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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-2 section-1

Each section contains 100 MCQs on International Finance and Treasury .
11
Determination of forward rates is explained by
Discuss
Answer & Solution
Answer: Option A
Solution:
Determination of forward rates is explained by Purchasing power parity theory. Purchasing Power Parity says that since they are the same goods, the purchasing power in the countries should be the same. This doesn't mean the exchange rate should be equal to one; it means the ratio of price to exchange rate should be one.
12
Which of the following institutions cannot be included in the international financial and monetary system?
Discuss
Answer & Solution
Answer: Option A
Solution:
WTO institutions cannot be included in the international financial and monetary system. The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations.
13
Cash and carry arbitrage explains the determination of
Discuss
Answer & Solution
Answer: Option A
Solution:
Cash and carry arbitrage explains the determination of Forward Rates for currencies. Cash-and-carry-arbitrage is a market neutral strategy combining the purchase of a long position in an asset such as a stock or commodity, and the sale (short) of a position in a futures contract on that same underlying asset.
14
International Monetary Fund is headquartered in
Discuss
Answer & Solution
Answer: Option A
Solution:
International Monetary Fund is headquartered in Washington, United States, consisting of 189 countries working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world while periodically depending on World Bank for its resources.
15
The margin for a currency future should be maintained with the clearing house by
Discuss
Answer & Solution
Answer: Option C
Solution:
The margin for a currency future should be maintained with the clearing house by both the buyer and the seller. Initial Futures Margin is the amount of money that is required to open a buy or sell position on a futures contract.
16
The marking to market in respect of a currency future refers to
Discuss
Answer & Solution
Answer: Option B
Solution:
The marking to market in respect of a currency future refers to adjusting the margin money of buyer and seller to reflect the current value of futures. Currency futures are a exchange-traded futures contract that specify the price in one currency at which another currency can be bought or sold at a future date.
17
The marking to market of a futures contract is done
Discuss
Answer & Solution
Answer: Option C
Solution:
The marking to market of a futures contract is done daily, based on the closing price for the previous day. In Mark-to-Market accounting the asset values are determined according to market prices at the end of each day in order to arrive at the profit or loss status of the parties in a futures transaction.
18
In India currency-notes issue system is based on
Discuss
Answer & Solution
Answer: Option B
Solution:
In India currency-notes issue system is based on Minimum Reserve System. Under the Minimum Reserve System, the RBI has to keep a minimum reserve of Rs 200 crore comprising of gold coin and gold bullion and foreign currencies.
19
European Economic Community founded in
Discuss
Answer & Solution
Answer: Option A
Solution:
The European Economic Community (EEC) was a regional organisation that aimed to bring about economic integration among its member states. It was created by the Treaty of Rome of 1957.
20
The following statement with respect to currency option is wrong
Discuss
Answer & Solution
Answer: Option A
Solution:
Call option will be used by exporters with respect to currency option is wrong. Call options are financial contracts that give the option buyer the right, but not the obligation, to buy a stock, bond, commodity or other asset or instrument at a specified price within a specific time period.