Question 1

As per FEMA, no person, other than ________ would enter in any transactions of the foreign currency.
A)Offshore banks
B)Parliament
C)Government
D)Authorized Dealer

Accepted Answer

Under the Foreign Exchange Management Act (FEMA), only authorized dealers, typically banks and financial institutions that have been granted permission by the Reserve Bank of India, are allowed to engage in transactions involving foreign exchange.

Question 2

The monetary penalty payable under FERA was nearly ___________times the amount involved.
A)Three
B)Five
C)Two
D)Six

Accepted Answer

Under the Foreign Exchange Regulation Act (FERA), the monetary penalty could be up to five times the amount involved in the contravention.

Question 3

__________ implies investment made with an intent of obtaining an ownership stake in an enterprise domiciled in a country by an enterprise situated in some other country.
A)FDI
B)FPI
C)Two
D)Six

Accepted Answer

B

Question 4

RBI has granted license to certain established firms, hotels and other organizations permitting them to deal in foreign currency notes, coins and travelers' cheques. They are termed as ___________
A)Authorized Banks
B)Authorized Dealers
C)Authorized Money changers
D)Authorized shopkeeper

Accepted Answer

These entities are termed as "Authorized Money changers" by the RBI, allowing them to deal in foreign exchange transactions including currency notes, coins, and travelers' cheques.

Question 5

FEDAI stands for _____________
A)Foreign Exchange dealers act of India
B)Foreign Exchange direct association of India
C)Foreign exchange dealers association Index
D)Foreign exchange dealers association of India

Accepted Answer

FEDAI stands for Foreign Exchange Dealers' Association of India. It is an association of banks that deals in foreign exchange in India, established in 1958 to provide guidelines and rules for forex transactions.

Question 6

____________ can authorize a person / company to deal in foreign exchange.
A)SEBI
B)RBI
C)IRDA
D)Parliament

Accepted Answer

The Reserve Bank of India (RBI) is the central banking institution of India which controls the issuance and supply of the Indian rupee and manages the country's main payment systems. It has the authority to regulate and supervise the financial system, including authorizing persons or companies to deal in foreign exchange under the Foreign Exchange Management Act, 1999 (FEMA).

Question 7

__________ is the process of analyzing and ranking proposed projects to determine which ones deserving of an investment.
A)IPO
B)Debt financing
C)Capital Budgeting
D)Budgeting

Accepted Answer

Capital Budgeting is the process used by companies to evaluate and prioritize major projects or investments, such as new facilities or equipment, by assessing their profitability and potential impact on the company's financial future.

Question 8

Walmart opening a new retail outlet is an example of _______________ project.
A)Expansion
B)Regulatory
C)Replacement
D)R & D

Accepted Answer

Opening a new retail outlet is an example of an expansion project, as it involves increasing the company's footprint or capacity.

Question 9

Net amount of all cash flowing in and out of the business, from all sources is ____________ cash flow.
A)Incremental
B)Total
C)Terminal
D)Capital budgeting

Accepted Answer

Total cash flow refers to the net amount of all cash flowing in and out of a business from all sources, encompassing all types of cash inflows and outflows, not just those from a specific project or activity.

Question 10

_________ are the initial outlays required to analyse a project that cannot be recovered even if a project is accepted.
A)Opportunity cost
B)Externally
C)Cannibalization
D)Sunk cost

Accepted Answer

Sunk costs are expenses that have already been incurred and cannot be recovered, regardless of whether a project proceeds.

Question 11

___________ means transfer of corporate money from a foreign country back to its home country.
A)Repatriation
B)Capital Budgeting
C)Withholding
D)Holding

Accepted Answer

Repatriation refers to the process of returning assets, profits, or money from a foreign country back to the company's home country. This term is commonly used in the context of multinational corporations bringing back profits earned in foreign countries.

Question 12

Lower the better applies to ___________ capital budgeting method.
A)NPV
B)Payback period
C)IRR
D)Profitability Index

Accepted Answer

The Payback Period method in capital budgeting focuses on how quickly an investment can be recouped. A lower payback period is preferred as it indicates a faster return of the initial investment, making it the only method among the options where "lower is better."

Question 13

Formula of profitability index is ___________
A)PV of cash inflow / PV of cash outlay
B)Pv of cash inflow - PV of cash outlay
C)PV of cash inflow + Pv of cash outlay
D)PV of cash outlay / PV of cash inflow

Accepted Answer

The profitability index is calculated by dividing the present value (PV) of future cash inflows by the present value of the investment's cash outlay.

Question 14

__________ monitors the balance of payments of its member nations.
A)World Bank
B)IMF
C)WTO
D)IFC

Accepted Answer

The International Monetary Fund (IMF) monitors the balance of payments of its member nations to ensure the stability of the international monetary and financial system.

Question 15

_________ supporters' sustainable investments in the private sector.
A)IFC
B)World Bank
C)IMF
D)WTO

Accepted Answer

The International Finance Corporation (IFC) is known for supporting sustainable investments in the private sector.

Question 16

_____________ includes risk of loss from uniform political and government issues.
A)Political Risk
B)International Finance
C)Imperfect Market
D)Foreign Exchange risk

Accepted Answer

Political Risk involves the risk of loss businesses may face due to changes in the political environment or government policies. This can include changes in laws, fiscal policy, or any other government action that could affect the business's operations or profitability.

Question 17

Due to imperfection in markets ___________ are restricted by a limit to invest and manage their portfolio.
A)Investors
B)Creditors
C)Debtors
D)Consumers

Accepted Answer

Investors are often restricted by limits to invest and manage their portfolios due to imperfections in markets, such as information asymmetries, transaction costs, and regulations, which can affect their ability to freely invest and manage their assets.

Question 18

____________ to promote domestic investment and growth through capital Market.
A)International Finance
B)World Bank
C)WTO
D)IFC

Accepted Answer

The answer of ____________ to promote domestic investment and growth...

Question 19

_________ it increases in flow of capital and investment to developing economics.
A)Globalization
B)Privatization
C)Liberalization
D)Balance of payment

Accepted Answer

Globalization often leads to an increase in the flow of capital and investment to developing economies as it involves the integration of markets and economies worldwide.

Question 20

________ control over the monetary system of India.
A)RBI
B)IFC
C)IMF
D)WTO

Accepted Answer

The Reserve Bank of India (RBI) has control over the monetary system of India, as it is the central banking institution of the country responsible for regulating the issuance and supply of the Indian rupee and managing the country's main payment systems.

Quiz 6: Foreign Exchange and Investment

As per FEMA, no person, other than ________ would enter in any transactions of the foreign currency.

The monetary penalty payable under FERA was nearly ___________times the amount involved.

__________ implies investment made with an intent of obtaining an ownership stake in an enterprise domiciled in a country by an enterprise situated in some other country.

RBI has granted license to certain established firms, hotels and other organizations permitting them to deal in foreign currency notes, coins and travelers' cheques. They are termed as ___________

FEDAI stands for _____________

____________ can authorize a person / company to deal in foreign exchange.

__________ is the process of analyzing and ranking proposed projects to determine which ones deserving of an investment.

Walmart opening a new retail outlet is an example of _______________ project.

Net amount of all cash flowing in and out of the business, from all sources is ____________ cash flow.

_________ are the initial outlays required to analyse a project that cannot be recovered even if a project is accepted.

___________ means transfer of corporate money from a foreign country back to its home country.

Lower the better applies to ___________ capital budgeting method.

Formula of profitability index is ___________

__________ monitors the balance of payments of its member nations.

_________ supporters' sustainable investments in the private sector.

_____________ includes risk of loss from uniform political and government issues.

Due to imperfection in markets ___________ are restricted by a limit to invest and manage their portfolio.

____________ to promote domestic investment and growth through capital Market.

_________ it increases in flow of capital and investment to developing economics.

________ control over the monetary system of India.