McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Bachelor of Business Administration (BBA) .
Chapters
| 151. |
_ refers to the process of buying and selling a foreign currency in two different market at same time. |
| A. | Arbitrage |
| B. | Speculation |
| C. | Spot exchange rate |
| D. | Hedging |
| Answer» A. Arbitrage | |
| 152. |
Transactions in the foreign exchange market are carried out are termed as _. |
| A. | fixed rate |
| B. | forward rate |
| C. | exchange rate |
| D. | Hedging |
| Answer» C. exchange rate | |
| 153. |
Demand for foreign exchange varies _ with the exchange rates. |
| A. | Direct |
| B. | Negative |
| C. | inversely |
| D. | positive |
| Answer» C. inversely | |
| 154. |
When supply of foreign exchange is increased given the demand for foreign exchange, the rate of exchange _. |
| A. | decrease |
| B. | increases |
| C. | Direct |
| D. | upward |
| Answer» A. decrease | |
| 155. |
When demand for foreign exchange increases, the exchange rate _. |
| A. | increases |
| B. | inversely |
| C. | decrease |
| D. | unrelated |
| Answer» A. increases | |
| 156. |
The relative version is considered to be _ to absolute version. |
| A. | superior |
| B. | Gustav Cassel |
| C. | selection of index numbers |
| D. | inferior |
| Answer» A. superior | |
| 157. |
The relative version of the PPP theory is propounded by _. |
| A. | Cassel |
| B. | Adam Smith |
| C. | J.S.Mill |
| D. | Alfred Marshall |
| Answer» A. Cassel | |
| 158. |
According to _ theory, the exchange rate between two currencies is determined by their purchasing power. |
| A. | Purchasing Power Parity |
| B. | Balance of payment theory |
| C. | Mint parity theory |
| D. | Comparative advantage theory |
| Answer» A. Purchasing Power Parity | |
| 159. |
The -----------is the largest market in the world. |
| A. | foreign exchange market |
| B. | NSE |
| C. | BSE |
| D. | NASDAQ |
| Answer» A. foreign exchange market | |
| 160. |
The countries of the world are following the exchange rate system. |
| A. | fixed |
| B. | flexible |
| C. | restrictive |
| D. | strict |
| Answer» B. flexible | |
| 161. |
_ _ is a feature of the foreign exchange market which enables an investor to earn high returns. |
| A. | cost |
| B. | Leverage |
| C. | revenue |
| D. | profit |
| Answer» B. Leverage | |
| 162. |
_has enabled faster growth of the foreign exchange market. |
| A. | Technology |
| B. | Leverage |
| C. | Internaltrade |
| D. | exchange rate |
| Answer» A. Technology | |
| 163. |
__ function refer to the function of converting one currency into another. |
| A. | Arbitrage |
| B. | booking |
| C. | asking |
| D. | hedging |
| Answer» D. hedging | |
| 164. |
_ are authorized to deal in foreign exchange transactions. |
| A. | Moneylenders |
| B. | Money launderers |
| C. | Commercial banks |
| D. | RRBs |
| Answer» C. Commercial banks | |
| 165. |
Investment in financial assets like shares or bonds abroad will _- the demand for foreign exchange. |
| A. | inceae |
| B. | decrease |
| C. | keep constant |
| D. | fluctuate |
| Answer» A. inceae | |
| 166. |
A _ country requires more foreign exchange. |
| A. | developing |
| B. | developed |
| C. | hermit nation |
| D. | restrictive |
| Answer» A. developing | |
| 167. |
Services rendered by the domestic country to foreign counter parts increase the _ of foreign exchange. |
| A. | supply |
| B. | demand |
| C. | manufacture |
| D. | produce |
| Answer» A. supply | |
| 168. |
Unilateral payments received _ _ the supply of foreign exchange. |
| A. | increase |
| B. | decrease |
| C. | does not change |
| D. | drastically changes |
| Answer» A. increase | |
| 169. |
_ rate variations can affect the equilibrium exchange rate. |
| A. | Birth |
| B. | death |
| C. | inflation |
| D. | production |
| Answer» C. inflation | |
| 170. |
Interest rate differentials the exchange rate. |
| A. | affect |
| B. | tandardised |
| C. | localise |
| D. | neutralise |
| Answer» A. affect | |
| 171. |
The degree of _ achieved affect the exchange rate. |
| A. | education |
| B. | health |
| C. | growth |
| D. | currency |
| Answer» C. growth | |
| 172. |
The purchasing power parity theory the difference in the quality of goods. |
| A. | considers |
| B. | appreciates |
| C. | ignores |
| D. | values |
| Answer» C. ignores | |
| 173. |
The PPP theory _ capital transfers. |
| A. | considers |
| B. | appreciates |
| C. | ignores |
| D. | values |
| Answer» C. ignores | |
| 174. |
The _rate is determined by the demand for and supply of a currency. |
| A. | spot |
| B. | forward rate |
| C. | option |
| D. | futures |
| Answer» A. spot | |
| 175. |
The differencbetween bid price and ask price s the _ |
| A. | loss |
| B. | profit |
| C. | value |
| D. | difference |
| Answer» B. profit | |
| 176. |
_ exchange rate may be either at a premium or discount or at par. |
| A. | spot |
| B. | forward |
| C. | current |
| D. | option |
| Answer» B. forward | |
| 177. |
In a system of managed float there is less chance of speculation. |
| A. | flexible |
| B. | managed float |
| C. | fixed |
| D. | restictive |
| Answer» B. managed float | |
| 178. |
__ is done to overcome uncertainties. |
| A. | Arbitrage |
| B. | Hedging |
| C. | speculation |
| D. | locking |
| Answer» B. Hedging | |
| 179. |
_ is the opposite of hedging. |
| A. | Arbitrage |
| B. | locking |
| C. | speculation |
| D. | blocking |
| Answer» C. speculation | |
| 180. |
The modern foreign exchange market functions in a system of _ . |
| A. | Fixed exchange rate |
| B. | Gold standard |
| C. | Britton Wood system |
| D. | Floating exchange rate |
| Answer» D. Floating exchange rate | |
| 181. |
Pick out the feature which is not true of the foreign exchange market. |
| A. | Buying and selling of currencies |
| B. | Largest market |
| C. | High liquidity |
| D. | Existence of a central market place |
| Answer» D. Existence of a central market place | |
| 182. |
In the determination of the exchange value of a currency, the first currency of a currency pair is called _ . |
| A. | Price currency |
| B. | Hard currency |
| C. | Base currency |
| D. | bitcoin |
| Answer» C. Base currency | |
| 183. |
The currency used for international transactions irrespective of the importing or exporting country’s currency is called _ . |
| A. | Soft currency |
| B. | Bitcoin |
| C. | Vehicle currency |
| D. | value currency |
| Answer» C. Vehicle currency | |
| 184. |
Pick out the feature which is not true of the foreign exchange market. |
| A. | It is open 24 hours a day |
| B. | Not one single entity can control the market |
| C. | Huge market |
| D. | It has limited geographical dispersion |
| Answer» C. Huge market | |
| 185. |
_ enables an investor to earn high returns while minimizing capital risks. |
| A. | Liquidity |
| B. | Reserves |
| C. | Returns |
| D. | Leverage |
| Answer» D. Leverage | |
| 186. |
Trading in foreign exchange has become fast and simple due to _ . |
| A. | Simple procedures |
| B. | Geographical proximity |
| C. | Improved technology |
| D. | Bullet trains |
| Answer» B. Geographical proximity | |
| 187. |
Pick out the feature which is not true of the foreign exchange market. |
| A. | Huge trading volumes |
| B. | Operates throughout the week |
| C. | Presence of a risk element |
| D. | Leverage enables to make profit |
| Answer» B. Operates throughout the week | |
| 188. |
The provision of foreign bills of exchange in international payments in an example of _ . |
| A. | Transfer function |
| B. | Credit function |
| C. | Speculation |
| D. | None of the above |
| Answer» C. Speculation | |
| 189. |
Transaction where the exchange of currencies take place on the same date is known as |
| A. | swap transaction |
| B. | ready transaction |
| C. | spot transaction |
| D. | value tomorrow |
| Answer» B. ready transaction | |
| 190. |
Transaction in which exchange of currencies take place at a specified future date, subsequent to spot date is known as, |
| A. | swap transaction |
| B. | forward transaction |
| C. | future transaction |
| D. | non-deliverable forwards |
| Answer» B. forward transaction | |
| 191. |
Transaction in which currencies to be exchanged the next day of the transaction is known as |
| A. | value today |
| B. | ready transaction |
| C. | spot transaction |
| D. | value tomorrow |
| Answer» D. value tomorrow | |
| 192. |
According to the Purchasing Power Parity theory, the rate of exchange between the currencies of two countries is determined by_ |
| A. | their relative price levels |
| B. | their import and export volumes |
| C. | their import and export values |
| D. | their relative capital movements |
| Answer» A. their relative price levels | |
| 193. |
Which of the following is not an assumption of the Purchasing Power Parity theory? _ |
| A. | There are no trade barriers between countries |
| B. | The price index for each of the two countries must be comprised of the same basket of goods |
| C. | All the prices should be indexed to the same year |
| D. | Changes in the exchange rate changes internal price level |
| Answer» D. Changes in the exchange rate changes internal price level | |
| 194. |
Exchange rate between two currencies is based on _ __ |
| A. | purchasing power of two currencies |
| B. | economic development of the two nation |
| C. | political stability in the two countries |
| D. | export - import in two countries |
| Answer» A. purchasing power of two currencies | |
| 195. |
Purchasing Power Parity Theory considers that goods in different countries are _ |
| A. | differential |
| B. | identical |
| C. | superior |
| D. | inferior |
| Answer» B. identical | |
| 196. |
Under IMF, the exchange rate system was _ |
| A. | gold standard |
| B. | currency board system |
| C. | dollarization |
| D. | EURO |
| Answer» A. gold standard | |
| 197. |
Under managed float, the central bank of a nation intervenes to_ _ foreign currency. |
| A. | only purchase |
| B. | only sell |
| C. | purchase and sell |
| D. | auction |
| Answer» A. only purchase | |
| 198. |
Flexible exchange rate system, the exchange rate is determined by _ |
| A. | Market forces |
| B. | Central Bank |
| C. | commercial bank |
| D. | Scheduled Bank |
| Answer» A. Market forces | |
| 199. |
India has adipted _ _ _ Exchange rate system. |
| A. | Fixed |
| B. | Flexible |
| C. | Managed |
| D. | Stable |
| Answer» C. Managed | |
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