International Finance
LIST OF ATTEMPTED QUESTIONS AND ANSWERSTrue/False
Question
Integrated branches of Commercial banks handle forex transactions as well as options, swaps, futures, arbitrage operations
Correct Answer
True
Your Answer
True
True/False
Question
JV means Joint venture and WOS means World of Security.
Correct Answer
False
Your Answer
False
Select The Blank
Question
The rate of interest on rupee finance for exports is not exceeding ________ less than PLR.
Correct Answer
0.025
Your Answer
50 basis points over LIBOR
Multiple Choice Multiple Answer
Question
What does a speculator accept while dealing with an option?
Correct Answer
The exercise or strike price, the amount , The expiration date and time, the method of payment
Your Answer
The exercise or strike price, the amount , The expiration date and time, the method of payment
Multiple Choice Single Answer
Question
In the syndicated loan arrangement the borrower has to execute :-
Correct Answer
Single Principal loan agreement
Your Answer
Single Principal loan agreement
True/False
Question
At Least one principal Lender bank is essential for issue of the ADR or GDR.
Correct Answer
False
Your Answer
True
Multiple Choice Single Answer
Question
US financial system is the freest system because
Correct Answer
Institutions can introduce new products and instuments at the price of their choice.
Your Answer
Institutions can introduce new products and instuments at the price of their choice.
Multiple Choice Single Answer
Question
In a coupon swap who is called the buyer?
Correct Answer
One who pays the fixed rate of interest
Your Answer
One who pays the fixed rate of interest
True/False
Question
Till August 1994 India was following the Indirect Methodof Rate quotation.
Correct Answer
False
Your Answer
False
Select The Blank
Question
For setting up joint ventures abroad or equity participation abroad, EXIM bank provides funds under ________ Scheme.
Correct Answer
Overseas investment facility
Your Answer
Overseas investment facility
Multiple Choice Single Answer
Question
Under the automatic route of Direct Investment Abroad, what is the restriction on market purchases?
Correct Answer
50% of the net worth of the investing company
Your Answer
50% of the net worth of the investing company
Multiple Choice Single Answer
Question
What are the powers of money changers?
Correct Answer
Purchase and sell foreign currency notes and travellers cheques
Your Answer
Purchase and sell foreign currency notes and travellers cheques and also Give export finance
Select The Blank
Question
Any company involved in foreign exchange transactions is exposed to ________ risk.
Correct Answer
Currency
Your Answer
Currency
Multiple Choice Multiple Answer
Question
What are the features of Settlement price ?
Correct Answer
Price established by the clearing house at the end of each trading session , It is used to determine the net gain, loss, margin call and next days price limits
Your Answer
Price established by the clearing house at the end of each trading session , It is used to determine the net gain, loss, margin call and next days price limits
Multiple Choice Multiple Answer
Question
What are the activities of ICC?
Correct Answer
Aribtration and dispute resolving , Canvass for open trade combat commercial crime
Your Answer
Aribtration and dispute resolving , Canvass for open trade combat commercial crime , Increased Govt regulation of Business
True/False
Question
Cause of increase in cost of public issues Underwriting fees , selling commission
Correct Answer
True
Your Answer
False
Select The Blank
Question
The currency swaps used ________.
Correct Answer
To lower the risk of currency exposure
Your Answer
To lower the risk of currency exposure
True/False
Question
The Option period in the forward contract is at the option of the Banker, hence the bank has to be very conservative in quoting rates.
Correct Answer
False
Your Answer
True
Multiple Choice Multiple Answer
Question
Which factors affect the exchange rates in short time period?
Correct Answer
Demand and supply, interest rates, inflation, , Sentiment, Speculation
Your Answer
Demand and supply, interest rates, inflation, , Sentiment, Speculation , GDP,Balance of trade and payment,Unemployment
Match The Following
QuestionCorrect Answer
Your Answer
Departure
EXW
EXW
Main carriage paid
CFR
CFR
Main carriage unpaid
FAS
FAS
Arrival
DES
DES
Multiple Choice Multiple Answer
Question
Sterling Market is attractive for an international investor because
Correct Answer
Gilts offer higher attractive margin , Choice of issuing medium term and long term bonds
Your Answer
Gilts offer higher attractive margin , Choice of issuing medium term and long term bonds , Linking of issues to currency swaps
True/False
Question
In red clause credit some clauses are printed in Red ink.
Correct Answer
True
Your Answer
False
Multiple Choice Multiple Answer
Question
Which debits are permitted to EEFC accounts?
Correct Answer
Payment of hotel bills abroad, payment for expenses on Heart operation abroad , Payment to EOUs in India for services rendered by them
Your Answer
Payment of hotel bills abroad, payment for expenses on Heart operation abroad , Payment to EOUs in India for services rendered by them
Multiple Choice Single Answer
Question
Punjab National Bank Mumbai Branch quoted USD 1= Rs 50.5000/52.5050. Which is the bid rate for USD?
Correct Answer
USD 1=Rs 50.5000
Your Answer
USD 1=Rs 50.5000
Multiple Choice Single Answer
Question
Why are various methods of financial analysis used for assessing a cross border project ?
Correct Answer
To weed out unviable projects and rank profitable ones
Your Answer
To weed out unviable projects and rank profitable ones
Multiple Choice Multiple Answer
Question
Criteria for investment abroad under automatic route :-
Correct Answer
Activity for investment is core activity of Indian Company. , Total Financial commitment in JV/WOS as per prescribed ceiling
Your Answer
Activity for investment is core activity of Indian Company. , Total Financial commitment in JV/WOS as per prescribed ceiling
Multiple Choice Multiple Answer
Question
Who can issue the Certificate of Inspection?
Correct Answer
Export Inspection Council , Person authorised by Importer.
Your Answer
Export Inspection Council , Person authorised by Importer.
Multiple Choice Single Answer
Question
Large number of exporters from which country are enjoying the privilege of receiving up front cash from importers in Russia?
Correct Answer
United Kingdom
Your Answer
United Kingdom
True/False
Question
In developed markets, speculators play important role in determining the trend of currency rates.
Correct Answer
True
Your Answer
True
Select The Blank
Question
In US Capital Market a Company prepares all the necessary documents in advance of the public issue under the facility known as ________.
Correct Answer
Shelf Registration
Your Answer
Shelf Registration
Select The Blank
Question
In Overseas market the forward rate is generally quoted on the basis of ________.
Correct Answer
Fixed date
Your Answer
Calendar month
Select The Blank
Question
Forward Margin makes a currency costlier then the currency is at ________.
Correct Answer
Premium
Your Answer
Discount
Multiple Choice Multiple Answer
Question
These are the parties to the documentary credit :-
Correct Answer
Negotiating Bank, advising bank , Reimbursing bank, Confirming bank
Your Answer
Negotiating Bank, advising bank , Reimbursing bank, Confirming bank
Multiple Choice Multiple Answer
Question
What are the functions of Asian Development Bank?
Correct Answer
Give Softloans to poorer countries in Asia , Give project finance from resources raised in world capital market
Your Answer
Give Softloans to poorer countries in Asia , Give project finance from resources raised in world capital market
Multiple Choice Single Answer
Question
Fixed, Floating or Limited flexibility are used in the context of
Correct Answer
Exchange Rates
Your Answer
Exchange Rates
Select The Blank
Question
In mid 1992 ________ rejected the ratification of Maastricht treaty
Correct Answer
Denmark
Your Answer
UK
Multiple Choice Multiple Answer
Question
Under the liberalisation through FEMA, what can an AD offer to the clients, without the prior permission of RBI or Government?
Correct Answer
Hedges, interest rate swaps, currency swaps. , Caps and collars, and forward rate agreements
Your Answer
Hedges, interest rate swaps, currency swaps. , Caps and collars, and forward rate agreements
Question
To whom is an AD required to report the cancellation of forward contracts?
Correct Answer
No one at all.
Your Answer
To Reserve Bank of India, fortnightly
Select The Blank
Multiple Choice Single Answer
International Finance - 2
Multiple Choice Multiple AnswerQuestion
What schemes have been floated by RBI for facilitating Inter bank transactions?
Correct Answer
Clearing house for settlement and clearance for the operations of Ads , Set up a market intelligence cell to study and monitor developments in Forex Market
Your Answer
Clearing house for settlement and clearance for the operations of Ads , Make additional foreign currency available to ADs at cheaper rates
Select The Blank
Question
________ is the agency of ICC which deals with the maritime crime.
Correct Answer
International Maritime Bureau
Your Answer
International Maritime Bureau
Multiple Choice Single Answer
Question
Which of them are special funding facilities of IMF ?
Correct Answer
Buffer Stock Facility
Your Answer
Buffer Stock Facility
True/False
Question
Cross currency forward contract is not meaningful if original contract is in Rupees to USD
Correct Answer
True
Your Answer
True
Multiple Choice Multiple Answer
Question
What does a speculator accept while dealing with an option?
Correct Answer
The exercise or strike price, the amount , The expiration date and time, the method of payment
Your Answer
The exercise or strike price, the amount , The expiration date and time, the method of payment , The Market report of the exchange which trades the option
Multiple Choice Single Answer
Question
Which is the most actively traded currency in the international market today?
Correct Answer
US Dollar
Your Answer
US Dollar
Match The Following
Question
Correct Answer
Your Answer
Intolerable risk
Drop the investment project
Drop the investment project
Country risk analysis
Cost of evluation does not justify analysis
Cost of evluation does not justify analysis
Stock market analysis
Banks are ahead
Factors' values
Weightages %
Factors' values
100% of total
Select The Blank
Question
Global capital market can be understood from the study of ________.
Correct Answer
Yen,Euro Dollar, Swiss Francs, USD market, Govt Borrowings within and outside the country
Your Answer
Yen,Euro Dollar, Swiss Francs, USD market, Govt Borrowings within and outside the country
Multiple Choice Single Answer
Question
For a spot transaction carried out on Thursday, currencies will be exchanged on :-
Correct Answer
Monday
Your Answer
Monday
Multiple Choice Single Answer
Question
Under which category of exchange rate did the Indian Rupee came from June 92?
Correct Answer
Other managed Floating
Your Answer
Pegged to Single currency
Match The Following
QuestionCorrect Answer
Your Answer
Maturity of future
Time when actual commodity is delivered
Last date of exercising option
Note issuance facility
Euronotes
Euronotes
Bearer security issued in currency other than that of the country of issue
Eurobonds
Eurobonds
Margin on future
Peformance bond or security deposit
Peformance bond or security deposit
True/False
Question
Postal receipt is an acknowledgement of receipt of goods, a quasi negotiable instrument.
Correct Answer
False
Your Answer
False
True/False
Question
The Prominent non banking financial institutions participating in the FOREX markets are Pension funds, mutual funds, insurance Cos.
Correct Answer
True
Your Answer
True
Multiple Choice Multiple Answer
Question
What are margins, with reference to futures market?
Correct Answer
Faith money deposited by buyers and sellers ensures liquidity , Margin ensures solvency for honouring contracts
Your Answer
Faith money deposited by buyers and sellers ensures liquidity , Margin ensures solvency for honouring contracts
Multiple Choice Single Answer
Question
What is the volume of the world's average daily transactions in foreign exchange?
Correct Answer
USD 1 trillion
Your Answer
USD 1 trillion
Multiple Choice Single Answer
Question
NIF is basically an agreement :-
Correct Answer
By underwriting bank to support funding for a certain period, against which borrowers can issue short term papers
Your Answer
Which enables the investor to market the same in the secondary market
Multiple Choice Single Answer
Question
What was the official foreign currency reserve of the group of seven central Banks taken togeather in mid 1992?
Correct Answer
USD 275 Billion
Your Answer
USD 275 Billion
Multiple Choice Single Answer
Question
What Preshipment facility is granted by EXIM Bank to an exporter?
Correct Answer
Preshipment credit beyond six months for construction and turnkey projects abroad
Your Answer
Preshipment credit up to six months for construction and turnkey projects abroad
Select The Blank
Question
Over the years ________has been the most widely accepted currency in international capital market.
Correct Answer
American Dollar
Your Answer
American Dollar
Select The Blank
Question
As a result of the world wars in the 20th century the ________ of most of the countries suffered heavily.
Correct Answer
Economies
Your Answer
Currencies
Multiple Choice Single Answer
Question
Which currency is traded in one leg of about 70% of the world's transactions?
Correct Answer
US Dollar
Your Answer
US Dollar
Select The Blank
Question
________ is the acid test for events to be included in country risk.
Correct Answer
Control by Government'
Your Answer
Recurrence
Select The Blank
Question
The Trans European Automated Real Time Gross Settlement Express Transfer is popular in ________.
Correct Answer
Brussels
Your Answer
Brussels
Multiple Choice Single Answer
Question
What is Risk Syndication facility?
Correct Answer
Sharing of risk of non payment by supplier
Your Answer
Sharing risk of Non payment by the Syndicate of Banks giving loans
True/False
Question
If ERD > IRD hen exporter should availa Rupee finance
Correct Answer
True
Your Answer
True
Multiple Choice Multiple Answer
Question
The characteristics of an International documentary credit are :-
Correct Answer
It is an undertaking given by the openers bank to pay certain sum of money , It is an undertaking given on behalf of a certain person to another person in different country
Your Answer
It is an undertaking given by the openers bank to pay certain sum of money , It is an undertaking given on behalf of a certain person to another person in different country
Multiple Choice Multiple Answer
Question
Which debits are permitted to EEFC accounts?
Correct Answer
Payment of hotel bills abroad, payment for expenses on Heart operation abroad , Payment to EOUs in India for services rendered by them
Your Answer
Payment of hotel bills abroad, payment for expenses on Heart operation abroad , Payment to EOUs in India for services rendered by them
True/False
Question
Funding Options in domestic yen market are Futures, FRAs, Call and put options.
Correct Answer
True
Your Answer
True
True/False
Question
There is no difference between CIP and CIF contracts except the mode of transportation.
Correct Answer
True
Your Answer
True
Multiple Choice Single Answer
Question
Financial management is complex process for
Correct Answer
Companies which have international trade
Your Answer
Companies which have international trade
Select The Blank Question
When an Indian Company earns at least 50% of its average turnover from a particular activity then that activity is considered as ________.
Correct Answer
Core activity
Your Answer
Primary activity
Select The Blank
Question
A Credit can be a confirmed credit only if it is also ________.
Correct Answer
An Irrevocable credit
Your Answer
An Irrevocable credit
True/False
Question
The volume of trading of Derivatives in the world trade market is growing but still only 5% of the total.
Correct Answer
False
Your Answer
False
Multiple Choice Single Answer
Question
Punjab National Bank Mumbai Branch quoted USD 1= Rs 50.5000/52.5050. Which is the offered rate for Rs?
Correct Answer
USD 1=Rs 50.5000
Your Answer
USD 1=Rs 50.5000
Multiple Choice Multiple Answer
Question
Export finance
Correct Answer
Preshipment credit , Post shipment credit , Duty Draw back
Your Answer
Preshipment credit , Post shipment credit , Buyers credit
Multiple Choice Multiple Answer
Question
Internationally only those currencies are in demand
Correct Answer
Which are convertible , Which have liquidity confirmed in Euro market operations
Your Answer
Which are convertible , Which have liquidity confirmed in Euro market operations , Which have greater intrinsic value
Multiple Choice Multiple Answer
Question
What are the functions of Asian Development Bank?
Correct Answer
Give Softloans to poorer countries in Asia , Give project finance from resources raised in world capital market
Your Answer
Give Softloans to poorer countries in Asia , Give project finance from resources raised in world capital market
Multiple Choice Multiple Answer
Question
What does the word '"Tombstone" stand for?
Correct Answer
Advertisement which lists the managers, underwriters, , List of Providers of recently floated issue
Your Answer
Advertisement which lists the managers, underwriters, , List of Providers of recently floated issue
Select The Blank
Question
Short term instruments normally issued by corporate borrowers, forhigh values, at a discount to face value are known as ________.
Correct Answer
Euro Commercial Papers
Your Answer
Euro Commercial Papers
Multiple Choice Single Answer
Question
Why are various methods of financial analysis used for assessing a cross border project ?
Correct Answer
To weed out unviable projects and rank profitable ones
Your Answer
To weed out unviable projects and rank profitable ones
Multiple Choice Single Answer
Question
Examples of hedge are:
Correct Answer
Buy when you are having short position
Your Answer
Buy when you are having short position
Multiple Choice Multiple Answer
Question
What is the effect of cross currency option on the customer?
Correct Answer
He gets the flexibility to exposure , He is exposed to additional risk of movement of rates between 3 currencies
Your Answer
He gets the flexibility to exposure , He is exposed to additional risk of movement of rates between 3 currencies
Select The Blank
Question
Forward margin makes a currency cheaper then the currency is at ________.
Correct Answer
Discount
Your Answer
Discount
Multiple Choice Single Answer
Question
Why does a person need protection from unfavourable movement of exchange rate?
Correct Answer
Unfavourable fluctuations in exchange rate can wipe out the normal business profit
Your Answer
Unfavourable fluctuations in exchange rate can wipe out the normal business profit
Multiple Choice Single Answer
Question
The capital market is said to be volatile when
Correct Answer
Prices of capital market instruments change and are expected to change drastically
Your Answer
Prices of capital market instruments change and are expected to change drastically
True/False
Question
JV means Joint venture and WOS means World of Security.
Correct Answer
False
Your Answer
False
Multiple Choice Multiple Answer
Question
What is the criteria for an Indian Company for Direct Investment abroad?
Correct Answer
Activity proposed need to be core activity , Financial commitment in JV/WOS maximum $ 100 million or equivalent
Your Answer
Activity proposed need to be core activity , Financial commitment in JV/WOS maximum $ 100 million or equivalent , Indian co should not have been black listed
Friday, January 25, 2008
International Finance - 1
Multiple Choice Multiple Answer QuestionWhat are the categories of exposures, a person faces in International trade?
Correct Answer
Transaction exposure , Translation exposure
Your Answer
Transaction exposure , Exchange rate fluctuation , Political changes
Multiple Choice Multiple Answer Question
The factors which affect the performance of an option are:-
Correct Answer
Underlying asset price , Time before expiration, rate of interest
Your Answer
Underlying asset price , Time before expiration, rate of interest
Select The Blank
Question
The option which can be exercised on the maturity date and not before it is known as________.
Correct Answer
European Option
Your Answer
European Option
Multiple Choice Single Answer
Question
What are the powers of restricted money changers?
Correct Answer
Purchase foreign currencies
Your Answer
Purchase and sell foreign currency notes and travellers cheques
Multiple Choice Multiple Answer Question
Which contracts are used for transportation by road?
Correct Answer
FCA , CPT
Your Answer
FCA , CPT
Multiple Choice Multiple Answer
Question
The World Bank Group Consists of
Correct Answer
International Development Association , International finance Corporation , Multinational Investment Guarantee Agency
True/False
Question
Naked position is when investor does not hedge against market risk.
Correct Answer
True
Your Answer
TRUE
Multiple Choice Multiple Answer
Question
In DAF, the frontier means :-
Correct Answer
Frontier of exporter's country , Frontier of importer's country
Multiple Choice Single Answer
Question
Which type of Convertibility of Rupee launched in March 1992 ?
Correct Answer
Limited convertibility
Your Answer
Convertibility on current account
Multiple Choice Single Answer
Question
What was the reason for launching swap as an risk hedging instrument?
Correct Answer
To avoid the effects of currency control imposed in UK
Your Answer
To avoid the effects of currency control imposed in UK
Multiple Choice Single Answer
Question
Equity can be raised internationallly by a company through :-
Correct Answer
Fund raising, underwriting, hedging , arbitration operations
Your Answer
Floating debt instruments
True/False
Question
In forward sales, the delivery refers to actual cash flows on due date.
Correct Answer
True
Select The Blank
Question
Any company involved in foreign exchange transactions is exposed to ________ risk.
Correct Answer
Currency
Your Answer
Payment
True/False
Question
An AD can book a forward contract for a part of the amount of Sale Contract
Correct Answer
True
Multiple Choice Single Answer
Question
Why does a person need protection from unfavourable movement of exchange rate?
Correct Answer
Unfavourable fluctuations in exchange rate can wipe out the normal business profit
Your Answer
He wants to make profit
Match The Following
Question
Correct Answer
Your Answer
Merchant banking
Portfolio management
Portfolio management
Securitization
Issue of debt in the form of tradeable security
Issue of debt in the form of tradeable security
Prime borrower
Highest credit rating
Highest credit rating
Traditional banking service
Loans and cash credit against security
Loans and cash credit against security
Multiple Choice Multiple Answer
Question
What are the activities of ICC?
Correct Answer
Aribtration and dispute resolving , Canvass for open trade combat commercial crime
Your Answer
Aribtration and dispute resolving , Canvass for open trade combat commercial crime
Multiple Choice Multiple Answer
Question
Which factors influence the valuation of cash flows?
Correct Answer
Incomplete capital market , Availability of projkect specific concessional finance,
Your Answer
Incomplete capital market , Rates of inflation, , volatility of exchange rates
Multiple Choice Multiple Answer
Question
What is the objective of FEDAI?
Correct Answer
Laying down terms and conditions of exchange business between Customers and Bankers , Interbank understanding for transacting forex business and exchange rates
Your Answer
Laying down terms and conditions of exchange business between Customers and Bankers , Growth of Indian Exports , Ensure the profitability of Forex business to the banks
Question
Forward margin makes a currency cheaper then the currency is at ________.
Correct Answer
Discount
Your Answer
PAR
Match The Following
Question
Correct Answer
Your Answer
Intolerable risk
Drop the investment project
Cost of evluation does not justify analysis
Country risk analysis
Cost of evluation does not justify analysis
Continue the project
Stock market analysis
Banks are ahead
Banks are ahead
Weightages %
Factors' values
Factors' values
Multiple Choice Single Answer
Question
A bill of exchange issued by a bank which pays specified sum of money to the holder on a specific date is called :-
Correct Answer
Bankers' Acceptance Bond
Your Answer
Usance Bill of Exchange
Multiple Choice Single Answer
Question
In the syndicated loan arrangement the borrower has to execute :-
Correct Answer
Single Principal loan agreement
Your Answer
Single Principal loan agreement
Select The Blank
Question
Rupee was liberalised on ________ account in 1993, and on current account in 1994.
Correct Answer
Trade
Your Answer
Capital
Select The Blank
Question
Indian Co. intending to make investment under Automatic route needs to submit form ________ to RBI with enclosures.
Correct Answer
ODA
Your Answer
ODA
Multiple Choice Multiple Answer
Question
A Forward purchase contract was booked with an authorised dealer and subsequently cancelled .It :-
Correct Answer
Can be booked again with another dealer , Can be booked again with the same dealer
Your Answer
Can be booked again with another dealer , Can be booked again with the same dealer , Can be booked only for un booked portion of the contract.
Select The Blank Question
The ________is a Floating rate index for swaps.
Correct Answer
US Commercial paper rate
Your Answer
US Commercial paper rate
Question
ECGC provides cover to an Indian contractor for construction work abroad under ________.
Correct Answer
Construction works policy
Your Answer
Export Performance Guarantee
True/False
Question
The Negotiating bank examines the documents submitted by the seller and makes payment if they comply the terms and conditions of the LC.
Correct Answer
True
Your Answer
True
Multiple Choice Single Answer
Question
What was the official foreign currency reserve of the group of seven central Banks taken togeather in mid 1992?
Correct Answer
USD 275 Billion
Your Answer
USD 275 Billion
Multiple Choice Multiple Answer
Question
What are the sources of raising funds for exports?
Correct Answer
Suppliers credit , Forfaiting
Your Answer
Suppliers credit , Forfaiting
Select The Blank
Question
Forward margin makes a currency cheaper then the currency is at ________.
Correct Answer
Discount
Your Answer
Discount
Multiple Choice Single Answer
Question
Name the common forex derivatives :-
Correct Answer
Options, futures
Your Answer
Options, futures
True/False
Question
Country risk analysis is a futile exercise in the background of cost of analysis.
Correct Answer
True
Your Answer
False
Select The Blank
Question
Even after liberalisation of exchange controls, the Euro sterling market remained volatile because of uncertainties in UK and gyrations of sterling against major ________ countries
Correct Answer
OECD
Your Answer
OECD
Match The Following
Question
Correct Answer
Your Answer
Issues linked with LIBOR,LIBID,LIMEAN
FRNs
FRNs
Issue of bonds without fixed rate of interest, linked to short term interest rate in the global market
FloatingRate Note
FloatingRate Note
Issue of loans internationally,through arranger, underwriter,co manager, for a large amount for sharing risk of lending
Syndicated Loans
Syndicated Loans
Equity issues in the foreign markets either as direct investments or portfolio investments.
American or Global Depository Receipts
American or Global Depository Receipts
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