Saturday, February 26, 2011

International Finance - 3

International Finance - 3

True/False
Question
Integrated branches of Commercial banks handle forex transactions as well as options, swaps, futures, arbitrage operations
Correct Answer
True

True/False
Question
JV means Joint venture and WOS means World of Security.
Correct 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

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

Multiple Choice Single Answer
Question
In the syndicated loan arrangement the borrower has to execute :-
Correct 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


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.

Multiple Choice Single Answer
Question
In a coupon swap who is called the buyer?
Correct Answer
One who pays the fixed rate of interest


True/False
Question
Till August 1994 India was following the Indirect Method of Rate quotation.
Correct 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



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

Multiple Choice Single Answer
Question
What are the powers of money changers?
Correct Answer
Purchase and sell foreign currency notes and travellers cheques

Select The Blank
Question
Any company involved in foreign exchange transactions is exposed to ________ risk.
Correct 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

Multiple Choice Multiple Answer
Question
What are the activities of ICC?
Correct Answer
Aribtration and dispute resolving , Canvass for open trade combat commercial crime
True/False
Question
Cause of increase in cost of public issues Underwriting fees , selling commission
Correct Answer
True

Select The Blank
Question
The currency swaps used ________.
Correct 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

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


Match The Followin
Question
Correct Answer


Departure
EXW

Main carriage paid
CFR

Main carriage unpaid
FAS

Arrival
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


True/False
Question
In red clause credit some clauses are printed in Red ink.
Correct Answer
True

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


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


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


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

Multiple Choice Multiple Answer
Question
Who can issue the Certificate of Inspection?
Correct 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

True/False
Question
In developed markets, speculators play important role in determining the trend of currency rates.
Correct 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


Select The Blank
Question
In Overseas market the forward rate is generally quoted on the basis of ________.
Correct Answer
Fixed date


Select The Blank
Question
Forward Margin makes a currency costlier then the currency is at ________.
Correct Answer
Premium


Multiple Choice Multiple Answer
Question
These are the parties to the documentary credit :-
Correct 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


Multiple Choice Single Answer
Question
Fixed, Floating or Limited flexibility are used in the context of
Correct Answer
Exchange Rates



Select The Blank
Question
In mid 1992 ________ rejected the ratification of Maastricht treaty
Correct Answer
Denmark


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


Multiple Choice Single Answer
Question
To whom is an AD required to report the cancellation of forward contracts?
Correct Answer
No one at all.

Select The Blank
Question
ECGC provides cover to an Indian contractor for construction work abroad under ________.
Correct Answer
Construction works policy


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


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


Multiple Choice Multiple Answer
Question
What are the sources of raising funds for exports?
Correct Answer
Suppliers credit , Forfaiting



Select The Blank
Question
Forward margin makes a currency cheaper then the currency is at ________.
Correct Answer
Discount


Multiple Choice Single Answer
Question
Name the common forex derivatives :-
Correct Answer
Options, futures

True/False
Question
Country risk analysis is a futile exercise in the background of cost of analysis.
Correct Answer
True



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


Match The Following
Question
Correct Answer

Issues linked with LIBOR,LIBID,LIMEAN
FRNs

Issue of bonds without fixed rate of interest, linked to short term interest rate in the global market
FloatingRate Note

Issue of loans internationally,through arranger, underwriter,co manager, for a large amount for sharing risk of lending
Syndicated Loans

Equity issues in the foreign markets either as direct investments or portfolio investments.
American or Global Depository Receipts

International Finance - 2
Multiple Choice Multiple Answer
Question
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


Select The Blank
Question
________ is the agency of ICC which deals with the maritime crime.
Correct Answer
International Maritime Bureau


Multiple Choice Single Answer
Question
Which of them are special funding facilities of IMF ?
Correct 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


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


Multiple Choice Single Answer
Question
Which is the most actively traded currency in the international market today?
Correct Answer
US Dollar



Match The Following
Question
Correct Answer


Intolerable risk
Drop the investment project

Country risk analysis
Cost of evluation does not justify analysis

Stock market analysis
Banks are ahead

Weightages %
Factors' values

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


Multiple Choice Single Answer
Question
For a spot transaction carried out on Thursday, currencies will be exchanged on :-
Correct 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


Match The Following
Question
Correct Answer


Maturity of future
Time when actual commodity is delivered

Note issuance facility
Euronotes

Bearer security issued in currency other than that of the country of issue
Eurobonds

Margin on future
Peformance bond or security deposit

True/False
Question
Postal receipt is an acknowledgement of receipt of goods, a quasi negotiable instrument.
Correct 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


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


Multiple Choice Single Answer
Question
What is the volume of the world's average daily transactions in foreign exchange?
Correct 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

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


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

Select The Blank
Question
Over the years ________has been the most widely accepted currency in international capital market.
Correct 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


Multiple Choice Single Answer
Question
Which currency is traded in one leg of about 70% of the world's transactions?
Correct Answer
US Dollar


Select The Blank
Question
________ is the acid test for events to be included in country risk.
Correct Answer
Control by Government'


Select The Blank
Question
The Trans European Automated Real Time Gross Settlement Express Transfer is popular in ________.
Correct Answer
Brussels


Multiple Choice Single Answer
Question
What is Risk Syndication facility?
Correct Answer
Sharing of risk of non payment by supplier

True/False
Question
If ERD > IRD hen exporter should availa Rupee finance
Correct 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

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

True/False
Question
Funding Options in domestic yen market are Futures, FRAs, Call and put options.
Correct Answer
True


True/False
Question
There is no difference between CIP and CIF contracts except the mode of transportation.
Correct Answer
True


Multiple Choice Single Answer
Question
Financial management is complex process for
Correct 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


Select The Blank
Question
A Credit can be a confirmed credit only if it is also ________.
Correct 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


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



Multiple Choice Multiple Answer
Question
Export finance
Correct Answer
Preshipment credit , Post shipment credit , Duty Draw back

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


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

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


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



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

Multiple Choice Single Answer
Question
Examples of hedge are:
Correct 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



Select The Blank
Question
Forward margin makes a currency cheaper then the currency is at ________.
Correct 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


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


True/False
Question
JV means Joint venture and WOS means World of Security.
Correct 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

International Finance - 1
Multiple Choice Multiple Answer


Question
What are the categories of exposures, a person faces in International trade?
Correct Answer
Transaction exposure , Translation exposure


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
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

Multiple Choice Single Answer
Question
What are the powers of restricted money changers?
Correct Answer
Purchase foreign currencies
Multiple Choice Multiple Answer
Question
Which contracts are used for transportation by road?
Correct 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


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



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



Multiple Choice Single Answer
Question
Equity can be raised internationallly by a company through :-
Correct Answer
Fund raising, underwriting, hedging , arbitration operations



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


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


Match The Following
Question
Correct Answer

Merchant banking
Portfolio management

Securitization
Issue of debt in the form of tradeable security

Prime borrower
Highest credit rating


Traditional banking service
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


Multiple Choice Multiple Answer
Question
Which factors influence the valuation of cash flows?
Correct Answer
Incomplete capital market , Availability of projkect specific concessional finance,


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


Select The Blank


Question
Forward margin makes a currency cheaper then the currency is at ________.
Correct Answer
Discount

Match The Following

Question
Correct Answer

Intolerable risk
Drop the investment project

Country risk analysis
Cost of evluation does not justify analysis

Stock market analysis
Banks are ahead

Weightages %
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

Multiple Choice Single Answer
Question
In the syndicated loan arrangement the borrower has to execute :-
Correct 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



Select The Blank
Question
Indian Co. intending to make investment under Automatic route needs to submit form ________ to RBI with enclosures.
Correct 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



Select The Blank
Question
The ________is a Floating rate index for swaps.
Correct Answer
US Commercial paper rate




1 comment: