Less demanding and complex

B. More demanding and complex

C. Less important and complex

D. Outdated and complex

B. two or more countries

D. None of the above

International finance is concerned with__________

A. exchange rates of currencies

B. monetary systems of the world

C. foreign direct investment

D. all of the above

________ maintains the foreign exchange reserves in India?

A. State Bank of India

B. Reserve Bank of India

C. Finance Ministry of India

India’s foreign exchange rate system is _______

A. Fixed target of band

C. Show no specific tendency

D. All of the above

_____ is not a characteristic of speculation.

D. Exchange rate fluctuation

The responsibility for administration of of FEMA is vested with ________

The foreign direct investment includes __________

The three disputes of FDI are over _______

More expansion of foreign direct investment can boost _______

Who determines foreign exchange rates in India?

C. market forces of demand and supply

D. finance ministry of India

Who regulates the foreign trade in India?

D. all of the above

Which Indian industries have been hit by globalization?

When did government remove the barrier for investment in India?

C. not ordinarily resident

D. all of the above

A. The clearance code of India

B. The clearing corporation of India

C. The clearing committee of India

D. The clearing consignment of India

______ refers to converting illegal on money into legitimate money.

C. international monetary credits

Which of the following is known as the paper gold?

Tax on imports can be treated as _______

IMS is the full form of _________

A. International monetary source

B. International monetary system

C. International monetary structure

D. International monetary society

____offers the exporter the greatest level of safety.

Q2. The term Euro Currency market refers to

A. The international foreign exchange market

C. The countries which have adopted Euro as their currency

D. The market in which Euro is exchanged for other currencies

A. Imperfect Market Theory

B. Product cycle theory

C. Theory of Comparative Advantage

D. None of the above

Q4.Dumping refers to:

D. Expensive goods selling for low prices

Q5. International trade and domestic trade differ because of:

D. All of the above

D. Both the buyer and the seller