International Finance Questions Quiz! Trivia

20 Questions | By Mbafmtest | Last updated: Mar 20, 2022 | Total Attempts: 113

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International Finance Questions Quiz! Trivia - Quiz

Looking for an International finance questions quiz trivia? International finance gives one a look at how countries interact with each other when it comes to foreign direct investment, currency exchange rates and financial decisions. Do you know some of the securities traded across different countries? By taking the quiz you will get to refresh your memory on this course and what you can learn. Give it a shot and see how well you will do!

Questions and Answers

1.

The acronym SWIFT stands for
- A.
  
  Safety Width in Financial Transactions
- B.
  
  Society for Worldwide Interbank Financial Telecommunication
- C.
  
  Society for Worldwide International Financial Telecommunication
- D.
  
  Swift Worldwide Information for Financial Transaction
2.

India is facing continuous deficit in its balance of payments. In the foreign exchange market rupee is expected to
- A.
  
  Appreciate
- B.
  
  Show no specific tendency
- C.
  
  Depreciate
- D.
  
  Depreciate against currencies of the countries with positive balance of payment and appreciate against countries
3.

The demand for domestic currency in the foreign exchange market is indicated by the following transactions in balance of payment.
- A.
  
  Import of goods and services and capital outflows
- B.
  
  Export of goods and services
- C.
  
  Export of goods and services and capital inflows
- D.
  
  Import of goods and services
4.

If PPP holds
- A.
  
  The nominal exchange rate will not change
- B.
  
  Both real and nominal exchange rates will not change
- C.
  
  Both real and nominal exchange will move together
- D.
  
  The real exchange rate will not change
5.

The strike price under an option is
- A.
  
  Lower of the market price and the agreed price
- B.
  
  None of the above
- C.
  
  The exchange rate which the currencies are agreed to be exchanged under the contract
- D.
  
  The price at which the option is auctioned
6.

An option at-the-money when
- A.
  
  The option has a ready market
- B.
  
  The strike price and the spot price are the same
- C.
  
  The strike price is greater than spot price, in the case of a put option
- D.
  
  An option at-the-money when The strike price is greater than the spot price, in the case of a call option
7.

The true cost of hedging transaction exposure by using forward market is
- A.
  
  Difference between agreed rate and spot rate on the due date of contract
- B.
  
  Difference between agreed rate and spot rate at the time of entering into contract
- C.
  
  Forward premium / discount annualized
- D.
  
  None of the above
8.

A firm operating in India cannot hedge its foreign currency exposure through.
- A.
  
  Forwards
- B.
  
  Futures
- C.
  
  Options
- D.
  
  None of the above
9.

Foreign currency exposures can be avoided by
- A.
  
  Denominating the transaction in domestic currency
- B.
  
  Entering into forward contracts
- C.
  
  Exposure netting
- D.
  
  Maintaining foreign currency accounts
10.

Maintaining a foreign currency account is helpful to
- A.
  
  Avoid exchange risk and domestic currency depreciation
- B.
  
  Avoid exchange risk
- C.
  
  Avoid both transaction cost and exchange risk
- D.
  
  Avoid transaction cost
11.

Translation exposure is positive when
- A.
  
  Exposed liabilities are lesser than exposed assets.
- B.
  
  The exposure results in profit.
- C.
  
  Exposed assets are lesser than exposed liabilities.
- D.
  
  There are no liabilities
12.

For the purpose of translations, current rate refers to
- A.
  
  The rate prevailing on the date of the balance sheet
- B.
  
  The rate current at the time of transaction
- C.
  
  The rate prevailing on the date of preparation of the balance sheet
- D.
  
  The spot rate
13.

Exposed assets are those translated at
- A.
  
  Current rate
- B.
  
  Historical rate
- C.
  
  Average rate
- D.
  
  Current rate or average rate
14.

Translation loss may occur when
- A.
  
  Exposed assets exceed exposed liabilities and foreign currency depreciates
- B.
  
  Exposed assets exceed exposed liabilities and foreign currency appreciates
- C.
  
  The subsidiary's balance sheet shows a loss
- D.
  
  The foreign currency depreciates
15.

The following method cannot be used for managing translation exposure:
- A.
  
  Option contract
- B.
  
  Forward contract
- C.
  
  Leading and lagging
- D.
  
  Exposure netting
16.

Economic exposure does not deal with
- A.
  
  Expected exchange rate changes
- B.
  
  Changes in real exchange rates
- C.
  
  Future cash flow of the firm
- D.
  
  None of the above
17.

The __________ refers to the orderly relationship between spot and forward currency exchange rates and the rates of interest between countries.
- A.
  
  Interest-rate parity
- B.
  
  One-price rule
- C.
  
  Purchasing-power parity
- D.
  
  Exchange-power parity
18.

Non-resident Bank Accounts refer to
- A.
  
  Vostro account
- B.
  
  Nostro account
- C.
  
  accounts opened in offshore centres
- D.
  
  foreign bank account
19.

The abbreviations SDR stands for
- A.
  
  Special Drawing Rights
- B.
  
  Specific Drawing Rights
- C.
  
  Special Depository Rules
- D.
  
  Specific Depository Rules
20.

The value of SDR is
- A.
  
  Based on basket of five currencies
- B.
  
  Average of the value of US dollar and Euro
- C.
  
  Based on value of gold
- D.
  
  Equivalent to one US dollar