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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-7

Each section contains 100 MCQs on International Finance and Treasury .
51
Direct relationship between price change and interest rate change is represented by
Discuss
Answer & Solution
Answer: Option A
Solution:
Direct relationship between price change and interest rate change is represented by positive duration. The name for a particular relationship between changes in the price of a debt security and changes in prevailing interest rates. When a security has positive duration, its price increases in response to a decrease in prevailing market rates. Almost all securities have positive duration.
52
Investors of coupon bond will receive cash flow very soon if
Discuss
Answer & Solution
Answer: Option C
Solution:
Investors of coupon bond will receive cash flow very soon if interest payment is higher. A coupon bond, also referred to as a bearer bond or bond coupon, is a debt obligation with coupons attached that represent semiannual interest payments. With coupon bonds, there are no records of the purchaser kept by the issuer; the purchaser's name is also not printed on any kind of certificate.
53
Inverse relationship between price change and interest rate change is represented by
Discuss
Answer & Solution
Answer: Option B
Solution:
Inverse relationship between price change and interest rate change is represented by negative duration. A situation in which the price of a bond or other debt security moves in the same direction of interest rates. That is, negative duration occurs when the bond prices go up along with interest rates and vice versa.
54
Duration which is divided by interest rate plus one is classified as
Discuss
Answer & Solution
Answer: Option C
Solution:
Duration which is divided by interest rate plus one is classified as modified duration. Modified duration is a formula that expresses the measurable change in the value of a security in response to a change in interest rates. Modified duration follows the concept that interest rates and bond prices move in opposite directions.
55
Larger fluctuations in portfolio value of foreign exchange of financial institutions leads to
Discuss
Answer & Solution
Answer: Option B
Solution:
Larger fluctuations in portfolio value of foreign exchange of financial institutions leads to greater volatility of rates. It is the money value of your investment portfolio.
56
Services such as commercial trade transactions and positions in financial investments provided by financial institutions are classified as
Discuss
Answer & Solution
Answer: Option C
Solution:
Services such as commercial trade transactions and positions in financial investments provided by financial institutions are classified as agent services. A registered agent, or agent for service of process (SOP), provides a legal address within the jurisdiction where legal documents may be served during business hours.
57
For a foreign exchange of specific currency, non-hedged position is classified as
Discuss
Answer & Solution
Answer: Option A
Solution:
For a foreign exchange of specific currency, non-hedged position is classified as open position. A naked position is a securities position, long or short, that is not hedged from market risk. Both the potential gain and the potential risk are greater when a position is naked instead of covered or hedged in some way.
58
Position which came in to existence because of holding assets less than liabilities is considered as
Discuss
Answer & Solution
Answer: Option D
Solution:
Position which came in to existence because of holding assets less than liabilities is considered as net short in currency. An investor who is net short has more short positions than long positions in a given asset, industry, market, or portfolio.
59
Theory according to which difference between expected appreciation and foreign interest must be equal to domestic interest rate is called
Discuss
Answer & Solution
Answer: Option A
Solution:
Theory according to which difference between expected appreciation and foreign interest must be equal to domestic interest rate is interest rate parity theoremcalled. Interest rate parity (IRP) is a theory in which the interest rate differential between two countries is equal to the differential between the forward exchange rate and the spot exchange rate.
60
Rule which states that similar set of goods and services produced in various countries should have equal price is classified as
Discuss
Answer & Solution
Answer: Option D
Solution:
Rule which states that similar set of goods and services produced in various countries should have equal price is classified as law of one price. The law of one price is an economic concept that states that the price of an identical asset or commodity will have the same price globally, regardless of location, when certain factors are considered.