International Finance and Treasury MCQ Questions and Solutions with Explanations

Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Section 7 Section 8 Section 9

11.
Which among the following statements is not true relating to 'Crawling Peg System' of exchange rate?

A. It was introduced as an alternative to the adjustable peg system

B. It allows a narrow margin of fluctuations as compared to adjustable peg system

C. It takes a position in between the fixed exchange rate system and the flexible exchange rate system

D. It was introduced by IMF in 1971

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12.
An appreciation of the currency is likely to occur if,

A. domestic interest rates fall

B. there is an increase in demand for imports

C. there is an increase in demand for exports

D. there is an increase in the balance of payments deficit determination of ER

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13.
Which of the following is true of foreign exchange markets?

A. The futures market is mainly used by hedgers while the forward market is mainly used for speculating

B. The futures market and the forward market are mainly used for hedging

C. The futures market is mainly used by speculators while the forward market is mainly used for hedging

D. The futures market and the forward market are mainly used for speculating

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14.
If the spot rate of US dollar is Rs. 60 and one mouth forward rate is Rs. 62, the forward rate premium (p) will be

A. 40%

B. (-) 40%

C. 33%

D. (-) 33%

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15.
If a company agreements today for several future date of real currency exchange, they will be building use of a

A. stock rate

B. futures rate

C. forward rate

D. None of the above

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16.
In commodity market, the foreign exchange rate is determined as per

A. equilibrium rate of foreign exchange

B. comparative price of foreign currency

C. demand and supply of foreign currency

D. SDR

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17.
Environmental factors affecting international operations are as follows except

A. foreign customs

B. foreign economic factors

C. foreign political situations

D. international distance

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18.
The difference between the value of a call option and a put option with the same exercise price is due primarily to

A. the greater liquidity of call options

B. the use of continuous as opposed to discrete discounting

C. the differential between the current stock price and the exercise price in present value terms

D. the effect of dividends on the two securities

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19.
Given below are two statements, one labelled as Assertion (A) and the other labelled as Reason (R). Read the statements and choose the correct answer:
Assertion (A) The nominal interest rate comprises of a real interest rate and an expected rate of inflation and it adjusts when the inflation rate is expected to change. Hence, in the perfect international capital markets, real rate of returns are equal in the two countries.
Reason (R) The international fisher effects states that the nominal interest rate differential must be equal to the expected inflation rate differential In the two countries.

A. Both (A) and (R) are correct and (R) is the right explanation of (A)

B. Both (A) and (R) are correct, but (R) is not the right explanation of (A)

C. (A) is correct, but (R) is not correct

D. Both (A) and (R) are incorrect

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20.
If your local currency is in variable form and foreign currency is in fixed form quotation will be

A. indirect

B. direct

C. local form

D. foreign form

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

11. Which among the following statements is not true relating to 'Crawling Peg System' of exchange rate?

Answer & Solution

12. An appreciation of the currency is likely to occur if,

Answer & Solution

13. Which of the following is true of foreign exchange markets?

Answer & Solution

14. If the spot rate of US dollar is Rs. 60 and one mouth forward rate is Rs. 62, the forward rate premium (p) will be

Answer & Solution

15. If a company agreements today for several future date of real currency exchange, they will be building use of a

Answer & Solution

16. In commodity market, the foreign exchange rate is determined as per

Answer & Solution

17. Environmental factors affecting international operations are as follows except

Answer & Solution

18. The difference between the value of a call option and a put option with the same exercise price is due primarily to

Answer & Solution

Answer & Solution

20. If your local currency is in variable form and foreign currency is in fixed form quotation will be

Answer & Solution

Read More Section(International Finance and Treasury)

11.
Which among the following statements is not true relating to 'Crawling Peg System' of exchange rate?

12.
An appreciation of the currency is likely to occur if,

13.
Which of the following is true of foreign exchange markets?

14.
If the spot rate of US dollar is Rs. 60 and one mouth forward rate is Rs. 62, the forward rate premium (p) will be

15.
If a company agreements today for several future date of real currency exchange, they will be building use of a

16.
In commodity market, the foreign exchange rate is determined as per

17.
Environmental factors affecting international operations are as follows except

18.
The difference between the value of a call option and a put option with the same exercise price is due primarily to

20.
If your local currency is in variable form and foreign currency is in fixed form quotation will be