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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-7 section-1

Each section contains 100 MCQs on International Finance and Treasury .
61
An operation in order to protect the domestic currency value of an asset or a liability that is denominated in foreign currency is called as
Discuss
Answer & Solution
Answer: Option A
Solution:
An operation in order to protect the domestic currency value of an asset or a liability that is denominated in foreign currency is called as Hedging. A risk management strategy used in limiting or offsetting probability of loss from fluctuations in the prices of commodities, currencies, or securities. In effect, hedging is a transfer of risk without buying insurance policies.
62
Difference between buying and selling rates in an exchange rate or interest rate quotation is known as
Discuss
Answer & Solution
Answer: Option B
Solution:
Difference between buying and selling rates in an exchange rate or interest rate quotation is known as Spread. The spread is the gap between the bid and the ask prices of a security or asset, like a stock, bond or commodity.
63
International Finance Corporation established in
Discuss
Answer & Solution
Answer: Option A
Solution:
International Finance Corporation (IFC) was established in July 1956 as an affiliate of the World Bank to provide finance to the private sector. The World Bank grants loans to the governments of the member countries or provides loan capital to the private enterprises on the guarantee of the member governments.
64
Which exchange rate theory focuses on the inflation exchange rate relationship?
Discuss
Answer & Solution
Answer: Option C
Solution:
Purchasing power parity theory focuses on the inflation exchange rate relationship. It states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.
65
The exchange rate prevailing at a financial reporting date
Discuss
Answer & Solution
Answer: Option A
Solution:
Closing exchange rate is the rate prevailing at a financial reporting date. It is the exchange rate for two currencies at the end of a period of time, such as a trading day or month.
66
The bank account of a non-resident of a country, where the amount of currency in the account cannot be transferred to another country is called as
Discuss
Answer & Solution
Answer: Option B
Solution:
The bank account of a non-resident of a country, where the amount of currency in the account cannot be transferred to another country is called as Blocked Account. A blocked account can be an account that is subject to foreign exchange controls in a country that restricts the amount of its currency that can be transferred to other countries or exchanged into other currencies.
67
Exchange rate between currency A and currency B, given the values of currencies A and B with respect to a third currency is known as
Discuss
Answer & Solution
Answer: Option D
Solution:
Exchange rate between currency A and currency B, given the values of currencies A and B with respect to a third currency is known as Cross exchange rate. A cross rate is the currency exchange rate between two currencies when neither are the official currencies of the country in which the exchange rate quote is given.
68
Agreement to exchange one currency for another at a specified exchange rate and date is
Discuss
Answer & Solution
Answer: Option A
Solution:
Agreement to exchange one currency for another at a specified exchange rate and date is Currency swap. A currency swap is an agreement in which two parties exchange the principal amount of a loan and the interest in one currency for the principal and interest in another currency. At the inception of the swap, the equivalent principal amounts are exchanged at the spot rate.
69
Long-term securities denominated in two currencies is called as
Discuss
Answer & Solution
Answer: Option B
Solution:
Long-term securities denominated in two currencies is called as Dual currency bonds. A dual currency bond is a synthetic security that is redeemed in one currency while interest payments over the life of the bond are made in another currency. For example, a bond issued in U.S. dollars which pays interest in euros will be considered a dual currency bond.
70
Foreign exchange transactions involve monetary transactions
Discuss
Answer & Solution
Answer: Option C
Solution:
Foreign exchange transactions involve monetary transactions between residents of two or more countries. The Foreign Exchange Transactions refers to the sale and purchase of foreign currencies. Simply, the foreign exchange transaction is an agreement of exchange of currencies of one country for another at an agreed exchange rate on a definite date.