McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Master of Business Administration (MBA) .
Chapters
| 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. |
| Answer» C. There are possible benefits from international diversification. | |
| 2. |
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 |
| Answer» B. purchasing power parity | |
| 3. |
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. |
| Answer» D. real exchange rates should be stable over time. | |
| 4. |
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 foreign interest rate |
| 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 foreign interest rate |
| Answer» C. the home currency will depreciate if the current home inflation rate exceeds the current foreign inflation rate | |
| 5. |
Interest Rate Parity (IRP) implies that: |
| A. | Interest rates should change by an equal amount but in the opposite direction to the difference in inflation rates between two countries |
| 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 |
| Answer» 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 | |
| 6. |
In equilibrium position, spread between foreign and domestic rate of interest must be equal to spread of |
| A. | domestic rates |
| B. | forward and spot exchange rates |
| C. | forward rate |
| D. | spot rates |
| Answer» B. forward and spot exchange rates | |
| 7. |
Rule which states that similar set of goods and services produced in various countries should have equal price is classified as |
| A. | law of similar mortgage rate |
| B. | law of one type manufacturing |
| C. | law of similar labor rules |
| D. | law of one price |
| Answer» D. law of one price | |
| 8. |
Example of derivative securities includes |
| A. | swap contract |
| B. | option contract |
| C. | futures contract |
| D. | all of above |
| Answer» D. all of above | |
| 9. |
Authority which intervenes directly or indirectly in foreign exchange markets by altering interest rates is considered as |
| A. | central government |
| B. | centralized stocks |
| C. | central corporations |
| D. | centralized instruments |
| Answer» A. central government | |
| 10. |
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. |
| Answer» B. transactions risk exposure. | |
| 11. |
Suppose that the Japanese yen is selling at a forward discount in the forward-exchange market. This implies that most likely |
| 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. |
| Answer» C. interest rates are higher in Japan than in the United States. | |
| 12. |
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 | |
| 13. |
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. |
| Answer» C. The futures market is mainly used by speculators while the forward market is mainly used for hedging. | |
| 14. |
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 | |
| 15. |
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 |
| D. | None of the above |
| Answer» C. simultaneously buys large amounts of a currency in one market and sell it in another market | |
| 16. |
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 | |
| 17. |
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 | |
| 18. |
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 | |
| 19. |
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 |
| Answer» B. currency swap | |
| 20. |
Investment can be defined. |
| 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 |
| Answer» B. Use of capital on assets to receive returns | |
| 21. |
The concept of Financial management is. |
| 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 |
| Answer» B. All features of obtaining and using financial resources for company operations | |
| 22. |
What is the primary goal of financial management? |
| A. | To minimise the risk |
| B. | To maximise the owner’s wealth |
| C. | To maximise the return |
| D. | To raise profit |
| Answer» B. To maximise the owner’s wealth | |
| 23. |
The finance manager is accountable for. |
| A. | Earning capital assets of the company |
| B. | Effective management of a fund |
| C. | Arrangement of financial resources |
| D. | Proper utilisation of funds |
| Answer» C. Arrangement of financial resources | |
| 24. |
The market value of a share is responsible for. |
| A. | The investment market |
| B. | The government |
| C. | Shareholders |
| D. | The respective companies |
| Answer» A. The investment market | |
| 25. |
The capital budget is associated with. |
| A. | Long terms and short terms assets |
| B. | Fixed assets |
| C. | Long terms assets |
| D. | Short term assets |
| Answer» C. Long terms assets | |
| 26. |
CAPM stands for. |
| A. | Capital asset pricing model. |
| B. | Capital amount printing model. |
| C. | Capital amount pricing model. |
| D. | Capital asset printing model. |
| Answer» A. Capital asset pricing model. | |
| 27. |
What does financial leverage measure? |
| 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 |
| Answer» C. The sensibility of EPS with % change in the EBIT level | |
| 28. |
From the below-mentioned items which are financial assets? |
| A. | Machines |
| B. | Bonds |
| C. | Stocks |
| D. | B and C |
| Answer» C. Stocks | |
| 29. |
Trade between two countries can be useful if cost ratios of goods are: |
| A. | Undetermined |
| B. | Decreasing |
| C. | Equal |
| D. | Different |
| Answer» D. Different | |
| 30. |
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. The market where the borrowing and lending of currencies take place outside the country of issue | |
| 31. |
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» B. Product cycle theory | |
| 32. |
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» B. Sale of goods abroad at low a price, below their cost and price in home market | |
| 33. |
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. All of the above | |
| 34. |
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. Both the buyer and the seller | |
| 35. |
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. Call option will be used by exporters | |
| 36. |
Govt. policy about exports and imports is called: |
| A. | Commercial policy |
| B. | Fiscal policy |
| C. | Monetary policy |
| D. | Finance policy |
| Answer» A. Commercial policy | |
| 37. |
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. Trade between countries | |
| 38. |
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. Foreign exchange market | |
| 39. |
Purchasing goods from a foreign country is called |
| A. | Import |
| B. | Entrepot |
| C. | Export |
| D. | Re-Export |
| Answer» A. Import | |
| 40. |
Goods imported for the purpose of export is known as |
| A. | Home trade |
| B. | Foreign trade |
| C. | Entrepot |
| D. | Trade |
| Answer» C. Entrepot | |
| 41. |
Agents are appointed by? |
| A. | Manufacturer |
| B. | Wholesaler |
| C. | Retailer |
| D. | Principal |
| Answer» D. Principal | |
| 42. |
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 |
| Answer» C. Wholesaler | |
| 43. |
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 |
| Answer» C. Broker | |
| 44. |
Who among the following appoints the agent |
| A. | Principal |
| B. | Retailer |
| C. | Manufacturer |
| D. | Wholesaler |
| Answer» A. Principal | |
| 45. |
Which among the following is not concerned with Chambers of Commerce & Industry |
| A. | CII |
| B. | FICCI |
| C. | ICICI |
| D. | ASSOCHAM |
| Answer» C. ICICI | |
| 46. |
One example of Small scale Fixed retailers among these is |
| A. | Pedlars |
| B. | General stores |
| C. | Hawkers |
| D. | Cheap Jacks |
| Answer» B. General stores | |
| 47. |
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 |
| Answer» D. Departmental store | |
| 48. |
What is the Bill receivable account? |
| A. | Personal Account |
| B. | Machinery Account |
| C. | Real Account |
| D. | Nominal Account |
| Answer» C. Real Account | |
| 49. |
A bill of exchange includes. |
| A. | An order to pay |
| B. | A request to pay |
| C. | A promise to pay |
| D. | All the above |
| Answer» A. An order to pay | |
| 50. |
Which bill is drawn and accepted in the same country? |
| A. | Trade Bill |
| B. | Foreign Bill |
| C. | Inland Bill |
| D. | Accommodation Bill |
| Answer» C. Inland Bill | |
Done Studing? Take A Test.
Great job completing your study session! Now it's time to put your knowledge to the test. Challenge yourself, see how much you've learned, and identify areas for improvement. Don’t worry, this is all part of the journey to mastery. Ready for the next step? Take a quiz to solidify what you've just studied.