Q1: Ultimately___was replaced by the___on 1st Jan 1995
- A. GATS, WTO
- B. WTO, GATT
- C. GATT, WTO
- D. IMF, GATT
Answer
Answer C. GATT, WTO
Q2: ___is the first step in the internationalization process.
- A. license
- B. foreign investment
- C. sales
- D. export
Answer
Answer A. license
Q3: In the foreign exchange market, the___of one country is traded for the___of another country.
- A. currency; currency
- B. currency; financial instruments
- C. currency; goods
- D. goods; goods
Answer
Answer A. currency; currency
Q4: By definition, currency appreciation occurs when
- A. the value of all currencies falls relative to gold
- B. the value of all currencies rises relative to gold
- C. the value of one currency rises relative to another currency
- D. the value of one currency falls relative to another currency
Answer
Answer C. the value of one currency rises relative to another currency.
Q5: Hedging is used by companies to:
- A. decrease the variability of tax paid
- B. decrease the spread between spot and forward market quotes
- C. increase the variability of expected cash flows
- D. decrease the variability of expected cash flows
Answer
Answer D. decrease the variability of expected cash flows
Q6: Exchange rates
- A. are always fixed
- B. fluctuate to equate the quantity of foreign exchange demanded with the quantity supplied
- C. fluctuate to equate imports and exports
- D. fluctuate to equate rates of interest in various countries
Answer
Answer B. fluctuate to equate the quantity of foreign exchange demanded with the quantity supplied
Q7: If the U.S. dollar appreciates relative to the British pound,
- A. it will take fewer dollars to purchase a pound
- B. it will take more dollars to purchase a pound
- C. it is called a weakening of the dollar
- D. both a & c
Answer
Answer A. it will take fewer dollars to purchase a pound
Q8: A floating exchange rate
- A. is determined by the national governments involved
- B. remains extremely stable over long periods of time
- C. is determined by the actions of central banks
- D. is allowed to vary according to market forces
Answer
Answer D. is allowed to vary according to market forces
Q9: In a quote exchange rate, the currency that is to be purchase with another currency is called the
- A. liquid currency
- B. foreign currency
- C. local currency
- D. base currency
Answer
Answer D. base currency
Q10: An economist will define the exchange rate between two currencies as the:
- A. amount of one currency that must be paid in order to obtain one unit of another currency
- B. difference between total exports and total imports within a country
- C. price at which the sales and purchases of foreign goods takes place
- D. ratio of import prices to export prices for a particular country
Answer
Answer A. amount of one currency that must be paid in order to obtain one unit of another currency
Q11: India is facing continuous deficit in its balance of payments. In the foreign exchange Market rupee is expected to
- A. depreciate
- B. appreciate
- C. show no specific tendency
- D. depreciate against currencies of the countries with positive balance of payment and appreciate against
Answer
Answer A. depreciate.
Q12: The demand for domestic currency in the foreign exchange market is indicated by the Following transactions in balance of payment
- A. export of goods and services
- B. import of goods and services
- C. export of goods and services and capital inflows
- D. import of goods and services and capital outflows
Answer
Answer C. export of goods and services and capital inflows.
Q13: The price at which a market maker is prepared to buy (a currency) or borrow (money) is termed as
- A. spot rate
- B. bid rate
- C. ask price
- D. forward rate
Answer
Answer B. bid rate
Q14: The___is especially well suited to offer hedging protection against transactions risk exposure.
- A. forward market
- B. spot market
- C. transactions market
- D. inflation-rate market
Answer
Answer A. forward market
Q15: Difference between buying and selling rates in an exchange rate is known as
- A. strike price
- B. spread
- C. swap points
- D. spot rate
Answer
Answer B. spread
Q16: Exchange rate between currency A and currency B, given the values of currencies A and B with respect toa third currency is known as
- A. golden standard
- B. flexible exchange rate
- C. fixed exchange rate
- D. cross exchange rate
Answer
Answer D. cross exchange rate
Q17: The swap arrangement where principal amounts are not exchanged, but periodical payments will be
- A. currency swap
- B. cross currency interest swap
- C. interest rate swap
- D. non-financial swap
Answer
Answer C. interest rate swap.
Q18: What is FEMA?
- A. first exchange management act
- B. foreign exchequer management act
- C. foreign exchange management act
- D. d)foreign evaluation management act
Answer
Answer C. foreign exchange management act
Q19: ___involve the exchange of currency the second day after the date on which the two foreign exchange traders agree to the transaction.
- A. spot transactions
- B. outright forward transactions
- C. fx swaps
- D. reverse transactions
Answer
Answer A. spot transactions
Q20: Outright forward transactions involve the exchange of currency beyond three days at a fixed exchange rate, known as the:
- A. spot rate
- B. forward rate
- C. fx swap rate
- D. reverse transaction rate
Answer
Answer B. forward rate
Q21: The biggest market for foreign exchange is which of the following?
- A. new york
- B. tokyo
- C. london
- D. china
Answer
Answer C. london
Q22: The___is the price at which the trader is willing to buy foreign currency.
- A. offer
- B. bid
- C. spread
- D. cross rate
Answer
Answer B. bid
Q23: Which of the following is the price at which the trader is willing to sell foreign currency?
- A. bid
- B. spread
- C. offer
- D. cross rate
Answer
Answer C. offer
Q24: ___is only a legal agreement and it is not an institution, but___is a permanent institution.
- A. gatt, wto
- B. wto, gatt
- C. wto, imf
- D. imf, gatt
Answer
Answer A. gatt, wto
Q25: The WTO was established to implement the final act of Uruguay Round agreement of___
- A. mfa
- B. gatt
- C. trip’s
- D. uno
Answer
Answer B. gatt
Q26: WTO stands for
- A. world technology association
- B. world time organization
- C. world trade organization
- D. world tourism organization
Answer
Answer C. world trade organization
Q27: What is the name of the international organization that fosters monetary and financial Cooperation and serves as a bank for central banks?
- A. wto
- B. eu
- C. world bank
- D. bank for international settlements
Answer
Answer D. bank for international settlements
Q28: Which of the following are institutional banks that provide financial support and professional advice for developing countries?
- A. a) multilateral development banks
- B. b) central banks
- C. c) investment banks
- D. d) barclays bank
Answer
Answer A. a) multilateral development banks
Q29: Which of the following examples definitely illustrates a depreciation of the U.S. dollar?
- A. the dollar exchanges for 1 pound and then exchanges for 1.2 pounds
- B. the dollar exchanges for 250 yen and then exchanges for 275 francs
- C. the dollar exchanges for 100 francs and then exchanges for 120 yen
- D. the dollar exchanges for 120 francs and then exchanges for 100 francs
Answer
Answer D. the dollar exchanges for 120 francs and then exchanges for 100 francs
Q30: Interest rate swaps are usually possible because international financial markets in different countriesare
- A. efficient
- B. perfect
- C. imperfect
- D. both a & b
Answer
Answer C. imperfect
Q31: The exchange rate is the
- A. total yearly amount of money changed from one country’s currency to another country’s currency
- B. total monetary value of exports minus imports
- C. amount of country’s currency which can exchanged for one ounce of gold
- D. price of one country’s currency in terms of another country’s currency
Answer
Answer D. price of one country’s currency in terms of another country’s currency
Q32: A speculator in foreign exchange is a person who
- A. buys foreign currency, hoping to profit by selling it a a higher exchange rate at some later date
- B. earns illegal profit by manipulation foreign exchange
- C. causes differences in exchange rates in different geographic markets
- D. none of the above
Answer
Answer A. buys foreign currency, hoping to profit by selling it a a higher exchange rate at some later date
Q33: Under a gold standard,
- A. a nation’s currency can be traded for gold at a fixed rate
- B. a nation’s central bank or monetary authority has absolute control over its money supply
- C. new discoveries of gold have no effect on money supply or prices
- D. a & b
Answer
Answer A. a nation’s currency can be traded for gold at a fixed rate
Q34: The Bretton Woods accord
- A. of 1879 created the gold standard as the basis of international finance
- B. of 1914 formulated a new international monetary system after the collapse of the gold standard
- C. of 1944 formulated a new international monetary system after the collapse of the gold standard
- D. none of the above
Answer
Answer C. of 1944 formulated a new international monetary system after the collapse of the gold standard
Q35: The current system of international finance is a
- A. gold standard
- B. fixed exchange rate system
- C. floating exchange rate system
- D. managed float exchange rate system
Answer
Answer D. managed float exchange rate system
Q36: Ask quote is for
- A. seller
- B. buyer
- C. hedger
- D. speculator
Answer
Answer A. seller
Q37: A simultaneous purchase and sale of foreign exchange for two different dates is called
- A. currency devalues
- B. currency swap
- C. currency valuation
- D. currency exchange
Answer
Answer B. currency swap
Q38: The basic objective of export Promotion Council is to promote and develop the Exports of the
- A. particular products of country
- B. only attractive projects of the country
- C. only services industry products of the country
- D. overall exports of the country
Answer
Answer D. overall exports of the country.
Q39: The main promoter of trade liberalization was
- A. gatt
- B. nafta
- C. cepta
- D. cisa
Answer
Answer A. gatt
Q40: ___is an important reason for economic integration.
- A. geographic proximity
- B. democracy
- C. totalitarianism
- D. common law practice
Answer
Answer A. geographic proximity
