Quiznetik
Business Economics | Set 4
1. In a system of managed float there is less chance of speculation.
A. flexible
B. managed float
C. fixed
D. restictive
Correct : B. managed float
2. __ is done to overcome uncertainties.
A. Arbitrage
B. Hedging
C. speculation
D. locking
Correct : B. Hedging
3. _ is the opposite of hedging.
A. Arbitrage
B. locking
C. speculation
D. blocking
Correct : C. speculation
4. 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
Correct : D. Floating exchange rate
5. 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
Correct : D. Existence of a central market place
6. 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
Correct : C. Base currency
7. 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
Correct : C. Vehicle currency
8. 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
Correct : C. Huge market
9. _ enables an investor to earn high returns while minimizing capital risks.
A. Liquidity
B. Reserves
C. Returns
D. Leverage
Correct : D. Leverage
10. Trading in foreign exchange has become fast and simple due to _ .
A. Simple procedures
B. Geographical proximity
C. Improved technology
D. Bullet trains
Correct : B. Geographical proximity
11. 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
Correct : B. Operates throughout the week
12. 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
Correct : C. Speculation
13. 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
Correct : B. ready transaction
14. 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
Correct : B. forward transaction
15. 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
Correct : D. value tomorrow
16. 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
Correct : A. their relative price levels
17. 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
Correct : D. Changes in the exchange rate changes internal price level
18. 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
Correct : A. purchasing power of two currencies
19. Purchasing Power Parity Theory considers that goods in different countries are _
A. differential
B. identical
C. superior
D. inferior
Correct : B. identical
20. Under IMF, the exchange rate system was _
A. gold standard
B. currency board system
C. dollarization
D. EURO
Correct : A. gold standard
21. 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
Correct : A. only purchase
22. Flexible exchange rate system, the exchange rate is determined by _
A. Market forces
B. Central Bank
C. commercial bank
D. Scheduled Bank
Correct : A. Market forces
23. India has adipted _ _ _ Exchange rate system.
A. Fixed
B. Flexible
C. Managed
D. Stable
Correct : C. Managed