McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Bachelor of Business Administration (BBA) , Master of Commerce (M.com) .
Chapters
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 |
2. |
_______ is the first step in the internationalization process. |
A. | license |
B. | foreign investment |
C. | sales |
D. | export |
Answer» A. license |
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 |
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. |
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 |
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 |
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 |
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 |
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 |
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 |
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. |
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. |
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 |
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 |
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 |
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 |
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. |
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 |
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 |
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 |
21. |
The biggest market for foreign exchange is which of the following? |
A. | new york |
B. | tokyo |
C. | london |
D. | china |
Answer» C. london |
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 |
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 |
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 |
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 |
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 |
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 |
29. |
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» B. currency; financial instruments |
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 |
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 |
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 |
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 |
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 |
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 |
D. | none of the above |
Answer» C. of 1944 formulated a new international monetary system after the collapse of the gold standard |
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 |
37. |
Ask quote is for |
A. | seller |
B. | buyer |
C. | hedger |
D. | speculator |
Answer» A. seller |
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 |
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