McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Bachelor of Commerce in Banking and Insurance (B.Com Banking and Insurance) .
| 51. |
Which of the following is not an example of an international trade draft? |
| A. | Time draft. |
| B. | Sight draft. |
| C. | Both the first and second answers are correct |
| D. | Usance draft |
| Answer» C. Both the first and second answers are correct | |
| 52. |
A group of European countries have formed a union and created a common currency known as __________. |
| A. | the EU currency |
| B. | the European Union |
| C. | the EMU |
| D. | the Euro |
| Answer» D. the Euro | |
| 53. |
The forward exchange rate __________. |
| A. | is the rate today for exchanging one currency for another for immediate delivery |
| B. | is the rate today for exchanging one currency for another at a specific future date |
| C. | is the rate today for exchanging one currency for another at a specific location on a specific future date |
| D. | is the rate today for exchanging one currency for another at a specific location for immediate delivery |
| Answer» B. is the rate today for exchanging one currency for another at a specific future date | |
| 54. |
The spot exchange rate __________. |
| A. | is the rate today for exchanging one currency for another for immediate delivery |
| B. | is the rate today for exchanging one currency for another at a specific future date |
| C. | is the rate today for exchanging one currency for another at a specific location on a specific future date |
| D. | is the rate today for exchanging one currency for another at a specific location for immediate delivery |
| Answer» A. is the rate today for exchanging one currency for another for immediate delivery | |
| 55. |
What are the forms of assistance that the World Bank provides to its members? |
| A. | Technical and financial |
| B. | Political and financial |
| C. | Political and economic |
| D. | Technical and military |
| Answer» A. Technical and financial | |
| 56. |
The World Bank Group is made up of how many organisations? |
| A. | 3 |
| B. | 5 |
| C. | 8 |
| D. | 10 |
| Answer» B. 5 | |
| 57. |
The most liquid asset among the following is? |
| A. | Gold |
| B. | Share |
| C. | Cash |
| D. | land |
| Answer» C. Cash | |
| 58. |
The system operated by the WTO is known as the |
| A. | multilateral trading system |
| B. | bilateral trading system |
| C. | ratified system |
| D. | ungratified system |
| Answer» A. multilateral trading system | |
| 59. |
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 | |
| 60. |
A deposit or borrowing domiciled outside the home country of the currency is called as |
| A. | foreign bond |
| B. | euro bond |
| C. | euro currency |
| D. | domestic bond |
| Answer» C. euro currency | |
| 61. |
The price at which a market maker is prepared to sell (a currency) or lend (money) |
| A. | forward rate |
| B. | sport rate |
| C. | bid rate |
| D. | offer rate |
| Answer» D. offer rate | |
| 62. |
Bretton woods agreement arrived at in |
| A. | July 1994 |
| B. | July 1954 |
| C. | June 1960 |
| D. | June 1964 |
| Answer» A. July 1994 | |
| 63. |
A contract that gives the buyer the right to buy commodity or a foreign currency from the seller at a fixed price is called as |
| A. | put option |
| B. | call option |
| C. | cross option |
| D. | currency swap |
| Answer» B. call option | |
| 64. |
CIF stands for |
| A. | Cost, interest, freight |
| B. | Cost, income, freight |
| C. | Cost, insurance, freight |
| D. | Customs, insurance, freight |
| Answer» C. Cost, insurance, freight | |
| 65. |
The market where long term securities (shares, bonds, etc) are bought and sold is called as |
| A. | money market |
| B. | capital market |
| C. | primary market |
| D. | secondary market |
| Answer» B. capital market | |
| 66. |
A bank located usually in another country that provides service for another bank is |
| A. | Foreign bank |
| B. | Central bank |
| C. | Correspondent bank |
| D. | World bank |
| Answer» C. Correspondent bank | |
| 67. |
_______________ is a process of taking advantage of differentials in interest rates of two currencies while eliminating exchange risk. |
| A. | Hedging |
| B. | Insurance |
| C. | Covered – Interest Arbitrage |
| D. | Exposure |
| Answer» C. Covered – Interest Arbitrage | |
| 68. |
Quotation where the price of one unit of foreign currency is given in terms of local currency units is called as |
| A. | Indirect quotation |
| B. | . Direct quotation |
| C. | Open-ended quotation |
| D. | Close – ended quotation |
| Answer» B. . Direct quotation | |
| 69. |
FOB stands for |
| A. | Freight on board |
| B. | Free on board |
| C. | Flexible on board |
| D. | Future on board |
| Answer» B. Free on board | |
| 70. |
An operation in order to protect the domestic currency value of an asset or a liability that is denominated in foreign currency is called as |
| A. | Hedging |
| B. | Hermes |
| C. | Indexation |
| D. | Leading |
| Answer» A. Hedging | |
| 71. |
Difference between buying and selling rates in an exchange rate or interest rate quotation is known as |
| A. | Strike price |
| B. | Spread |
| C. | Swap points |
| D. | Spot rate |
| Answer» B. Spread | |
| 72. |
The price which one subsidiary or one unit of business charges from another for selling goods or providing services is |
| A. | Transfer price |
| B. | Strike price |
| C. | Spot price |
| D. | Forward rate |
| Answer» A. Transfer price | |
| 73. |
The bond that does not pay any interest and issued at a price lower than its reimbursement value is called as |
| A. | Zero coupon bond |
| B. | Coupon bond |
| C. | Euro bond |
| D. | Domestic bond |
| Answer» A. Zero coupon bond | |
| 74. |
International Development Association established in |
| A. | 1970 |
| B. | 1962 |
| C. | 1960 |
| D. | 1958 |
| Answer» C. 1960 | |
| 75. |
International Finance Corporation established in |
| A. | 1956 |
| B. | 1960 |
| C. | 1966 |
| D. | 1970 |
| Answer» A. 1956 | |
| 76. |
____________ means using short-term forward contracts to offset “paper” gains and losses on the long-term assets and liabilities of foreign subsidiaries. |
| A. | Hedging transaction exposure |
| B. | Hedging balance-sheet exposure |
| C. | Hedging economic exposure |
| D. | Hedging cost exposure |
| Answer» B. Hedging balance-sheet exposure | |
| 77. |
Which exchange rate theory focuses on the inflation – exchange rate relationship? |
| A. | Interest rate parity |
| B. | International Fisher Effect |
| C. | Purchasing power parity |
| D. | Traditional Model |
| Answer» C. Purchasing power parity | |
| 78. |
The exchange rate prevailing at a financial reporting date |
| A. | Closing exchange rate |
| B. | Opening exchange rate |
| C. | Fixed exchange rate |
| D. | Fluctuating exchange rate |
| Answer» A. Closing exchange rate | |
| 79. |
The bank account of a non-resident of a country, where the amount of currency in the account cannot be transferred to another country is called as |
| A. | Nostro account |
| B. | Blocked Account |
| C. | Foreign account |
| D. | Capital account |
| Answer» B. Blocked Account | |
| 80. |
Funds that cannot be remitted from the subsidiary to the parent due to host government restrictions is known as |
| A. | Close – ended funds |
| B. | Open – ended funds |
| C. | Blocked funds |
| D. | Restricted funds |
| Answer» C. Blocked funds | |
| 81. |
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 A |
| Answer» D. Cross exchange rate A | |
| 82. |
Agreement to exchange one currency for another at a specified exchange rate and date is |
| A. | Currency swap |
| B. | Swap points |
| C. | Currency put option |
| D. | Currency call option |
| Answer» A. Currency swap | |
| 83. |
Long– term securities denominated in two currencies is called as |
| A. | Euro bond |
| B. | Dual – currency bonds |
| C. | Foreign bonds |
| D. | Euro dollar deposit. |
| Answer» B. Dual – currency bonds | |
| 84. |
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 |
| Answer» C. between residents of two or more countries | |
| 85. |
A foreign currency account maintained by a bank abroad is its |
| A. | nostro account |
| B. | vostro account |
| C. | loro account |
| D. | foreign bank account |
| Answer» A. nostro account | |
| 86. |
Non-resident Bank Accounts’ refer to |
| A. | nostro account |
| B. | vostro account |
| C. | accounts opened in offshore centers |
| D. | foreign bank account |
| Answer» B. vostro account | |
| 87. |
The number of nostro accounts that can be maintained by a bank in a particular currency is |
| A. | One |
| B. | not exceeding three |
| C. | minimum two |
| D. | no such limit |
| Answer» D. no such limit | |
| 88. |
Full fledged money changers are authorized to undertake |
| A. | only sale transactions |
| B. | only purchase transactions |
| C. | all types of foreign exchange transactions |
| D. | purchase and sale of foreign currency notes, coins and travelers cheques |
| Answer» D. purchase and sale of foreign currency notes, coins and travelers cheques | |
| 89. |
. IMF augments its resources by borrowing under |
| A. | General arrangements to borrow |
| B. | New arrangements to borrow |
| C. | Trust funds |
| D. | All the above |
| Answer» D. All the above | |
| 90. |
The abbreviations SDR stands for |
| A. | Special Drawing Rights |
| B. | Specific Drawing Rights |
| C. | Special Depository Rules |
| D. | Specific Depository Rules |
| Answer» A. Special Drawing Rights | |
| 91. |
The value of SDR is |
| A. | equivalent to one US dollar |
| B. | based on value of gold |
| C. | average of the value of US dollar and Euro |
| D. | based on basket of five currencies |
| Answer» D. based on basket of five currencies | |
| 92. |
The term World Bank refers to |
| A. | IBRD |
| B. | IDA |
| C. | Both IBRD and IDA |
| D. | IFC |
| Answer» C. Both IBRD and IDA | |
| 93. |
. IBRD lending is not available for |
| A. | middle income countries |
| B. | low income countries |
| C. | multilateral agencies |
| D. | developed countries |
| Answer» C. multilateral agencies | |
| 94. |
The eligibility to borrow from IDA is based on |
| A. | relative poverty |
| B. | lack of creditworthiness to borrow on market terms |
| C. | good policy performance |
| D. | all the above |
| Answer» D. all the above | |
| 95. |
Financial products of IFC does not include |
| A. | loans |
| B. | equity participation |
| C. | risk management products |
| D. | none of the above |
| Answer» D. none of the above | |
| 96. |
MIGA stands for |
| A. | Multilateral Investment Guarantee Agency |
| B. | Multilateral Institutional and Government Agencies |
| C. | Mutual Interest Guaranteeing Agencies |
| D. | Mutual Institutional and Government Agencies |
| Answer» A. Multilateral Investment Guarantee Agency | |
| 97. |
Guarantee provided by MIGA to private investors covers risk of |
| A. | transfer restriction |
| B. | expropriation |
| C. | breach of contract |
| D. | all the above |
| Answer» D. all the above | |
| 98. |
The activities of ADB include |
| A. | project financing |
| B. | guaranteeing loans |
| C. | both a and b |
| D. | risk management products |
| Answer» C. both a and b | |
| 99. |
A ‘credit’ in balance of payments indicates |
| A. | Accumulation of bank balances abroad |
| B. | Foreign direct investment received into the country |
| C. | Earning of foreign exchange by the country |
| D. | Earning of foreign exchange or incurring of liability abroad or decrease in asset abroad |
| Answer» D. Earning of foreign exchange or incurring of liability abroad or decrease in asset abroad | |
| 100. |
The current account of balance of payments does not include |
| A. | Trade in goods |
| B. | Trade in services |
| C. | Income on investments |
| D. | None of the above |
| Answer» D. None of the above | |
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