1. Money market instruments include all the following, except _____________
Correct : D. Equity shares
2. In Quote of 1$ = Rs.61, __________ is a home country.
Correct : A. India
3. If USD /CAD 1.1630, 3 months forward 1. 1675.Annualized interest rate CAD 6%,
USD 4%. Arbitrage gain will be_____________
Correct : C. 1087
4. PPP theory ____________government intervention.
Correct : A. Ignores
5. ________ theory states that exchange rate between two currencies is directly affected
by their interest rates.
Correct : C. Fisher`s
6. If formula I of Fishers effect is positive, Borrow ___________ , invest __________.
Correct : D. Home Foreign
7. __________ is a standardized contract to exchange one currency for another at a special
date in the future at a price (exchange rate) that is fixed on the purchase date.
Correct : A. Futures Contract
8. The _______ requires that an upfront margin to trade on an exchange.
Correct : D. Currency Futures
9. Which of the following is false ________
Correct : B. Futures contracts are more liquid than forward contracts
10. Which of the following does the most to reduce default risk for futures
contracts_________
Correct : C. Marking to market
11. Foreign currency forward market is ___________
Correct : A. An over the counter unorganized market
12. Which of the following financial instruments is primarily used to transfer risk
_____________
Correct : C. Futures Contract
13. An option giving the buyer of the option the right but not the obligation to buy a
currency is _____________
Correct : A. Call option
14. Regulation _________ of federal Reserve Act imposed a ceiling on interest rates that
could be paid on deposits by Banks in the US.
Correct : B. Q
15. __________ bond is issued in a local market by a foreign borrower, denominated in
local currency.
Correct : A. Foreign
16. ___________ once issued bonds with coupon rates tied to its financial performance.
Correct : B. Wait Disney
17. ______________ is type of security listed on Luxembourg.
Correct : B. GDR
18. Level _________ ADR `s must comply with various SEC rule, including full
registration and reporting requirements of SEC.
Correct : C. III
19. ADR `s are dominated in _______ currency.
Correct : A. US $
20. In ADR and GDR process, _______ issues the depository Receipts in Foreign Markets.
Correct : B. Depository Bank
21. The Dow Jones Industrial Average (DJIA) contains _________ of the largest and most influential companies (blue chip companies) is the US__________
Correct : D. 30
22. Required Return from an investment =____________
Correct : A. Risk free return + Risk premium
23. IPO stands for ____________
Correct : C. Initial Public Offering
24. An unsponsored ADR, __________
Correct : C. Trades in OTC market
25. ________ was introduced at a time when forex reserves of the country were low.
Correct : A. FERA
26. As per FEMA, no person, other than ________ would enter in any transactions of the
foreign currency.
Correct : D. Authorized Dealer
27. The monetary penalty payable under FERA was nearly ___________times the amount
involved.
Correct : B. Five
28. __________ implies investment made with an intent of obtaining an ownership stake in
an enterprise domiciled in a country by an enterprise situated in some other country.
Correct : B. FPI
29. RBI has granted license to certain established firms, hotels and other organizations permitting them to deal in foreign currency notes, coins and travelers’ cheques. They are termed as ___________
Correct : C. Authorized Money changers
30. FEDAI stands for _____________
Correct : D. Foreign exchange dealers association of India
31. ____________ can authorize a person / company to deal in foreign exchange.
Correct : B. RBI
32. __________ is the process of analyzing and ranking proposed projects to determine
which ones deserving of an investment.
Correct : C. Capital Budgeting
33. Walmart opening a new retail outlet is an example of _______________ project.
Correct : A. Expansion
34. Net amount of all cash flowing in and out of the business, from all sources is
____________ cash flow.
Correct : B. Total
35. _________ are the initial outlays required to analyse a project that cannot be recovered
even if a project is accepted.
Correct : D. Sunk cost
36. ___________ means transfer of corporate money from a foreign country back to its
home country.
Correct : A. Repatriation
37. Lower the better applies to ___________ capital budgeting method.
Correct : B. Payback period
38. Formula of profitability index is ___________
Correct : A. PV of cash inflow / PV of cash outlay
39. __________ monitors the balance of payments of its member nations.
Correct : B. IMF
40. ________ deals with the global rules of trade between nations.
Correct : A. WTO
41. _________ supporters’ sustainable investments in the private sector.
Correct : A. IFC
42. _____________ includes risk of loss from uniform political and government issues.
Correct : A. Political Risk
43. Due to imperfection in markets ___________ are restricted by a limit to invest and
manage their portfolio.
Correct : A. Investors
44. ____________ to promote domestic investment and growth through capital Market.
Correct : A. International Finance
45. _________ it increases in flow of capital and investment to developing economics.
Correct : A. Globalization
46. ________ control over the monetary system of India.
Correct : A. RBI
47. _________ records all international transactions that involve creation of assets and
liabilities in foreign currencies.
Correct : A. Capital Account
48. _____________ leads to increasingly the standard of living of developing economics.
Correct : B. Globalization
49. __________ also relates to international assets and liabilities for such transactions which the country’s monetary authorities use to such transactions which the country’s monetary authorities use to settle the deficits and surpluses.
Correct : A. Reserve Account
50. ___________is a statistical residence.
Correct : D. Errors and omissions
51. Difference between except and import of goods and services______________.
Correct : A. Balance of Trade
52. Balance of Trade =Net earnings on exports ___________
Correct : A. Net payment of Import
53. Balance of Trade is a _________ concept.
Correct : C. Narrow
54. BOP Stands for ___________
Correct : B. Balance of Payment
55. balance of payment = Current Account + balancing Item _____________
Correct : C. Capital Account
56. Balance of payment Identity equation ______________
Correct : C. CA + FA+ RA = 0
57. Balance of payment is a statement that records all __________ transactions between a
country and the rest of the world.
Correct : D. Monetary
58. IIP is a subset of the national _____________
Correct : C. Balance sheet
59. ___________ was the first university implemented system for valuing currencies.
Correct : B. Gold Standard
60. International Monetary fund which was given the task of implementing and monitoring
the__________
Correct : A. BWS
61. BWS came into effect in July______________
Correct : C. 1944
62. EURO is single currency of the European Monetary Union adopted on _______________
Correct : A. January 1,1999
63. __________ supports sustainable investments in the private sector in developing countries.
Correct : A. IFC
64. Foreign Investment are recorded in the _________ of balance of payments.
Correct : C. Capital Account
65. ___________ is widely used by Government for formulating policies for economy.
Correct : A. BOP
66. Under gold standard system, countries gold reserves were required to be in custody of
_________
Correct : B. Central Bank
67. ________ is also known as price quotation.
Correct : A. Direct Quote
68. _________ is also known as price Quantity Quote.
Correct : B. Indirect Quote
69. _____ is todays quote.
Correct : A. Spot Quote
70. ___________ is also known as Bid office spread.
Correct : C. Spread Quote
71. ___________ is also known as reference rate.
Correct : C. Mid Quote
72. Price of _________-- currency in terms of national currency.
Correct : B. Foreign
73. US Dollar serves as a _________ Currency.
Correct : A. Vehicle
74. Bid rate is lesser than _____________ rate.
Correct : B. Ask
75. If two banks are quoting the following GBP rates: Bank A: Rs.78.9810-79.1110 and
Bank B: Rs.79.0110-19.2350. The arbitrage opportunity will be _________________
Correct : B. 0
76. If Quote of Bank ABC is EUR INR 68.00 /30 and Quote of Bank PQR is INR EUR
1.4550/1.4600, arbitrage opportunity will be ___________-
Correct : A. 2828
77. Effect of falling domestic exchange rate ___________
Correct : A. Reduces Profitability for importers
78. ___________ refers to the size or scope of potential loss.
Correct : A. Risk
79. ____________ risk is also called as “According Exposure”.
Correct : C. Translation
80. Internal techniques of managing forex risk includes all of the following, except
_______________
Correct : D. Forward and Future contracts
81. When a company has receipts and payments in the same foreign currency due at the
same time, it can use ___________technique of managing forex risk.
Correct : D. Matching
82. _________ is a tax levied on passive income earned by an individua; or corporation of
one country within the tax jurisdiction of another country.
Correct : B. Withholding Tax
83. ____________ is also known as secrecy jurisdiction.
Correct : A. Tax haven
84. A strategy used to reduce tax liabilities by pricing goods and services within a group structure in way that it does not reflect the arm’s length transaction_______________.
Correct : C. Transfer Pricing
85. ____________ is a Tax avoidance technique whereby multinational subsidiaries are financed primarily by debt from the parent company instead of equity capital.