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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-3

Each section contains 100 MCQs on International Finance and Treasury .
11
Type of risk in which value of liabilities and assets is affected by exchange rate is classified as
Discuss
Answer & Solution
Answer: Option B
Solution:
Type of risk in which value of liabilities and assets is affected by exchange rate is classified as foreign exchange risk. Foreign exchange risk refers to the losses that an international financial transaction may incur due to currency fluctuations.
12
Exchange markets and over counter markets are considered as two types of
Discuss
Answer & Solution
Answer: Option C
Solution:
Exchange markets and over counter markets are considered as two types of secondary market. A secondary market is a marketplace where already issued securities both shares and debt can be bought and sold by the investors. So, it is a market where investors buy securities from other investors, and not from the issuing company.
13
Current market price of common stock is $15 and conversion rate received on conversion is $320 to calculate
Discuss
Answer & Solution
Answer: Option C
Solution:
Conversion Price = Conversion rate received on conversion × Current market price of common stock
= $320 × $15 = $4,800.
14
Bonds that are backed by cash flow from project and are sold to finance particular project are classified as
Discuss
Answer & Solution
Answer: Option B
Solution:
Bonds that are backed by cash flow from project and are sold to finance particular project are classified as revenue bonds. Revenue bonds are municipal bonds that finance income-producing projects and are secured by a specified revenue source. Typically, revenue bonds can be issued by any government agency or fund that is managed in the manner of a business, such as entities having both operating revenues and expenses.
15
Treasury notes that provide returns tied to inflation rate are classified as
Discuss
Answer & Solution
Answer: Option D
Solution:
Treasury notes that provide returns tied to inflation rate are classified as inflation index bonds. Inflation Indexed Bond (IIB) is a bond issued by the Sovereign, which provides the investor a constant return irrespective of the level of inflation in the economy. The main objective of Inflation Indexed Bonds is to provide a hedge and to safeguard the investor against macroeconomic risks in an economy.
16
Type of bonds in which there are many maturity dates and part of issue is paid off at every maturity date is considered as
Discuss
Answer & Solution
Answer: Option B
Solution:
Type of bonds in which there are many maturity dates and part of issue is paid off at every maturity date is considered as serial bonds. A serial bond is a bond issue that is structured so that a portion of the outstanding bonds mature at regular intervals until all of the bonds have matured. Because the bonds mature gradually over a period of years, these bonds are used to finance projects that provide a consistent income stream for bond repayment.
17
Placement of financial issue in which investment bank and municipality together finds large buyers is classified as
Discuss
Answer & Solution
Answer: Option C
Solution:
Placement of financial issue in which investment bank and municipality together finds large buyers is classified as private placement. Raising adequate capital is integral to building and growing a business, and companies usually go the initial public offering (IPO) route. An alternative is the capital raising event known as a private placement.
18
Bonds having longer maturity on original loans than promised payments are classified as
Discuss
Answer & Solution
Answer: Option C
Solution:
Bonds having longer maturity on original loans than promised payments are classified as Brady bonds. Brady bonds are bonds that are issued by the governments of developing countries. Brady bonds are some of the most liquid emerging market securities. The bonds are named after former U.S. Treasury Secretary Nicholas Brady, who sponsored the effort to restructure emerging market debt.
19
If trading of municipal bonds is infrequent, then secondary market is considered as
Discuss
Answer & Solution
Answer: Option A
Solution:
If trading of municipal bonds is infrequent, then secondary market is considered as thin markets. A thin market is a market with few buying or selling offers. It is also known as a narrow market. The signature characteristic of a thin market is traders' price impact. When the number of buying or selling offers is small, investors' trading positions are large relative to market size.
20
Difference between face value of bond and call price of bond is considered as
Discuss
Answer & Solution
Answer: Option A
Solution:
Difference between face value of bond and call price of bond is considered as call premium. Call premium is the dollar amount over the par value of a callable debt security that is given to holders when the security is redeemed early by the issuer.