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International Finance and Treasury MCQ Questions and Solutions with Explanations | Management

International Finance and Treasury MCQ Questions and answers with easy and logical explanations. Management provides you all type of quantitative and competitive aptitude mcq questions with easy and logical explanations. International FinanceMCQ is important for exams like MAT, CAT, CA, CS, CMA, CPA, CFA, UPSC, Banking and other Management department exam. Page-10 section-2

Each section contains 100 MCQs on International Finance and Treasury .
91
Institutions that facilitate channelling of funds and all related functions are classified as
Discuss
Answer & Solution
Answer: Option A
Solution:
Institutions that facilitate channelling of funds and all related functions are classified as financial institutions. A financial institution (FI) is a company engaged in the business of dealing with financial and monetary transactions such as deposits, loans, investments, and currency exchange.
92
Companies that collects funds from companies and individuals and invest in portfolios of assets are classified as
Discuss
Answer & Solution
Answer: Option B
Solution:
Companies that collects funds from companies and individuals and invest in portfolios of assets are classified as mutual funds. A mutual fund is a type of financial vehicle made up of a pool of money collected from many investors to invest in securities such as stocks, bonds, money market instruments, and other assets.
93
In money markets, excess supply of funds from agents is for
Discuss
Answer & Solution
Answer: Option D
Solution:
In money markets, excess supply of funds from agents is for short term. The money market is the trade in short-term debt investments. At the wholesale level, it involves large-volume trades between institutions and traders. At the retail level, it includes money market mutual funds bought by individual investors and money market accounts opened by bank customers.
94
In commercial banks, subordinate debentures and subordinate notes are considered as
Discuss
Answer & Solution
Answer: Option C
Solution:
In commercial banks, subordinate debentures and subordinate notes are considered as banks liabilities. The deposit itself is a liability owed by the bank to the depositor. Bank deposits refer to this liability rather than to the actual funds that have been deposited. When someone opens a bank account and makes a cash deposit, he surrenders legal title to the cash, and it becomes an asset of the bank.
95
Type of financial security having payoffs which are connected to some securities issued some time back is classified as
Discuss
Answer & Solution
Answer: Option D
Solution:
Type of financial security having payoffs which are connected to some securities issued some time back is classified as derivative security. A derivative security is a financial instrument whose value depends upon the value of another asset. The main types of derivatives are futures, forwards, options, and swaps. An example of a derivative security is a convertible bond.
96
Corporate equities or corporate stocks represent portion in instruments of capital markets which is
Discuss
Answer & Solution
Answer: Option A
Solution:
Corporate equities or corporate stocks represent portion in instruments of capital markets which is largest. Stocks and equity are same, as both represent the ownership in an entity (company) and are traded on the stock exchanges. Equity by definition means ownership of assets after the debt is paid off. Stock generally refers to traded equity. Stock is the type of equity that represents equity investment.
97
Depository institutions that concentrate loans in one segment such as consumer loans are considered as
Discuss
Answer & Solution
Answer: Option A
Solution:
Depository institutions that concentrate loans in one segment such as consumer loans are considered as thrifts. Thrifts also refer to credit unions and mutual savings banks that provide a variety of saving and loans services. Thrifts differ from commercial banks in that they can borrow money from the Federal Home Loan Bank System, which allows them to pay members higher interest.
98
Risk which arises from insufficient capital available to balance sudden decrease in assets value is classified as
Discuss
Answer & Solution
Answer: Option A
Solution:
Risk which arises from insufficient capital available to balance sudden decrease in assets value is classified as insolvency risk. Insolvency risk is defined as the risk that an individual or company will not be able to meet its debt obligations.
99
Financial intermediaries that make loans available and accept long term and short term debts for funding are considered as
Discuss
Answer & Solution
Answer: Option D
Solution:
Financial intermediaries that make loans available and accept long term and short term debts for funding are considered as finance companies. Finance companies make it easier for businesses as well as individuals to take care of their money needs.
100
Risk faced by financial institutions in which advancement of technology does not produce savings in cost is classified as
Discuss
Answer & Solution
Answer: Option D
Solution:
Risk faced by financial institutions in which advancement of technology does not produce savings in cost is classified as technology risk. Technology risk is any potential for technology failures to disrupt your business such as information security incidents or service outages. The potential for losses due to technology failures.