Foreign Exchange Management Set 4
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This set of Foreign Exchange Management Multiple Choice Questions & Answers (MCQs) focuses on Foreign Exchange Management Set 4
Q1 | ____________ means using short-term forward contracts to offset “paper” gainsand losses on the long-term assets and liabilities of foreign subsidiaries.
- Hedging transaction exposure
- Hedging balance-sheet exposure
- Hedging economic exposure
- Hedging cost exposure
Q2 | Which exchange rate theory focuses on the inflation – exchange rate relationship?
- Interest rate parity
- International Fisher Effect
- Purchasing power parity
- Traditional Model
Q3 | The exchange rate prevailing at a financial reporting date
- Closing exchange rate
- Opening exchange rate
- Fixed exchange rate
- Fluctuating exchange rate
Q4 | The bank account of a non-resident of a country, where the amount of currency inthe account cannot be transferred to another country is called as
- Nostro account
- Blocked Account
- Foreign account
- Capital account
Q5 | Funds that cannot be remitted from the subsidiary to the parent due to hostgovernment restrictions is known as
- Close – ended funds
- Open – ended funds
- Blocked funds
- Restricted funds
Q6 | Exchange rate between currency A and currency B, given the values of currencies Aand B with respect to a third currency is known as
- Golden standard
- Flexible exchange rate
- Fixed exchange rate
- Cross exchange rate A
Q7 | Agreement to exchange one currency for another at a specified exchange rate anddate is
- Currency swap
- Swap points
- Currency put option
- Currency call option
Q8 | Long– term securities denominated in two currencies is called as
- Euro bond
- Dual – currency bonds
- Foreign bonds
- Euro dollar deposit.
Q9 | Foreign exchange transactions involve monetary transactions
- among residents of the same country
- between residents of two countries only
- between residents of two or more countries
- among residents of at least three countries
Q10 | A foreign currency account maintained by a bank abroad is its
- nostro account
- vostro account
- loro account
- foreign bank account
Q11 | Non-resident Bank Accounts’ refer to
- nostro account
- vostro account
- accounts opened in offshore centers
- foreign bank account
Q12 | The number of nostro accounts that can be maintained by a bank in a particularcurrency is
- One
- not exceeding three
- minimum two
- no such limit
Q13 | Full fledged money changers are authorized to undertake
- only sale transactions
- only purchase transactions
- all types of foreign exchange transactions
- purchase and sale of foreign currency notes, coins and travelers cheques
Q14 | . IMF augments its resources by borrowing under
- General arrangements to borrow
- New arrangements to borrow
- Trust funds
- All the above
Q15 | The abbreviations SDR stands for
- Special Drawing Rights
- Specific Drawing Rights
- Special Depository Rules
- Specific Depository Rules
Q16 | The value of SDR is
- equivalent to one US dollar
- based on value of gold
- average of the value of US dollar and Euro
- based on basket of five currencies
Q17 | The term World Bank refers to
- IBRD
- IDA
- Both IBRD and IDA
- IFC
Q18 | . IBRD lending is not available for
- middle income countries
- low income countries
- multilateral agencies
- developed countries
Q19 | The eligibility to borrow from IDA is based on
- relative poverty
- lack of creditworthiness to borrow on market terms
- good policy performance
- all the above
Q20 | Financial products of IFC does not include
- loans
- equity participation
- risk management products
- none of the above
Q21 | MIGA stands for
- Multilateral Investment Guarantee Agency
- Multilateral Institutional and Government Agencies
- Mutual Interest Guaranteeing Agencies
- Mutual Institutional and Government Agencies
Q22 | Guarantee provided by MIGA to private investors covers risk of
- transfer restriction
- expropriation
- breach of contract
- all the above
Q23 | The activities of ADB include
- project financing
- guaranteeing loans
- both a and b
- risk management products
Q24 | A ‘credit’ in balance of payments indicates
- Accumulation of bank balances abroad
- Foreign direct investment received into the country
- Earning of foreign exchange by the country
- Earning of foreign exchange or incurring of liability abroad or decrease in asset abroad
Q25 | The current account of balance of payments does not include
- Trade in goods
- Trade in services
- Income on investments
- None of the above