Deck 3: Foreign Exchange and Capital Markets

Question 1

Among the following items which does NOT represent the Application of Funds?

A)Payment of Interim Dividend
B)Payment of Supervisor's Salary
C)Issue of Share Capital
D)Payment of Taxes

Answer 1

Issue of Share Capital

Question 2

Until February 1973, which one of the following was prevalent in World Monetary System?

A)Free Floating Exchange Rate System
B)Adjustable Peg Exchange Rate System
C)Bench marking Exchange Rate System
D)None of the above

Answer 2

Adjustable Peg Exchange Rate System

Question 3

Which one of the following is NOT referred to as 'Major' or 'Hard' Currency?

A)US Dollar
B)French Frank
C)Euro
D)India Rupee

Answer 3

India Rupee

Question 4

Rs. 75.17/USD is which type of quotation?

A)Indirect Quote
B)Direct Quote
C)Bilateral Quote
D)Cross Quote

Question 5

In a two way foreign exchange quotation, the difference between ask and bid prices is called ____________.

A)Difference
B)Margin
C)Spread
D)None of the above

Question 6

Below data is available: Spot Exchange Rate 6 Month's Forward Rate Rs./USD 75.17 Rs. 75.00 So, the forward rate is at ___________________

A)Premium
B)Discount
C)At Par
D)None of the above

Question 7

From the data given below which option is true? Spot 1 month's Forward Rs./GBP 94.85 94.95

A)1 month's forward is at 1.27% premium
B)1 month's forward is at 0.11% premium
C)1 month's forward is at 1.27% discount
D)1 month's forward is at 0.11% discount

Question 8

The rate of exchange of two currencies on the basis of exchange quotes of other pairs of currencies are derived when a quote of home currency (or desired currency) to any other currency is not available in the Foreign Exchange market is called ____________.

A)Direct Quote
B)Exchange Rate
C)Cross Rate
D)Dependent Rate

Question 9

Which of the below mentioned contract is a standardized contract?

A)Futures Contract
B)Forward Contract
C)Both a and b
D)None of the above

Question 10

An Option which can be exercised only on the maturity date is known as __________.

A)Put Option
B)American Option
C)European Option
D)Call Option

Question 11

There is a close link between the interest rates in two countries and the forward rate premium or discount. The theory about this is :

A)Purchasing Power Parity
B)Expectations Theory
C)Covered Interest Arbitrage and interest Rate Parity
D)None of the above.

Question 12

According to Fisher effect, the nominal rate is equal to the real interest rate plus an adjustment for ______________

A)FD Rate
B)Spot Rate
C)Inflation
D)Premium

Question 13

The acquisition of existing firms or plants as a means of FDI is called ___________.

A)Green Field Investments
B)Dark Zone Investments
C)Growing Zone Investments
D)Brown Field Investments

Question 14

McDonald's purchasing farms in India to grow potatoes is which type of FDI?

A)Green Field
B)Agriculture
C)Vertical
D)Horizontal

Question 15

When an American Company acquires a division or unit of Indian company, the US is said to be a ______________ Country.

A)Sending
B)Receiving
C)Promoting
D)None of the above

Question 16

An act of buying currency in one market at a lower price and selling it in another at higher price resulting in equilibrium in exchange rates of different currencies is called _________________.

A)Hedging
B)Speculation
C)Trading
D)Arbitrage

Question 17

Which of these are considered as nerve centres of foreign exchange activity.

A)London, New York and Tokyo
B)London, New Jersey and Mumbai
C)London, New York and Moscow
D)London, New York and Delhi

Question 18

Who are key participants of Foreign Exchange Market?

A)Importers & Exporters
B)Traders and Foreign Exchange Brokers
C)Speculators
D)All of the above

Question 19

When the exposed position in a foreign currency is covered through borrowing or lending in the money market, it is called ______________.

A)Borrowing-Lending technique
B)Futures Contract
C)Currency Swap
D)Money Market Hedge

Question 20

An efficient Capital Market provides operational efficiency through…

A)Simplified transaction procedure
B)Lowering settlement timings
C)Lowering transaction costs
D)All of the above

Question 21

Full form of WDM segment is ………..

A)Wholesale Debt Market
B)Wholesale Debenture Market
C)Wholesale Demand Management
D)Wholesale Deposit Market

Question 22

A facility of carrying forward the transaction from one settlement to another in BSE was called _______

A)Carry forward
B)Badla
C)Vayda
D)Forward

Question 23

For Book Building Process a merchant banker is appointed as a __________

A)Book Keeper
B)Book Writer
C)Book Runner
D)None of the Above

Question 24

Which one of the below is NOT a category of participant in the Primary Capital Market?

A)Issuers of securities
B)Investors in securities.
C)Traders of securities
D)Intermediaries

Question 25

Which of the below financial product / instrument cab be traded in the secondary market?

A)Equity Shares
B)Commercial Paper
C)Bonds
D)All of the above