Deck 3: International Trade and Finance Terminology and Concepts

Question 1

Which of the following is not an example of an international trade draft?

A)Time draft.
B)Sight draft.
C)Both the first and second answers are correct
D)Usance draft

Answer 1

Both the first and second answers are correct

Question 2

A group of European countries have formed a union and created a common currency known as __________.

A)the EU currency
B)the European Union
C)the EMU
D)the Euro

Answer 2

the Euro

Question 3

The forward exchange rate __________.

A)is the rate today for exchanging one currency for another for immediate delivery
B)is the rate today for exchanging one currency for another at a specific future date
C)is the rate today for exchanging one currency for another at a specific location on a specific future date
D)is the rate today for exchanging one currency for another at a specific location for immediate delivery

Answer 3

is the rate today for exchanging one currency for another at a specific future date

Question 4

The spot exchange rate __________.

A)is the rate today for exchanging one currency for another for immediate delivery
B)is the rate today for exchanging one currency for another at a specific future date
C)is the rate today for exchanging one currency for another at a specific location on a specific future date
D)is the rate today for exchanging one currency for another at a specific location for immediate delivery

Question 5

What are the forms of assistance that the World Bank provides to its members?

A)Technical and financial
B)Political and financial
C)Political and economic
D)Technical and military

Question 6

The World Bank Group is made up of how many organisations?

A)3
B)5
C)8
D)10

Question 7

The most liquid asset among the following is?

A)Gold
B)Share
C)Cash
D)land

Question 8

The system operated by the WTO is known as the

A)multilateral trading system
B)bilateral trading system
C)ratified system
D)ungratified system

Question 9

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

Question 10

A deposit or borrowing domiciled outside the home country of the currency is called as

A)foreign bond
B)euro bond
C)euro currency
D)domestic bond

Question 11

The price at which a market maker is prepared to sell (a currency) or lend (money)

A)forward rate
B)sport rate
C)bid rate
D)offer rate

Question 12

Bretton woods agreement arrived at in

A)July 1994
B)July 1954
C)June 1960
D)June 1964

Question 13

A contract that gives the buyer the right to buy commodity or a foreign currency from the seller at a fixed price is called as

A)put option
B)call option
C)cross option
D)currency swap

Question 14

The market where long term securities (shares, bonds, etc) are bought and sold is called as

A)money market
B)capital market
C)primary market
D)secondary market

Question 15

A bank located usually in another country that provides service for another bank is

A)Foreign bank
B)Central bank
C)Correspondent bank
D)World bank

Question 16

_______________ is a process of taking advantage of differentials in interest rates of two currencies while eliminating exchange risk.

A)Hedging
B)Insurance
C)Covered - Interest Arbitrage
D)Exposure

Question 17

Quotation where the price of one unit of foreign currency is given in terms of local currency units is called as

A)Indirect quotation
B). Direct quotation
C)Open-ended quotation
D)Close - ended quotation

Question 18

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

A)Hedging
B)Hermes
C)Indexation
D)Leading

Question 19

Difference between buying and selling rates in an exchange rate or interest rate quotation is known as

A)Strike price
B)Spread
C)Swap points
D)Spot rate

Question 20

The price which one subsidiary or one unit of business charges from another for selling goods or providing services is

A)Transfer price
B)Strike price
C)Spot price
D)Forward rate

Question 21

The bond that does not pay any interest and issued at a price lower than its reimbursement value is called as

A)Zero coupon bond
B)Coupon bond
C)Euro bond
D)Domestic bond

Question 22

International Finance Corporation established in

A)1956
B)1960
C)1966
D)1970