International Finance and Treasury MCQ Questions and Solutions with Explanations

1

Where there are large number of buyers and sellers then there is larger

A) liquidity B) speculation C) hedging D) forward rate

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Answer & Solution

Answer: Option A

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2

In derivative contract, settlement by offset, denotes which one of the following?

A) Settlement of a maturing futures contract by cash payment in order to offset the mutal obligation on the contract B) Closing out futures contract before maturity with an offsetting trade C) Terminating a futures contract by executing a new contract by way of payment of cash in a mutually agreed proportion D) A fresh contract is entered into by discarding the earlier contract outside the exchange

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Answer & Solution

Answer: Option B

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3

Which one of the following transactions can be carried on without any restriction or regulation of the RBI under the FEMA?

A) Transfer for issue of any foreign security by a person resident in India B) Transfer or issue of any foreign security by a person resident in India C) Drawal of foreign exchange for payments due on account of amortisation of loans or for depreciation of direct investment D) Export, import or holding of currency notes

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Answer & Solution

Answer: Option C

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4

Which of the following statement is true?

A) IFM is a branch of finance that deals with managing global operations B) IFM is a monetary authority that sanctions loans to the countries C) IFM is a social science which learns the behaviour of employees in a multinational D) None of the above

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Answer & Solution

Answer: Option B

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5

Global bond market consists of all bonds sold by issued companies, governments, or other firms

A) within their own countries B) outside their own countries C) to London banks D) to developing nations only

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Answer & Solution

Answer: Option B

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6

Which of the following statement is true?
Statement I Exchange rate fluctuates to equate imports and exports.
Statement II Exchange rates fluctuate to equate the quantity of foreign exchange demanded with the quantity supplied.

A) Both statements are correct B) Both statements are incorrect C) Statement I is correct, but Statement II is incorrect D) Statement I is incorrect, but Statement II is correct

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Answer & Solution

Answer: Option D

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7

The date of settlement for a foreign exchange transaction is referred to as

A) clearing date B) swap date C) maturity date D) value date

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Answer & Solution

Answer: Option D

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8

Interest Rate Parity (IRP) implies that

A) interest rates should change by an equal amount but in the opposite direction to the difference in inflation rates between two countries B) the difference in interest rates in different currencies for securities of similar risk and maturity should be consistent with the forward rate discount or premium for the foreign currency C) the interest rates between two countries start in equilibrium, any change in the differential rate of inflation between the two countries tends to be offset over the long-term by an equal but opposite change in the spot exchange rate D) in the long run real interest rate between two countries will be equal

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Answer & Solution

Answer: Option D

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9

The statement "This market enhances immediate exchange of currencies" refers to which of the following?

A) Forward market B) Option market C) Future market D) Spot market

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Answer & Solution

Answer: Option D

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10

A forward currency transaction

A) is always at a premium over the spot rate B) means that delivery and payment must be made within one business day (USA/Canada) or two business days after the transaction date C) calls for exchange in the future of currencies at an agreed rate of exchange D) sets the future date when delivery of a currency must be made at an unknown spot exchange rate

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Answer & Solution

Answer: Option C

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International Finance and Treasury MCQ Questions and Solutions with Explanations | Management