Question 1

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

Accepted Answer

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

Question 2

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

Accepted Answer

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

Question 3

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

Accepted Answer

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

Question 4

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

Accepted Answer

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

Question 5

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 ___________________

Accepted Answer

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

Question 6

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

Accepted Answer

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

Question 7

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 _________________.

Accepted Answer

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

Question 8

An efficient Capital Market provides operational efficiency through…

Accepted Answer

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

Question 9

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

Accepted Answer

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

Question 10

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

Accepted Answer

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

Question 11

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

Accepted Answer

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

Question 12

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

Accepted Answer

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

Question 13

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 ____________.

Accepted Answer

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

Question 14

Which of the below mentioned contract is a standardized contract?

Accepted Answer

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

Question 15

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

Accepted Answer

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

Question 16

Full form of WDM segment is ………..

Accepted Answer

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

Question 17

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

Accepted Answer

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 18

Rs. 75.17/USD is which type of quotation?

Accepted Answer

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

Question 19

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

Accepted Answer

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

Question 20

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

Accepted Answer

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

Exam 3: Foreign Exchange and Capital Markets