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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-6 section-5

Each section contains 100 MCQs on International Finance and Treasury .
51
Commercial papers cannot be converted in to cash with easy and quick transactions because of lack of
Discuss
Answer & Solution
Answer: Option A
Solution:
Commercial papers cannot be converted in to cash with easy and quick transactions because of lack of organized secondary markets. Commercial paper is an unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts payable and inventories and meeting short-term liabilities.
52
Bidder who can receive allocation of treasury bills before all other bidders is result of
Discuss
Answer & Solution
Answer: Option A
Solution:
Bidder who can receive allocation of treasury bills before all other bidders is result of highest bidder. The bidder is the party offering to buy an asset from a seller at a specific price. A bidder can be an individual or organization, and the potential purchase can be part of a multiparty transaction or an auction.
53
Accounting entry of institutions who borrows federal funds is as
Discuss
Answer & Solution
Answer: Option C
Solution:
Accounting entry of institutions who borrows federal funds is as liability on balance sheet. Federal funds, often referred to as fed funds, are excess reserves that commercial banks and other financial institutions deposit at regional Federal Reserve banks; these funds can be lent, then, to other market participants with insufficient cash on hand to meet their lending and reserve needs.
54
Difference between purchase price of treasury bills and face value of treasury bills is considered as
Discuss
Answer & Solution
Answer: Option C
Solution:
Difference between purchase price of treasury bills and face value of treasury bills is considered as return. The gain is realized when the bond matures, which is the difference between the purchase price and the face value.
55
Transaction of federal funds usually take place in form of
Discuss
Answer & Solution
Answer: Option C
Solution:
Transaction of federal funds usually take place in form of unsecured loans. An unsecured loan is a loan that is issued and supported only by the borrower's creditworthiness, rather than by any type of collateral. Unsecured loans sometimes referred to as signature loans or personal loans are approved without the use of property or other assets as collateral.
56
Economic period in which banks have excess funds is classified as
Discuss
Answer & Solution
Answer: Option C
Solution:
Economic period in which banks have excess funds is classified as contraction period. A contraction generally occurs after the business cycle peaks, but before it becomes a trough.
57
Interest rate at which federal funds are borrowed and can be lent is classified as
Discuss
Answer & Solution
Answer: Option D
Solution:
Interest rate at which federal funds are borrowed and can be lent is classified as federal funds rate. The federal funds rate refers to the interest rate that banks charge other banks for lending them money from their reserve balances on an overnight basis. By law, banks must maintain a reserve equal to a certain percentage of their deposits in an account at a Federal Reserve bank.
58
Selling price is added in to repurchase agreement paid interest to calculate
Discuss
Answer & Solution
Answer: Option B
Solution:
Selling price is added in to repurchase agreement paid interest to calculate repurchase price of securities. Repurchase price is the price at which the fund buys back units from the investor.
59
Agreement which incurs transaction between two parties and promise held that second party will repurchase security at specific price is classified as
Discuss
Answer & Solution
Answer: Option C
Solution:
Agreement which incurs transaction between two parties and promise held that second party will repurchase security at specific price is classified as repurchase agreement. A repurchase agreement (repo) is a form of short-term borrowing for dealers in government securities. In the case of a repo, a dealer sells government securities to investors, usually on an overnight basis, and buys them back the following day at a slightly higher price.
60
Type of funds that have transfer transactions between financial institutions are classified as
Discuss
Answer & Solution
Answer: Option A
Solution:
Type of funds that have transfer transactions between financial institutions federal fundsare classified as federal funds. Federal funds, often referred to as fed funds, are excess reserves that commercial banks and other financial institutions deposit at regional Federal Reserve banks; these funds can be lent, then, to other market participants with insufficient cash on hand to meet their lending and reserve needs