questionn

questiontext A
ame

Unit 1.1 The Buyer's home

The currency used to buy imported goods is?
currency
Unit 1.2 Export of goods is called trade in; Visible goods
Unit 1.3 Which one of the following is the SDR given by the IMF to its
Cold Money
member countries?

Of 1879 created a gold

Unit 1.4 The Bretton Woods Accord; standard as the basis
of international finance

Unit 1.5 It helps countries to meet deficit in BOP.; World Bank

a nation’s currency can
be traded for gold at a
Unit 1.6 fixed rate and
Under a gold standard;
monetary authority has
absolute control for
monetary supply

Unit 1.7 Under the Bretton woods system, the us dollar was pegged to
30 $ per ounce
gold at;

Unit 1.8 Dumping refers to; Reducing tariffs

Unit 1.9 Visible items

What is unilateral transfer in BOP?

Unit 1.10 International finance is concerned with; Exchange rates of

currencies and SLR

Unit 1.11 Market in which currencies buy and sell and their prices settle on International bond
is called the; market
The futures market is
mainly used by
Unit 1.12 Which of the following is true of foreign exchange market? hedgers while the
forward market is
mainly used for
speculating

Unit 1.13 Foreign currency forward market is; An over the counter
unorganized market

the short-run
tendencies between
Unit 1.14 The Purchasing Power Parity (PPP) theory is a good predictor changes in the price
of;
level and the exchange
rate of two countries

Unit 1.15 The forward market is especially well-suited to offer Translation risk
hedging protection against; exposure
 the same goods must
Unit 1.16 Interest-rate parity refers to the concept that, where market sell for the same price
imperfections are few,
across countries

Unit 1.17 Under fixed exchange rate system , the currency rate in the Rationing of foreign
market is maintained through; exchange

Unit 1.18 Foreign exchange market is considered as "24 hours’ market It is open all through
because; the day

Unit 1.19 The statutory basis for administration of foreign exchange in Foreign Exchange
India is? Regulation Act, 1973

Unit 1.20 Reserve Bank of India

Who maintains the foreign exchange reserves in India ?

Unit 2.1 Interest rates are at

Which one of the following is implied by interest rate parity?
par in all the countries.

Funds Flow, BOP, Current A/c, Capital Account, Excha

Dividends from a
Unit 2.2 Which of the following is a legitimate reason for foreign subsidiary are
international investment? tax exempt in the
United States.
the value of all
Unit 2.3 By definition, currency appreciation occurs when; currencies fall relative
to gold
Unit 2.4 The date of settlement for a foreign exchange transaction is
Clearing date
referred to as:
Unit 2.5 Operating Exposure
The impact of foreign exchange rate on firm is called as;
Unit 2.6 An over the counter
Foreign currency forward market is;
unorganized market

Unit 2.7 Exchange rates; are always fixed

 Earns illegal profit by
Unit 2.8 An arbitrageur in foreign exchange is a person who; manipulating foreign
exchange

buys foreign currency,

hoping to profit by
Unit 2.9 A speculator in foreign exchange is a person who; selling it a a higher
exchange rate at some
later date
Unit 2.10 Ask quote is for; Seller

Unit 2.11 If your local currency is in variable form and foreign Indirect
currency is in fixed form the quotation will be;
Unit 2.12 Globalisation is essentially a phenomenon of which nature; legal

Unit 2.13 When all components of the BoP accounts are included with no one
overall surplus or deficit, the total must be;
Unit 2.14 The BoP account that marks the inflow and outflow of capital
goods and services into a country is;
Unit 2.15 1972
The European Monetary Cooperation Fund was created in;
Unit 2.16 To find the Spread, what is subtracted from the Ask rate; forward rate

Unit 2.17 The price of a foreign currency is known as the foreign rate
exchange;
Unit 2.18 To finance government expenditure is the fundamental objective; real estate

Unit 2.19 Capital budgeting is also referred to as; cash inflow

Unit 2.20 For any enterprise be it large or small which of the following is capital budgeting
considered as a lubricant;

Forex Ma
Unit 3.1 When credits are more and debits are less, it will be treated as a
Deficit
current account;
Unit 3.2 Fixed exchange rate system is also known as which
Pegged
exchange rate?
Unit 3.3 Foreign Existence
FERA stands for;
Regulation Act
Unit 3.4 Maximum privacy for individuals and corporations are provided
Offshore tax
by these;
Unit 3.5 The foreign exchange reserves in India are maintained by; State Bank of India

Unit 3.6 The responsibility for administration of of FEMA is vested with; Central government

Unit 3.7 The foreign direct investment includes; tangible good

Unit 3.8 Who determines foreign exchange rates in India? RBI

Unit 3.9 The statutory authority which administers the exchange control
RBI
in India is;
Unit 3.10 The primary component of the current account is the; balance of trade

Unit 3.11 Type of risk in which value of liabilities and assets is affected by economic rates
exchange rate is classified as;

Unit 3.12 Which of the following statements is correct with respect to the It is convertible on
convertibility of Indian rupee? capital account

Unit 3.13 Rules and guidelines for Forex Business in India are defined RBI
by;
Unit 3.14 The managed floating exchange system was established in; 1969

Unit 3.15 One of the export payment method is; Bill of Lading

Unit 3.16 Safest method of payment when credit worthiness of buyer is not Payment in Advance
known is;
Unit 3.17 Letter of credit is issued by; Exporter

Unit 3.18 Initial payment to the exporter after receiving the documents is Confirming Bank
made by;
Unit 3.19 Party involved in opening letter of credit is; Custom Authority
Unit 3.20 Barter, Switch Trading, Buy Back, Off Set are types of; Insurance

International Trade Settlem

Unit 4.1 exchange rate

The International Monetary System does not consists of;
arrangements

Unit 4.2 Goods and services are exchanged for other goods or
services in;
Documentary bills

Unit 4.3 an advance made for

Packing credit is;
promotional activities

Unit 4.4 Commercial bank can provide pre-shipment finance for a period
of maximum how many days?
90
Unit 4.5 Capital provided by Pre-shipment finance is; static
Unit 4.6 Exporter can obtain Post shipment finance at which stage of the
shipment of goods?
throughout

Unit 4.7 The working capital requirement of exporter after shipment of

Pre-shipment Finance
goods are met through;

Unit 4.8 proceeds of export

Post shipment finance is expected to be repaid from ;
bill
Unit 4.9 Cash Packing credit
Form of post shipment finance is one of the following;
loan

Unit 4.10 ECGC functions under administrative control of; Ministry of

Commerce

Unit 4.11 Packing credit is also called as; Pre-shipment

finance
Unit 4.12 Entity that collects export proceeds from importer and credits it RBI
to exporter’s account is;
Unit 4.13 Finance to small and micro enterprises is provided by; EPCG

Unit 4.14 If export cargo is lost in transit the exporter should; claim with ECGC

Unit 4.15 EXIM bank lending to foreign government is ;; commercial loan

Unit 4.16 An exporter can avail from EXIM Bank. Which of the following short term loans
facility?
banks providing
Unit 4.17 Export finance guarantee of ECGC protects; foreign currency loan
to exporter

Unit 4.18 Commercial and political risks in export is covered by; ECGC

Unit 4.19 Commercial risks include; Insolvency of

buyer

Unit 4.20 Exporters are protected against bad debts in export trade EPCG
through;
FOREX Market
Unit 5.1 traded on futures
A currency future is not;
exchanges
Unit 5.2 The external methods of hedging transaction exposure does not
forward contract hedge
include;

Unit 5.3 The cost of hedging through options includes; forward premium

Unit 5.4 entering into forward

Foreign currency exposure can be avoided by;
contracts

Unit 5.5 advancing of

Leading refers to;
receivable

Unit 5.6 a loss to the parent

Translation loss is;
company
Unit 5.7 changes in real
Economic exposure does not deal with;
exchange rates
Unit 5.8 The exchange rates quoted by an authorised dealer to its
authorised rates
customers are known as-
Unit 5.9 interbank spot buying
Buying rate for ready merchant rate is derived from-
rate

Unit 5.10 In calculating cross rates, exchange margin is entered; only once in the
dollar/rupee rate

Unit 5.11 For calculating cross currency rates, banks in India use the Mumbai
dollar/foreign currency rate quoted in;

Unit 5.12 For option forward purchase transactions the forward premium based on earliest
will be reckoned; delivery date

Unit 5.13 Foreign Exchange Management Act Passed int he year; 1995

Unit 5.14 Euro was launched on; 1999

Unit 5.15 In India exchange rates for foreign currencies other than US TT buying rate
dollar are calculated as;
Unit 5.16 FEDAI was established in; 1956
Unit 5.17 The current account of balance of payments includes; unilateral payments

Unit 5.18 Basic balance in balance of payments refers to; Balance of Payments

the balance of
Unit 5.19 The balance of payments on current account; payments on current
account

Unit 5.20 remittance is received

TT buying rate is applicable for transactions where;
by telecommunicaton

If one of the segment of an enterprise claims tax holiday , the

Unit 6.1 purpose of transfer pricing is to ensure that the profit such Overstated
segment is not;
Unit 6.2 The amount charged when one business unit sells goods or
an opportunity cost.
services to another business unit is called;
Unit 6.3 In which of the following system of taxation, the tax rate
Progressive Taxation
decreases as the taxable amount increases?
Unit 6.4 What kind of income taxation system is present in India among
Progressive Taxation
the following?
Unit 6.5 The type of income tax levied on the gains after sale of
Capital Gains Tax
investment or property is called as:
Unit 6.6 Income Tax is imposed by; State Government
Unit 6.7 The values of the future net incomes discounted by the cost
Average capital cost
of capital are called;
 The Internal Rate of Return criterion for project acceptance,
Unit 6.8 IRR equal to the cost
under theoretically infinite funds is, Accept all projects
of capital
which have?
Unit 6.9 When choosing among mutually exclusive projects, the project Longest payback is
with; preferred
Unit 6.10 Lower standard deviation indicates; lower risk

Unit 6.11 FDI is the formulation policy of which nodal department? NABARD

According to India’s FDI policy, 100 percent FDI in equity via the
Unit 6.12 automatic method is not permitted in which of the following Maintenance and
repair organization
areas?

Unit 6.13 Foreign direct investment increase can help; Circulation of money

Unit 6.14 The foreign direct investment includes; Tangible Good

Unit 6.15 When a country is specialized in particular good and then trade Interdependence
with other countries is called;
Unit 6.16 The relationship between the exchange rate and the prices of purchasing power
tradable goods is known as the ? parity theory
If the importer refuses to accept the bill drawn on him the
Unit 6.17 exporter depending upon commercial expediency. sue the should reimport the
goods
importer;

Unit 6.18 Commercial risks include; risks due to war

Unit 6.19 Which among the following is not a type of LC ? Advance payment

Unit 6.20 The problem of non-execution of orders is associated with; Open Account
 B C D Answer

The seller’s home The currency of a third

Special drawing rights A
currency country
Basic goods Invisible goods Non- real goods A
Hot money Paper Money Metal Money C

Of 1914 formulated a Of 1944 formulated a

new international new international Of 1844 created a coin
monetary system after monetary system after standard as the basis C
the collapse of gold the collapse of gold of international finance
standard standard
WTO IMF UNO C

a nation’s central bank

new discoveries of gold gold has no impact and
or monetary authority
have no effect on the monetary authority A
has absolute control
money supply or prices has incidental control
over its money supply

35$ per ounce 25$ per ounce 25$ per ounce B

Sale of goods abroad Buying goods at low Buying goods at low

at low a price, below prices abroad and prices abroad and
B
their cost and price in selling at higher prices selling at higher prices
home market locally locally
Income receipts &
Invisible items Gifts C
payments
Exchange rate of
Monetary policies of
Foreign Borrowings curriencies, Monetary D
the world
Systems and FDI
International capital Foreign exchange
Eurocurrency market C
market market
The futures market is
The futures market and mainly used by The futures market and
the forward market are speculators while the the forward market are
C
mainly used for forward market is mainly used for
hedging mainly used for speculating
hedging
Organized market Organized listed Unorganized listed
A
without trading market market
interest rate
CRR rate differentials
the long-run differentials between
between two countries
tendencies between two countries when
when there are strong
changes in the price there are strong B
barriers preventing
level and the exchange barriers preventing
trade between the two
rate of two countries trade between the two
countries
countries
Transaction risk
Political risk exposure Taxation B
exposure
 there is an offsetting
relationship between there is an offsetting
interest rates across
interest rate relationship provided
countries will
differentials and by costs and revenues C
eventually be the
differentials in the in similar market
same.
forward spot Environments
exchange market

Centralising all foreign Infusion of liquid

Official intervention B
exchange operations currency

Due to geographical
All transactions are to Minimum 24 hours
dispersal at least one
be settled within 24 must lapse before any C
market is active at any
hours transaction is settled
point of time
Conservation of
Foreign Exchange
Exchange control Foreign Exchange &
Management Act , B
Manual prevention of
1999
Smuggling Act
Ministry of Finance, Export-Import Bank of
State Bank of India A
Government of India India
A condition that the
Potential holders of
Movements in spot expected returns on
foreign currency
rates and forward rates deposits in any two
deposits do not view D
in the foreign exchange countries are equal
these deposits as a
market are same. when measured in
desirable asset
the same currency
ital Account, Exchange Rate Systems
There are possible International
Most governments do
benefits from investments have less
not tax foreign C
international political risk than
corporations
diversification domestic investments
the value of all the value of one the value of one
currencies rise relative currency rises relative currency falls relative C
to gold to another currency to another currency
Swap date Maturity date Transaction date D

Transaction exposure Translation exposure Business risk A

Organized market Organized listed Unorganized listed
A
without trading market market
fluctuate to equate the
quantity of foreign fluctuate to equate
fluctuate to equate
exchange demanded rates of interest in B
imports and exports
with the quantity various countries
supplied
 Simultaneously buys
causes differences in Buys large amounts of
large amounts of a
exchange rates in a currency in one
currency in one C
different geographic market and sell it in
market and sell it in
markets same market
another market

causes differences in
Earns illegal profit by makes speculation and
exchange rates in
manipulation foreign earns ptofits and A
different geographic
exchange incurrs losses
markets

Buyer Hedger Speculator A

Direct Local form Foreign form B

ethical economic social C

two three zero D

current reserve surplus B

1980 1987 1976 A

spot rate bid futures C

market management finance A

retirement . Insurance taxation D

capital investment
project review business proposal B
appraisal
working capital venture capital capital B

Forex Market
Profit Loss Surplus B

Flexible Brett Fluctuating A

Foreign Exchange For Exercise Foreign Exercise
B
Regulation Act Regulation Act Regulation Act
Onshore Tax Europe tax American tax D
Finance Ministry of
Reserve Bank of India EXIM India B
India
State government RBI National banks C

intangible good intellectual property human resources A

market forces of finance ministry of

FEDAI C
demand and supply India
 ministry of commerce DGFT FEDA A
balance of money balance of capital
unilateral transfer A
market flows market flows
foreign exchange risk selling rate buying rates B
It is convertible both
It is convertible on
on current and capital It is not convertible B
current account
account
SEBI IRDA FEDAI D

1973 1976 1979 B

Payment against Cheque

Consular Invoice shipment on C
consignment
Documents against Deferred Credit
Open Account A
Acceptance Payment
C&F agent
Importer Importer’s bank C

Advising Bank Negotiating Bank Payment Bank C

Negotiating bank DGFT RBI B

Promotion Financing Counter trade D

tional Trade Settlement

a collection of
institutions, rules and
capital flows agents and brokers D
conventions that
govern its operations
Deferred Credit
Letter of Credit Countertrade D
Payment
an advance to meet
a priority sector an advance to
working capital need B
advance importer
of exporters
180 270 360 C

fixed working floating C

after before during B

Post-shipment
Packing Credit Deferred Credit B
Finance
loan from financial
personal loan local funds A
institutions
 Advance against Advance against Export bills
D
hypothecation pledge negotiated under LC

FICCI FIEO IPTO A

BRS Forfaiting Buyback A

Custom Authority C& F Agents Commercial Bank D

ECGC EXIM SIDBI D

claim under marine seek write off of seek refund of

B
insurance shipment credit custom duty

soft loan line of credit deferred loan C

medium and long protection against

insurance C
term loans bad debts
banks providing overseas branches overseas branches
foreign currency loan providing finance to providing finance to A
to C&F agent Indian exporter Indian importer

EXIM Bank SIDBI RBI A

risks due to imposition of

Risks due to war or insolvency of restriction on
A
civil disturbance cancellation of import remittances by
license importer’s country

ECGC FIEO FICCI B

FOREX Market
a special type of
of standard size available in India
forward contract D
money market hedge cross hedging futures hedging
C

option premium and

differences between
interest on option futures cost and
option price and spot
premium till due premium
price.
date of the contract
B
denominating the
use of foreign
transaction in exposure netting B
currency
domestic currency
advancing payments advancing of
advancing of payable either receivables or receivables and
payables delaying of payables C
a loss to the
a notional loss loss to the group
subsidiary company C
future cash flows of expected exchange
none of the above
the firm rate changes C
commercial rates merchant rates indirect rates
C
interbank ready interbank spot selling interbank ready
buying rate rate exchange rate A
twice in the
only once in the twice in the
dollar/rupee rate and
dollar/foreign dollar/rupee rate and A
dollar/foreign
currency rate dollar/foreign
currency rate
any international
London New York or Paris
market D
based on latest based on the average based on the future
delivery date due date for delivery date for delivery
A
1997 1999 2001 C
2000 2002 2004
A
Cross rates TT sellling rate Bill sellling rate
B
1957 1958 1960 C
portfolio investments short term borrowings long term borrowings
A
Current Account Balance of Trade Capital Account C

the total of balance

the combined of current account
the balance in official
balance of current and balances on D
reserves account
and capital accounts long term items in
capital account.
the nostro account of the nostro account of
remittance is sent by
the bank is already the bank is already D
telecommunication
debited credited

Understated Estimated Presented A

a standard variable
a transfer price. a residual price B
cost.
Regressive Taxation Degressive Taxation Proportional Taxation B

Regressive Taxation Degressive Taxation Proportional Taxation C

Securities
Sales Tax Wealth Tax A
Transaction Tax
Central Government Both of the above Constitution of India D
Discounted capital
Net capital cost Net present values D
cost
IRR greater than the IRR less than the Minimum IRR so that
B
cost of capital cost of capital the cost is constant
Higher NPV get Quickest payback is Lower cost of capital
C
selected preferred will be selected
highly favorable
higher risk no risk at all A
situation

Department for
SEBI promotion of industry RBI C
and internal trade

Private security Construction

Industrial Park B
agencies development project

Unemployment Supply of goods Employment D

Intangible Goods Intellectual Property Human Resource A

Dependence Agreement Correlation A

balance of payments
asset markets theory monetary theory A
theory
the option of re-
must find an may reimport or sell
export should be C
alternate buyer to an alternate buyer
explored

insolvency of the risks due cancellation

event of fire B
buyer of import licence

Revocable Confirmed Transferable LC A

Documents against
Letter of Credit Advance Payment C
payment