Question 1

The price at which a market maker is prepared to buy (a currency) or borrow (money) is termed as&#10;A)spot rate&#10;B)bid rate&#10;C)ask price&#10;D)forward rate

Accepted Answer

The bid rate is the price at which a market maker is willing to buy a currency or borrow money. It represents the maximum price that a buyer is willing to pay for a security.

Question 2

The __________ is especially well suited to offer hedging protection against transactions risk exposure.&#10;A)forward market&#10;B)spot market&#10;C)transactions market&#10;D)inflation-rate market

Accepted Answer

The forward market allows businesses and investors to lock in prices for transactions that will occur in the future, providing a hedge against the risk of adverse movements in exchange rates affecting the value of future cash flows.

Question 3

Difference between buying and selling rates in an exchange rate is known as&#10;A)strike price&#10;B)spread&#10;C)swap points&#10;D)spot rate

Accepted Answer

The difference between buying and selling rates in an exchange rate is known as the spread. This represents the transaction cost or the profit margin for the currency dealer.

Question 4

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&#10;A)golden standard&#10;B)flexible exchange rate&#10;C)fixed exchange rate&#10;D)cross exchange rate

Accepted Answer

The exchange rate between two currencies (A and B) calculated based on their values with respect to a third currency is known as the cross exchange rate. This method is commonly used in the forex market when direct quotes are not available.

Question 5

The swap arrangement where principal amounts are not exchanged, but periodical payments will be&#10;A)currency swap&#10;B)cross currency interest swap&#10;C)interest rate swap.&#10;D)non-financial swap.

Accepted Answer

In an interest rate swap, two parties exchange interest payments on a certain principal amount, but the principal amounts themselves are not exchanged. This type of swap typically involves exchanging fixed interest payments for floating interest payments, or vice versa, without the exchange of the underlying principal amounts.

Question 6

What is FEMA?&#10;A)first exchange management act&#10;B)foreign exchequer management act&#10;C)foreign exchange management act&#10;D)foreign evaluation management act

Accepted Answer

FEMA stands for Foreign Exchange Management Act, which is a legislation in India that governs the exchange of foreign currencies.

Question 7

The biggest market for foreign exchange is which of the following?&#10;A)new york&#10;B)tokyo&#10;C)london&#10;D)china

Accepted Answer

London is recognized as the largest market for foreign exchange, surpassing other major financial hubs due to its strategic location, which allows it to bridge Asian and American trading hours, and its comprehensive financial services infrastructure.

Question 8

&#8230;&#8230;&#8230;is only a legal agreement and it is not an institution, but &#8230;. is a permanent institution.&#10;A)gatt, wto&#10;B)wto, gatt&#10;C)wto, imf&#10;D)imf, gatt

Accepted Answer

The General Agreement on Tariffs and Trade (GATT) was a legal agreement between many countries, whose overall purpose was to promote international trade by reducing or eliminating trade barriers such as tariffs or quotas. It was replaced by the World Trade Organization (WTO) in 1995, which is a permanent institution and a larger organization that deals with the rules of trade between nations at a global or near-global level.

Question 9

The WTO was established to implement the final act of Uruguay Round agreement of &#8230;&#8230;&#10;A)mfa&#10;B)gatt&#10;C)trip's&#10;D)uno

Accepted Answer

The World Trade Organization (WTO) was established to implement the final act of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) negotiations, which concluded in 1994.

Question 10

Interest rate swaps are usually possible because international financial markets in different countries are&#10;A)efficient&#10;B)perfect&#10;C)imperfect&#10;D)both a & b

Accepted Answer

Interest rate swaps are often utilized because international financial markets are imperfect. These imperfections, including differences in interest rates, regulatory environments, and access to capital across countries, create opportunities for entities to benefit from swapping interest rate payments to manage risk or reduce financing costs.

Question 11

The Bretton Woods accord&#10;A)of 1879 created the gold standard as the basis of international finance&#10;B)of 1914 formulated a new international monetary system after the collapse of the gold standard&#10;C)of 1944 formulated a new international monetary system after the collapse of the gold standard&#10;D)none of the above

Accepted Answer

The answer of The Bretton Woods accord&#10;A)of 1879 created the...

Question 12

Ask quote is for&#10;A)seller&#10;B)buyer&#10;C)hedger&#10;D)speculator

Accepted Answer

The answer of Ask quote is for&#10;A)seller&#10;B)buyer&#10;C)hedger&#10;D)speculator...

Deck 3: Foreign Exchange and International Finance