international finance combined
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LIST OF ATTEMPTED QUESTIONS AND ANSWERS
Multiple Choice Multiple AnswerQuestion 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 monitordevelopments in Forex Market
Your Answer Clearing house for settlement and clearance for the operationsof Ads , Make additional foreign currency available to ADs atcheaper rates
Select The BlankQuestion ________ is the agency of ICC which deals with the maritime
crime.Correct Answer International Maritime Bureau
Your Answer International Maritime Bureau
Multiple Choice Single AnswerQuestion Which of them are special funding facilities of IMF ?
Correct Answer Buffer Stock Facility
Your Answer Buffer Stock Facility
True/FalseQuestion Cross currency forward contract is not meaningful if original
contract is in Rupees to USDCorrect Answer True
Your Answer True
Multiple Choice Multiple AnswerQuestion What does a speculator accept while dealing with an option?
Correct Answer The exercise or strike price, the amount , The expiration dateand time, the method of paymentYour Answer The exercise or strike price, the amount , The expiration date
and time, the method of payment , The Market report of theexchange which trades the option
Multiple Choice Single AnswerQuestion Which is the most actively traded currency in the international
market today?Correct Answer US Dollar
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Your Answer US Dollar
Match The FollowingQuestion Correct Answer Your Answer
Intolerable risk Drop the investmentproject
Drop the investmentproject
Country risk analysis Cost of evluation doesnot justify analysis
Cost of evluation does notjustify analysis
Stock market analysis Banks are ahead Factors' values
Weightages % Factors' values 100% of total
Select The BlankQuestion 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 countryYour Answer Yen,Euro Dollar, Swiss Francs, USD market, Govt Borrowings
within and outside the country
Multiple Choice Single AnswerQuestion For a spot transaction carried out on Thursday, currencies will
be exchanged on :-
Correct Answer Monday
Your Answer Monday
Multiple Choice Single AnswerQuestion Under which category of exchange rate did the Indian Rupee
came from June 92?Correct Answer Other managed Floating
Your Answer Pegged to Single currency
Match The FollowingQuestion Correct Answer Your Answer
Maturity of future Time when actualcommodity is delivered
Last date of exercisingoption
Note issuance facility Euronotes Euronotes
Bearer security issued incurrency other than thatof the country of issue
Eurobonds Eurobonds
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Margin on future Peformance bond orsecurity deposit
Peformance bond orsecurity deposit
True/FalseQuestion Postal receipt is an acknowledgement of receipt of goods, a
quasi negotiable instrument.Correct Answer False
Your Answer False
True/FalseQuestion The Prominent non banking financial institutions participating in
the FOREX markets are Pension funds, mutual funds,insurance Cos.
Correct Answer True
Your Answer True
Multiple Choice Multiple AnswerQuestion 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
Your Answer Faith money deposited by buyers and sellers ensures liquidity ,Margin ensures solvency for honouring contracts
Multiple Choice Single AnswerQuestion What is the volume of the world's average daily transactions in
foreign exchange?Correct Answer USD 1 trillion
Your Answer USD 1 trillion
Multiple Choice Single AnswerQuestion NIF is basically an agreement :-
Correct Answer By underwriting bank to support funding for a certain period,
against which borrowers can issue short term papersYour Answer Which enables the investor to market the same in thesecondary market
Multiple Choice Single AnswerQuestion What was the official foreign currency reserve of the group of
seven central Banks taken togeather in mid 1992?Correct Answer USD 275 Billion
Your Answer USD 275 Billion
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Multiple Choice Single AnswerQuestion What Preshipment facility is granted by EXIM Bank to an
exporter?
Correct Answer Preshipment credit beyond six months for construction andturnkey projects abroad
Your Answer Preshipment credit up to six months for construction andturnkey projects abroad
Select The BlankQuestion Over the years ________has been the most widely accepted
currency in international capital market.Correct Answer American Dollar
Your Answer American Dollar
Select The BlankQuestion As a result of the world wars in the 20th century the ________
of most of the countries suffered heavily.Correct Answer Economies
Your Answer Currencies
Multiple Choice Single AnswerQuestion Which currency is traded in one leg of about 70% of the world's
transactions?Correct Answer US Dollar
Your Answer US Dollar
Select The BlankQuestion ________ is the acid test for events to be included in country
risk.Correct Answer Control by Government'
Your Answer Recurrence
Select The Blank
Question The Trans European Automated Real Time Gross SettlementExpress Transfer is popular in ________.
Correct Answer Brussels
Your Answer Brussels
Multiple Choice Single AnswerQuestion What is Risk Syndication facility?
Correct Answer Sharing of risk of non payment by supplier
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Your Answer Sharing risk of Non payment by the Syndicate of Banks givingloans
True/FalseQuestion If ERD > IRD hen exporter should availa Rupee finance
Correct Answer True
Your Answer True
Multiple Choice Multiple AnswerQuestion The characteristics of an International documentary credit are :-
Correct Answer It is an undertaking given by the openers bank to pay certainsum of money , It is an undertaking given on behalf of a certainperson to another person in different country
Your Answer It is an undertaking given by the openers bank to pay certainsum of money , It is an undertaking given on behalf of a certainperson to another person in different country
Multiple Choice Multiple AnswerQuestion Which debits are permitted to EEFC accounts?
Correct Answer Payment of hotel bills abroad, payment for expenses on Heartoperation abroad , Payment to EOUs in India for servicesrendered by them
Your Answer Payment of hotel bills abroad, payment for expenses on Heart
operation abroad , Payment to EOUs in India for servicesrendered by them
True/FalseQuestion Funding Options in domestic yen market are Futures, FRAs,
Call and put options.Correct Answer True
Your Answer True
True/FalseQuestion There is no difference between CIP and CIF contracts except
the mode of transportation.Correct Answer True
Your Answer True
Multiple Choice Single AnswerQuestion Financial management is complex process for
Correct Answer Companies which have international trade
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Your Answer Companies which have international trade
Select The BlankQuestion When an Indian Company earns at least 50% of its average
turnover from a particular activity then that activity isconsidered as ________.
Correct Answer Core activity
Your Answer Primary activity
Select The BlankQuestion A Credit can be a confirmed credit only if it is also ________.
Correct Answer An Irrevocable credit
Your Answer An Irrevocable credit
True/FalseQuestion The volume of trading of Derivatives in the world trade market
is growing but still only 5% of the total.Correct Answer False
Your Answer False
Multiple Choice Single AnswerQuestion Punjab National Bank Mumbai Branch quoted USD 1= Rs50.5000/52.5050. Which is the offered rate for Rs?
Correct Answer USD 1=Rs 50.5000
Your Answer USD 1=Rs 50.5000
Multiple Choice Multiple AnswerQuestion Export finance
Correct Answer Preshipment credit , Post shipment credit , Duty Draw back
Your Answer Preshipment credit , Post shipment credit , Buyers credit
Multiple Choice Multiple AnswerQuestion Internationally only those currencies are in demand
Correct Answer Which are convertible , Which have liquidity confirmed in Euromarket operations
Your Answer Which are convertible , Which have liquidity confirmed in Euromarket operations , Which have greater intrinsic value
Multiple Choice Multiple Answer
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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 marketYour Answer Give Softloans to poorer countries in Asia , Give project finance
from resources raised in world capital market
Multiple Choice Multiple AnswerQuestion What does the word '"Tombstone" stand for?
Correct Answer Advertisement which lists the managers, underwriters, , List ofProviders of recently floated issue
Your Answer Advertisement which lists the managers, underwriters, , List ofProviders of recently floated issue
Select The BlankQuestion Short term instruments normally issued by corporateborrowers, forhigh values, at a discount to face value areknown as ________.
Correct Answer Euro Commercial Papers
Your Answer Euro Commercial Papers
Multiple Choice Single AnswerQuestion 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
Your Answer To weed out unviable projects and rank profitable ones
Multiple Choice Single AnswerQuestion Examples of hedge are:
Correct Answer Buy when you are having short position
Your 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 additionalrisk of movement of rates between 3 currencies
Your Answer He gets the flexibility to exposure , He is exposed to additionalrisk of movement of rates between 3 currencies
Select The BlankQuestion Forward margin makes a currency cheaper then the currency is
at ________.Correct Answer Discount
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Your Answer Discount
Multiple Choice Single AnswerQuestion 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 profitYour Answer Unfavourable fluctuations in exchange rate can wipe out the
normal business profit
Multiple Choice Single AnswerQuestion The capital market is said to be volatile when
Correct Answer Prices of capital market instruments change and are expected
to change drasticallyYour Answer Prices of capital market instruments change and are expectedto change drastically
True/FalseQuestion JV means Joint venture and WOS means World of Security.
Correct Answer False
Your Answer False
Multiple Choice Multiple Answer
Question What is the criteria for an Indian Company for DirectInvestment abroad?
Correct Answer Activity proposed need to be core activity , Financialcommitment in JV/WOS maximum $ 100 million or equivalent
Your Answer Activity proposed need to be core activity , Financialcommitment in JV/WOS maximum $ 100 million or equivalent ,Indian co should not have been black listed
Chapter 1 Introduction to international capital markets
Euro currency ; domestic markets ; US Japan ; Switzerland ; UK ; Australia ; Canada ;European ; centers in ECU;
1
Chapter 2 International Finance Markets - the U.S. dollar Market ;
The U.S. Dollar Market ; The Japanese Yen Market ; The Sterling Market ; The EuroMarket Has Been discussed in the next chapter ; Recent development in international
Finance Markets ;
5 10
Chapter 3 International Monetary and Financial SystemThe countrys central ban agreed to buy back their currency at a certain rate of gold;Melting down of gold was freely allowed ; There was unrestricted movement of gold (i.e.
import and / or export)The total money supply in the country was determined by the quantum of gold reserves in
the country
13 14
The international monetary fund ; quotas ; funding facilities ; regular facilities tranchepolicies ; restore Tranche credit Tranche ; extended arrangement (extended fund facility
15 17
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(EEF) ; Standard Arrangement (enlarged Arrears Policy)
Special facilities (compensatory and contingency financing facility (CCFF)Buffer stock Financing Facility ; Supplemental Reserve Policy (SRP); Reserve Tranche ;
Credit Tranche ; Stand by arrangement ;Extended arrangement or extended fund facilities (EFF) special facilities ; CCFF ; Buffer
stock financing Facility (BSFF) ; Supplemental resources facility (SRF) Enhancedstructural adjustment facility (ESAF) The fixed exchange rate system
18 19
Problems faced by the fixed exchange rate system ; failure of fixed rate system ; the
European monetary system (EMS) ; Economic and monetary union ; Recent developments ;post Maastricht developments; emergence of EURO
20 23
The group of seven ; special drawing rights (SDRS) ; The liquidity problems (SDRS) ; theworld bank group ; the world bank; international development agency (IDA) ; international
finance corporation (IFC) ; The multinational investment Guarantee Agency (MIGA)
24 27
Chapter 4 External commercial borrowing country ; company ; Equity ; Fund raising ;underwriting ; hedging ; arbitraging ; note issuance facility ; Mechanism and
documentation ; syndicated loans ; floating rate notes ;
31 35
Flip Flop FRN ; MIS Mich FRN ; MINI Max FRN ; Capped FRNs, Perpetual FRNs;VRN structured FRNs; Terms and conditions of FRN Ero Commercial paper (ECP) ; ADRs
and GDRs; GDR Global depositary Receipts ; The roles of different parties involved inlaunching of GDRGDR Global Depositary Receipts ; The roles of different parties involved in launching of
GDR steps involved in issuance of GDR are as follows
36 39
Pricing and Closing ; costs ; Advantages & Disadvantages of external commercialborrowing
40 41
Chapter 5 Documents used in International Trade ;Regulatory requirements ; operational requirements ; commercial documents ; financial
documents transport documents ; risk covering documents ; official / regulatory documents; miscellaneous documents ; Commercial documents ; proforma invoice ; commercial
invoice ; consular invoice customs invoice ; legalized invoice ; combined certificate oforigin and value ; financial documents ; bill of exchange ;
43 46
The second of the same tenor and date unpaid ; the first of the same tenor and date unpaid ;
or similar words ; sight B/E; Tenor ; time B/E; DP Basis ; document against Payment Basis; Documents against Acceptance Basis Transport documents; bill of lading ; received forshipment bill of lading ; on board bill of lading ;
47 49
Short form bill of lading ; long form bill of lading clean bill of lading ; claused bill of lading
; through bill of lading ; straight bill of lading ; charter party Bill of lading ; container bill oflading container bill of lading ; combined transport B/L or Mulit Modal B/L lash bill of
lading house bill of lading ; Airway bill ; Air consignment Note ; House Air way bill ;Postal Receipt ; Courier /Expected delivery service ; multimodal transport document ; riskcovering documents ; insurance policy ;
50 53
Insurance cover note ; official documents export declaration forms ; export certificate;
Certificate of origin ; Miscellaneous documents ; packing list ; weight certificate ;certificate of analysis and quality ; certificate of inspection ; health certificate ;
phytosanitary / Radiation / Fumigation
55 57
Chapter 6 Methods of payment ; advance payment ; bill for collection ; open account ;barter trade ; bank guarantee ; letter of credit (L / C) Seller wants buyer wants ; parties to a
61 66
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documentary credit ; applicant issuing bank advising ; confirming bank beneficiary ;
negotiating bank ; reimbursing bank
Types of letters of credit ; revocal letter of credit ; irrevocable letter of credit ; confimedirrevocable letter of credit ; transferable l / c revolving letter of credit ; credit available byinstallments; back to back letter of credit ; anticipatory credit or red clause letter of credit ;
green clause letter of credit ; deferred payment letter of credit ; standby letter of credit ;flow chart of export transaction under letter of credit
67 69
Flow chart of export transaction under letter of credit ; various steps in the transaction are as
under ; steps no. description
70 71
Chapter 7 Export / Import Finance ; - Part I import finance ; import financing throughtrust receipts / import loans ; import financing through issuing l/ c or bank guarantee ; partII Export Finance Timely ; adequate ; cheaper on liberal terms ; sources for raising
finance ; own funds ; 2 friends and relative ; 3 advance payment from buyer ; 4 Trade creditfrom suppliers 5 banks and financial institutions ; pre-shipment credit (P.C)
73 74
Post shipment credit ; advance against cash incentives / duty draw back ; forfeiting ;
rediscounting of export bills abroad ; buyers credit ; suppliers credit
75 -76
Chapter 8 Procedure in connection with foreign investment in India Seciton Iforeign direct investment ; FERA ; the practice at which a company can issue shares to non
residents ; fema ; esop ; section II Foreign technical collaboration ;
79 83
General Hotel & Tourism Related Industries ; procedure for granting approval; I / We
hereby certify that ; Documentation ; Standard conditions attached to approval fortechnology agreement ; no objection ; the agreement shall be subject to Indian laws:
84 88
Section III Portfolio investment ; explanation ; the regulations regarding portfolio
investments by NRIs / PIOs are as under ; NRI / PIOs ; Section IV Other investments ;Section V procedure for opening branch / project / Liaison office ;
89 - 92
Chapter 9 Direct investment outside India overseas investment division TDR ADRGDR the criteria for investment under the automatic route are as under ; JV/WOS; ODA;
The schemes for overseas investment by partnership firms ; criteria for overseas investmentby a registered partnership firm under the automatic route ;
95 99
The procedure to be followed by a partnership firm for making investment under the
automatic route ; the procedure to be followed by partnership firms which are not eligibleunder the automatic route ; restrictions for setting up of a second generation company ;resident individual India can acquire foreign securities without prior approval in the
following cases ; provided that ; WOS
100 102
Chapter 10 Taxation ; Bilateral relief
Unilateral relief ; for the purpose of this provision
105 106
Part 2 Forex risk management and hedging techniques
Chapter 1 Foreign exchange markets The international Market ; survey were ; the
market ; the participants ; information and communication system ; the payment s ystem ;the foreign exchange market in India
109 114
Chapter 2 Exchange Rates Exchange rage quotes ; direct and indirect rates ; directrates ; indirect rates; spot and forward rates value rate; ready or cash ; value today ; TOM;
spot ; forwards; glossary of market terms; Foreign exchange risks ; transactions exposure ;translation exposure ; economic exposure;
117 123
Translation moving towards a consensus ; economic exposure ; an overview ; scenario
exchange rages in India ; Inward remittances export encashment of foreign currency
124 127
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travelers cheques ; encashment of foreign currency notes; outward remittances ; imports ;
issuing foreign currency travelers cheques issuing foreign currency notes ;
Type of transaction exchange rate nomenclature ; Factors affecting movement of exchangerates ; summary
128 129
Chapter 3 Forward contracts - Forward cover for merchants forward purchase cover -forward sales contract - repayment of foreign currency loans period of delivery cross
currency booking (sale / Purchase ) ; utilization of the forward cover ; cancellation ;calculation of exchange rates for forward contracts
131 137
Cancellation ; early delivery and rollover of forward contracts ; forward sale contracts ;
forward purchase contract ; early delivery ; rollover charges
138 141
Chapter 4 Options and Futures History and development ; recent trends ; key features ofoptions and futures ; premium ; maturity or expiration date ; exercise ; in the money ; at themoney ; out of the money American option European option ; underlying asset price time
before expiration ; underlying asset price ; time before expiration the rate of interestvolatility
143- 147
Pricing and analysis ; pricing of options ; underlying asset price ; exercise price ; options
and futures products today ; interest rate options ; foreign exchange options and futures ;equity linked options ; commodity linked futures and options
148 152
Chapter 5 - SwapsWhat are swaps ; interest rate swaps ; lowering financial cost ; hedge exposure to interest
rate risk ; restructuring the debt in the balance sheet ; amortizing and accreting swaps ;forward swaps ; Reversible swaps ; basis swaps
155 157
Currency swaps ; lowering funding cost ; entering restricted capital markets ; reducing
currency risk ; supply demand imbalances in the markets ; amortizing currency swaps ;accreting currency swaps ; floating for floating rate currency swaps ; interest payments ;asset swaps
158 161
PART 3 AGENCIES INVOLVED IN INTERNATIONAL TRADE
Chapter 1 Export import Bank of India ; Functions of Exim Bank ; the exim bank
performs the following functions ; incidental functions ; operations programmes ; directfinancial assistance to exporters ; consultancy and technology services ; pre-shipment credit
; facilities for export oriented units ; overseas investment facility buyer credit facilities fordeemed exports small scale industry export bills rediscounting; the latest new schemes inoperation since 1992 are the following
163 166
Chapter 2 Reserve Bank of India Exchange controls in India RBI as the exchange
control authority ; Authorized dealers (Ads) ; Money changers ; other receipts ; payment for
imports ; other payments ; delegation to Ads; securities ; foreign currency accounts;liberalization of exchange control
169 173
Sodhani Committee Recommendations ; Exchange rate management ; 174 177
Chapter 3 Foreign Exchange dealers association of India ; Uniform customs andpractice for collection ;
179 180
Chapter 4 International chamber of commerce ICC WCF IBCC WCF 183 183
Chapter 5 Export credit guarantee corporation of India ; ECGC; need for export creditinsurance ; credit insurance policies ; scr or standard policy ; turnover policy ; small
exporter policy ; specific shipment policy (short term); buyer wise policy ; specific policyfor supply contract insurance cover for buyers credit and line of credit
189 190
Services Policy ; construction works policy ; maturity factoring ; Guarantees to banks ; 191
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packing credit guarantee ; export production finance guarantee ; post shipment credit
guarantee ; export finance guarantee ; export performance guarantee; export finance(overseas lending ) Guarantee
Part 4 Miscellaneous
Chapter 1 Exchange Earners foreign currency (EEFC)Status holder exporter ; individual professional ; others; permissible credits ; permissible
debits ;
195
Chapter 2 Country Risk ; Quantifying country risk ; A comprehensive example ; use ofcountry risk ; assessment ;
199
Chapter 3 International capital Budgeting - The Basic Frame work 203 204
Chapter 4 Incoterms Group E departure EXW ; Group F Main carriage unpaid ; FAS ;FOB ; CFR ; CIF ; CPT ; CIP ; Group C; Group D ; Arrival DAF ; DES ; DEQ; DDU CTD
/ MTO ; DDP ; delivered duty paid (CTD / MTO)
207- 212
Chapter 5 Actuals ; arbitrage ; bankers acceptance bond (BAS) ; Bearer Bond ; Bid rate; Bond ; Bull; call option ; caps ; cash commodity ; cash market ; cedel ; certificate of
deposit (CD) class of option ; closing price ; commission ; commercial paper (CP) ; contractspecifications ; convertible bond ; coupon ; cover; delivery ; delivery month ; equity ; equity
swaps ; equity collar ; Eurobond ; Euro clear ; euro commercial paper; euro currency ;
215 217
Exercise price ; expiration date; floating rate note ; fundamental Analysis ; futures contracthedge ; Hybrid ; Interest Rate swap; Intermediation ; Intrinsic Value ; Libor ; Long margin; margin c all maturity naked position ; note issuance facility (NIF)
218 -219
Option ; overbought ; oversold ; physical market ; position ; premium purchaser ; put option
; settlement price short ; speculator ; strike price ; straight debt tap ; technical analysistranche ; tombstone volatility ; volume ; withholding tax ; yankee bond ;
220 221
Chapter 1 Introduction to international capital markets 1Ero currency market ; Domestic market ; US, Japan Switzerland ; uk, australiacanada ; european conters in ECU ; Euro ; Asian doller market ; forex marker 1
SDR ; ECU ; US dollar ; German ; Swiss ; Japanees ; France ; Canada ; Australia; 2Chaper - 2 - International financial Markets - The U.S.Dollar Market ; pricing ;federal reservice board; curency ; central bank of US ; 5
The Japanese Yen Market ; Mof; Long Term Prime Rate ; 1970 japanese 6The Sterling Market ; 20th 19th century 1979 ; OECD Organization for economicco-operation & development EMS Exchange rate Mechanism; FRN ; Bulldog; 7the EURO Market has been discussed in the nex chapter Recent development ininternational financial markets ; septer 11 enron 7
LtCN (Long term capital Management Brazil china and mexico; 81990 ; 1980 ; severe tests financial system; securitization forces banks ; attractiveto browwerw; legal issues flexibility ; financial market development segement of ; 9swaps cash flow ; roject related; gain access to international ; marketability ; newfinancing techniques; 10
Chapter 3 International Monetary and Financial System 131945 ; 1944 ; intenrational world Bank for reconstruciton and development; secondworld war was european ; IMF International Monetary Fund; Gold standard firstworld war 13The country's Central Bank agreed to buy back their currency at a certain rate ofgold; 13
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melting down of gold was freely allowed 13There was unrestricted movement of gold (I.e. import and / export 14The total money supply in the country was determined by the quantum of gold
reserves in the country 141870 ; 1914 ; 1821 ; 1834 ; 1870 ; European countries gold standard in 1933 ;1930 International Monetary Co-operation ; IBRD ; IMF ; 14popularly known as world bank IMF ; the international monetary fund 1945 ; 1971
; 25 years ; aims 15SDR ((special drawing rights ) 25% 1960 ; 1963 ; Gross domestic product; 5 years; SDR 146 bn to SDR 212 ; 45% ; 1998 ; Two parts 16Funding Facilities ; Regular Facilities ; Special facilities ; restore tranche credittranche ; compensatory and contingenc y financing facility (CCFF) ; 16Extended arrangement (Extended Fund Facility EEF) ; Buffer stock FinancingFacility ; 16Standard Arrangement (Enlarged Arrears Policy ) ; Supplemental Reserve Policy(Supplemental Reserve Policy (SRP 17
Reserve Tranche ; Credit Tranches ; Stand - By Arrangement 17Extended arrangement or extended fund facilities (EFF) 18Special Facilities ; CCFF ; Buffer Stock Financing Facility ; BSFF ; SupplementalResource Facility (SRF) ; 1997 18Enhance Structural Adjustment Facility (ESAF) ; The fixed exchange rate systemUS dollars 35 ounce of gold 19Problem faced by the fixed exchange rate system ; 1960 ; value apprehension ;delay in adjustment 20failure of fixed rate system ; the european monetary system (EMS) EuropeanCommunity 20Currency Snake ; 1973 ; EMS EC ECU European Currency Unit ; SDR ; ERM ; DM; matrix german bundesbank 21
EM ; PST ; ERM ; Economic and monetary Union ;
LIST OF ATTEMPTED QUESTIONS AND ANSWERS
True/FalseQuestion Integrated branches of Commercial banks handle forex
transactions as well as options, swaps, futures, arbitrageoperations
Correct Answer True
Your Answer True
True/FalseQuestion JV means Joint venture and WOS means World of Security.
Correct Answer False
Your Answer False
Select The BlankQuestion The rate of interest on rupee finance for exports is not
exceeding ________ less than PLR.
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Correct Answer 0.025
Your Answer 50 basis points over LIBOR
Multiple Choice Multiple AnswerQuestion What does a speculator accept while dealing with an option?
Correct Answer The exercise or strike price, the amount , The expiration dateand time, the method of payment
Your Answer The exercise or strike price, the amount , The expiration dateand time, the method of payment
Multiple Choice Single AnswerQuestion In the syndicated loan arrangement the borrower has to execute
:-Correct Answer Single Principal loan agreement
Your Answer Single Principal loan agreement
True/FalseQuestion At Least one principal Lender bank is essential for issue of the
ADR or GDR.Correct Answer False
Your Answer True
Multiple Choice Single AnswerQuestion US financial system is the freest system because
Correct Answer Institutions can introduce new products and instuments at theprice of their choice.
Your Answer Institutions can introduce new products and instuments at theprice of their choice.
Multiple Choice Single AnswerQuestion In a coupon swap who is called the buyer?
Correct Answer One who pays the fixed rate of interest
Your Answer One who pays the fixed rate of interest
True/FalseQuestion Till August 1994 India was following the Indirect Methodof Rate
quotation.Correct Answer False
Your Answer False
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Select The BlankQuestion For setting up joint ventures abroad or equity participation
abroad, EXIM bank provides funds under ________ Scheme.
Correct Answer Overseas investment facility
Your Answer Overseas investment facility
Multiple Choice Single AnswerQuestion 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
Your Answer 50% of the net worth of the investing company
Multiple Choice Single AnswerQuestion What are the powers of money changers?
Correct Answer Purchase and sell foreign currency notes and travellers cheques
Your Answer Purchase and sell foreign currency notes and travellers chequesand also Give export finance
Select The BlankQuestion Any company involved in foreign exchange transactions is
exposed to ________ risk.Correct Answer Currency
Your Answer Currency
Multiple Choice Multiple AnswerQuestion What are the features of Settlement price ?
Correct Answer Price established by the clearing house at the end of eachtrading session , It is used to determine the net gain, loss,margin call and next days price limits
Your Answer Price established by the clearing house at the end of eachtrading session , It is used to determine the net gain, loss,margin call and next days price limits
Multiple Choice Multiple AnswerQuestion What are the activities of ICC?
Correct Answer Aribtration and dispute resolving , Canvass for open tradecombat commercial crime
Your Answer Aribtration and dispute resolving , Canvass for open tradecombat commercial crime , Increased Govt regulation ofBusiness
True/False
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Question Cause of increase in cost of public issues Underwriting fees ,selling commission
Correct Answer True
Your Answer False
Select The BlankQuestion The currency swaps used ________.
Correct Answer To lower the risk of currency exposure
Your Answer To lower the risk of currency exposure
True/False
Question The Option period in the forward contract is at the option of theBanker, hence the bank has to be very conservative in quotingrates.
Correct Answer False
Your Answer True
Multiple Choice Multiple AnswerQuestion Which factors affect the exchange rates in short time period?
Correct Answer Demand and supply, interest rates, inflation, , Sentiment,Speculation
Your Answer Demand and supply, interest rates, inflation, , Sentiment,Speculation , GDP,Balance of trade andpayment,Unemployment
Match The Following
Question Correct Answer Your Answer
Departure EXW EXW
Main carriage paid CFR CFR
Main carriage unpaid FAS FAS
Arrival DES DES
Multiple Choice Multiple AnswerQuestion Sterling Market is attractive for an international investor because
Correct Answer Gilts offer higher attractive margin , Choice of issuing mediumterm and long term bonds
Your Answer Gilts offer higher attractive margin , Choice of issuing mediumterm and long term bonds , Linking of issues to currency swaps
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True/FalseQuestion In red clause credit some clauses are printed in Red ink.
Correct Answer True
Your Answer False
Multiple Choice Multiple AnswerQuestion Which debits are permitted to EEFC accounts?
Correct Answer Payment of hotel bills abroad, payment for expenses on Heartoperation abroad , Payment to EOUs in India for servicesrendered by them
Your Answer Payment of hotel bills abroad, payment for expenses on Heartoperation abroad , Payment to EOUs in India for servicesrendered by them
Multiple Choice Single AnswerQuestion 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
Your Answer USD 1=Rs 50.5000
Multiple Choice Single Answer
Question Why are various methods of financial analysis used forassessing a cross border project ?
Correct Answer To weed out unviable projects and rank profitable ones
Your Answer To weed out unviable projects and rank profitable ones
Multiple Choice Multiple AnswerQuestion Criteria for investment abroad under automatic route :-
Correct Answer Activity for investment is core activity of Indian Company. , TotalFinancial commitment in JV/WOS as per prescribed ceiling
Your Answer ctivity for investment is core activity of Indian Company. , Total
Financial commitment in JV/WOS as per prescribed ceiling
Multiple Choice Multiple AnswerQuestion Who can issue the Certificate of Inspection?
Correct Answer Export Inspection Council , Person authorised by Importer.
Your Answer Export Inspection Council , Person authorised by Importer.
Multiple Choice Single Answer
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Question Large number of exporters from which country are enjoying theprivilege of receiving up front cash from importers in Russia?
Correct Answer United Kingdom
Your Answer United Kingdom
True/FalseQuestion In developed markets, speculators play important role in
determining the trend of currency rates.Correct Answer True
Your Answer True
Select The Blank
Question In US Capital Market a Company prepares all the necessarydocuments in advance of the public issue under the facilityknown as ________.
Correct Answer Shelf Registration
Your Answer Shelf Registration
Select The BlankQuestion In Overseas market the forward rate is generally quoted on the
basis of ________.Correct Answer Fixed date
Your Answer Calendar month
Select The BlankQuestion Forward Margin makes a currency costlier then the currency is
at ________.Correct Answer Premium
Your Answer Discount
Multiple Choice Multiple Answer
Question These are the parties to the documentary credit :-
Correct Answer Negotiating Bank, advising bank , Reimbursing bank,Confirming bank
Your Answer Negotiating Bank, advising bank , Reimbursing bank,Confirming bank
Multiple Choice Multiple AnswerQuestion What are the functions of Asian Development Bank?
Correct Answer Give Softloans to poorer countries in Asia , Give project financefrom resources raised in world capital market
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Your Answer Give Softloans to poorer countries in Asia , Give project financefrom resources raised in world capital market
Multiple Choice Single AnswerQuestion Fixed, Floating or Limited flexibility are used in the context of
Correct Answer Exchange Rates
Your Answer Exchange Rates
Select The BlankQuestion In mid 1992 ________ rejected the ratification of Maastricht
treatyCorrect Answer Denmark
Your Answer UK
Multiple Choice Multiple AnswerQuestion 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 agreementsYour 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 forwardcontracts?
Correct Answer No one at all.
Your Answer To Reserve Bank of India, fortnightly
Select The BlankQuestion ECGC provides cover to an Indian contractor for construction
ork abroad under ________.Correct Answer Construction works policy
Your Answer Export Performance Guarantee
True/FalseQuestion he Negotiating bank examines the documents submitted by the
seller and makes payment if they comply the terms andconditions of the LC.
Correct Answer True
Your Answer True
Multiple Choice Single Answer
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Question What was the official foreign currency reserve of the group ofseven central Banks taken togeather in mid 1992?
Correct Answer USD 275 Billion
Your Answer USD 275 Billion
Multiple Choice Multiple AnswerQuestion What are the sources of raising funds for exports?
Correct Answer Suppliers credit , Forfaiting
Your Answer Suppliers credit , Forfaiting
Select The Blank
Question Forward margin makes a currency cheaper then the currency isat ________.
Correct Answer Discount
Your Answer Discount
Multiple Choice Single AnswerQuestion Name the common forex derivatives :-
Correct Answer Options, futures
Your Answer Options, futures
True/FalseQuestion Country risk analysis is a futile exercise in the background of
cost of analysis.Correct Answer True
Your Answer False
Select The BlankQuestion Even after liberalisation of exchange controls, the Euro sterling
market remained volatile because of uncertainties in UK andgyrations of sterling against major ________ countriesCorrect Answer OECD
Your Answer OECD
Match The Following
Question Correct Answer Your Answer
Issues linked withLIBOR,LIBID,LIMEAN
FRNs FRNs
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Issue of bonds withoutfixed rate of interest,linked to short term
interest rate in the globalmarket
FloatingRate Note FloatingRate Note
Issue of loansinternationally,througharranger, underwriter,comanager, for a largeamount for sharing risk oflending
Syndicated Loans Syndicated Loans
Equity issues in theforeign markets either asdirect investments orportfolio investments.
American or GlobalDepository Receipts
American or GlobalDepository Receipts
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LIST OF ATTEMPTED QUESTIONS AND ANSWERS
Multiple Choice Single AnswerQuestion Proforma Invoice, Commercial Invoice, Consaular Invoice are
hich type of documents?Correct Answer Commercial Documents
Your Answer Commercial Documents
True/FalseQuestion Charter party bills of lading are generally not acceptable to
bankers as security because Sea Charters are full of problems.Correct Answer True
Your Answer True
Multiple Choice Multiple AnswerQuestion Why does a Transaction exposure arise?
Correct Answer Trading flows , Dividend or capital flows
Your Answer Trading flows , Dividend or capital flows
Multiple Choice Single AnswerQuestion If a dealer of securities is quoting rate as 200-250 then the rate
200 signifies which rate with reference to him?Correct Answer Bid rate
Your Answer Bid rate
Select The BlankQuestion A Documentary credit issued on the strength of another
documentary credit is known as ________.Correct Answer Back to Back credit
Your Answer Back to Back credit
Multiple Choice Multiple AnswerQuestion Internationally only those currencies are in demand
Correct Answer Which are convertible , Which have liquidity confirmed in Euromarket operations
Your Answer Which are convertible , Which have liquidity confirmed in Euromarket operations
True/False
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Question Tranche' is a managed issue of securities in smallerdenominations.
Correct Answer True
Your Answer False
True/FalseQuestion Funding Options in domestic yen market are Futures, FRAs,
Call and put options.Correct Answer True
Your Answer True
Select The BlankQuestion Global capital market can be understood from the study of
_______.Correct Answer Yen,Euro Dollar, Swiss Francs, USD market, Govt Borrowings
ithin and outside the countryYour Answer Yen,Euro Dollar, Swiss Francs, USD market, Govt Borrowings
ithin and outside the country
Multiple Choice Multiple AnswerQuestion Which events can lead to materialisation of country risk?
Correct Answer Change in Government policies , Change in Government rulesand laws
Your Answer Change in Government policies , Change in Government rulesand laws , Unpredicted Earthquake, Tsunami waves
Multiple Choice Multiple AnswerQuestion What is a 'speculator'?
Correct Answer Trader who is neither hedger nor arbitragor , He takes risks forprofit
Your Answer Trader who is neither hedger nor arbitragor , He takes risks forprofit
Select The BlankQuestion The major industrial power whose economy was not affected
after the II world war was ________.Correct Answer USA
Your Answer USA
Multiple Choice Multiple AnswerQuestion What does the word '"Tombstone" stand for?
Correct Answer Advertisement which lists the managers, underwriters, , List ofProviders of recently floated issue
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Your Answer Advertisement which lists the managers, underwriters, , List ofProviders of recently floated issue
Multiple Choice Multiple AnswerQuestion What do you understand by Commercial Risk?
Correct Answer Protracted default by the buyer , Insolvency of the buyer
Your Answer Protracted default by the buyer , Insolvency of the buyer
Select The BlankQuestion Legalised invoice is also called ________ invoice.
Correct Answer isaed
Your Answer isaed
Multiple Choice Single AnswerQuestion For a spot transaction carried out on Thursday, currencies will
be exchanged on :-Correct Answer Monday
Your Answer Monday
True/False
Question The American Dollar market comprises of the domestic segmentof USD the offshore segment of USD.Correct Answer True
Your Answer True
Match The Following
Question Correct Answer Your Answer
LastStage Form a single currency Meet in Maastricht inNetherland
The First stage in theEuropeand and MonetaryUnion (EMU)
Free movement of capitalin EC Establish EURO Bank
Stage II in EMU Establishment of European MonetaryInstitute
Establishment of EuropeanMonetary Institute
Stage III in EMU Members to meet theconvergence criteria andfix the exchange rates
Members to meet theconvergence criteria andfix the exchange rates
Select The Blank
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Question Under the ________ standard the Country's Central Bankpromised to buy back the currency at certain rate of Gold.
Correct Answer Gold
Your Answer Gold
True/FalseQuestion An Indian exporting goods to New York receives dollars in New
York.Correct Answer True
Your Answer True
Multiple Choice Multiple AnswerQuestion The factors which affect the performance of an option are:-
Correct Answer Underlying asset price , Time before expiration, rate of interest
Your Answer Underlying asset price , Time before expiration, rate of interest
Multiple Choice Multiple AnswerQuestion Which contracts are used for transportation by road?
Correct Answer FCA , CPT
Your Answer FCA , CPT , CFR
True/FalseQuestion Bid rate is bidders buying rate and offered r ate is bidders selling
rate.Correct Answer True
Your Answer False
Match The Following
Question Correct Answer Your Answer
Cancellation of contractsabove USD 500000
ECD ECD
Forward Purchasecontract currency atpremium
Presume earliest delivery Presume earliest delivery
Forward purchasecontract currency atdiscount
Presume latest delivery Presume latest delivery
Exchange margins FEDAI FEDAI
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Multiple Choice Single AnswerQuestion Under which category of exchange rate did the Indian Rupee
came from June 92?Correct Answer Other managed Floating
Your Answer Other managed Floating
Multiple Choice Multiple AnswerQuestion Which two countries were included to convert the group of five
into the group of seven?Correct Answer Italy , Canada
Your Answer Canada , Italy
Multiple Choice Single AnswerQuestion Who can open an EEFC account?
Correct Answer Individuals , firms, companies, resident in India
Your Answer Individuals , firms, companies, resident in India
Multiple Choice Single AnswerQuestion Method of advance payment is not disadvantageous to :-
Correct Answer The seller
Your Answer The seller
Multiple Choice Single AnswerQuestion What is the immediate cause for the growth of futures and
options in the last two decades?Correct Answer Increase in volatile trading conditions
Your Answer Increase in volatile trading conditions
Multiple Choice Single AnswerQuestion What do you mean by a derivative?
Correct Answer One which has been derived from other fundamentalinstruments
Your Answer Derived from Mathematical expressions
Multiple Choice Single AnswerQuestion "Currency Snake"
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Correct Answer Plus or minus movement of exchange rate around the parity rate
Your Answer Currency of European Country in the early 70's
True/FalseQuestion Postal receipt is an acknowledgement of receipt of goods, a
quasi negotiable instrument.Correct Answer False
Your Answer False
Multiple Choice Single AnswerQuestion In which currency can the EEFC account be opened?
Correct Answer Any Convertible currency
Your Answer Any Convertible currency
Multiple Choice Multiple AnswerQuestion Criteria for Direct investment abroad under normal route :-
Correct Answer iability of the proposal, and excellent track record of business ,Experience and expertise of promoters, benefit to the country
Your Answer Total Financial commitment in JV/WOS as per prescribed ceiling, Activity for investment is core activity of Indian Co.
Select The BlankQuestion _______ enables bankers to extend purchase, negotiation or
discount of export bills.Correct Answer Post shipment credit guarantee
Your Answer Post shipment credit guarantee
Multiple Choice Single AnswerQuestion For setting up a joint venture or WOS abroad, Indian banks
operating in India need a clearance :-Correct Answer Under Banking Regulation Act
Your Answer Under Banking Regulation Act
Multiple Choice Single AnswerQuestion Financial management is complex process for
Correct Answer Companies which have international trade
Your Answer Companies which have international trade
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True/FalseQuestion Indian companies are now allowed to freely invest abroad up to
$1.5 million, raised through GDE or EEFC without prior
permission from RBI.Correct Answer False
Your Answer False
Select The BlankQuestion Over the years ________has been the most widely accepted
currency in international capital market.Correct Answer American Dollar
Your Answer American Dollar
True/FalseQuestion Terms in an Irrevocable credit can not be alterred at all.
Correct Answer False
Your Answer True
Select The BlankQuestion Position in a currency is said to be ________, when sales equal
purchases.
Correct Answer SquareYour Answer Square
Multiple Choice Multiple AnswerQuestion How is the entry into any conuntry's money market or capital
market is restricted?Correct Answer Because of different tax systems , Because of different credit
standardsYour Answer Because of different tax systems , Because of different credit
standards
Select The BlankQuestion The currency notes and coins of individual countries
participating in "Euro" have ceased to be a legal tender from_______.
Correct Answer 2002
Your Answer 2002
Select The BlankQuestion Partnership firm not eligible for Overseas Direct Investment
needs to apply to RBI Approval in form ________.
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Correct Answer ODI
Your Answer ODI
Multiple Choice Single AnswerQuestion Where does the word derivative originate from?
Correct Answer Mathematics
Your Answer Mathematics
Select The BlankQuestion To make the export more competitive and remunerative, the
Indian Govt extends ________ facility.
Correct Answer Cash Incentives
Your Answer Cash Incentives
Multiple Choice Single AnswerQuestion The financial system of any country consists of
Correct Answer Network of commercial banks, domestic and foreign investmentbanks, NBFCs, etc
Your Answer The Central bank, IMF and world bank
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LIST OF ATTEMPTED QUESTIONS AND ANSWERS
Select The BlankQuestion Association of several scheduled commercial banks for forex
business is ________.Correct Answer Foreign Exchange Dealers Association of India
Your Answer Foreign Exchange Dealers Association of India
True/FalseQuestion Installment credit is issued for specific quantities of goods to be
shipped every week or month.Correct Answer True
Your Answer True
Select The BlankQuestion Combined Certificate of Origin and Value are required by
_______.Correct Answer Commonwealth Countries
Your Answer Commonwealth Countries
Select The BlankQuestion The creditworthiness of the futures seller and the futures buyer
is ________ because of the presence of the Futures exchange.Correct Answer Irrelevant
Your Answer Irrelevant
Select The BlankQuestion When interest rate changes by 0.05 per cent then it has
changed ________ basis points.Correct Answer 50
Your Answer 5
Multiple Choice Multiple AnswerQuestion What were the primary objectives of the group of seven
countries?Correct Answer Bring down the external value of US Dollar , Bring some stability
to exchange rates of all the countriesYour Answer Bring down the external value of US Dollar , Bring some stability
to exchange rates of all the countries
Multiple Choice Multiple Answer
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Question The crisis in global capital market in 2002-04 was due to
Correct Answer Collapse of Enron , Collapse of Argentina's currency board ,
The war against terrorismYour Answer Collapse of Enron , Collapse of Argentina's currency board
Multiple Choice Multiple AnswerQuestion Mr A sells an option conferring the right to buy a kilogram of
silver at Rs 8000/- for next six months means :-Correct Answer The buyer of option can buy silver from Mr A at 8000/- per Kg, in
next 6 months, even if the price goes up, , The buyer of optioncan sell silver to Mr A at 8000/- per Kg, in next 6 months, even ifthe price goes down.
Your Answer The buyer of option can buy silver from Mr A at 8000/- per Kg, innext 6 months, even if the price goes up, , Mr A has choice ofselling or not selling silver on his own
Multiple Choice Multiple AnswerQuestion Major investors in NIF are :-
Correct Answer Commercial Banks , Non banking Finance companies ,Insurance Companies
Your Answer Commercial Banks , Non banking Finance companies ,Insurance Companies
True/FalseQuestion With the advent of futures and Options there is no need for
additional instruments of risk hedging.Correct Answer False
Your Answer False
Select The BlankQuestion During the fixed rate exchange system prevailing in India, the
intervention currency was ________.Correct Answer Sterling Pound
Your Answer USDollar
Multiple Choice Single AnswerQuestion What help does EXIM Bank provide under the scheme 'Direct
Financial assistance to exporters'?Correct Answer Funds are provided under deferred payment terms to Indian
exporter for credit to foreign buyerYour Answer Funds are provided under deferred payment terms to Indian
exporter for credit to foreign buyer
Multiple Choice Single Answer
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Question What is a bill of lading?
Correct Answer Transport document representing movement of goods by water.
Your Answer Transport document representing movement of goods by water.
Multiple Choice Single AnswerQuestion Which controls are not permitted by IMF?
Correct Answer Current account controls
Your Answer Exchange controls
Multiple Choice Multiple Answer
Question What are the objectives of International Chamber ofCommerce?
Correct Answer Champion the global economy as a force of economic growth ,Creating of job and prosperity
Your Answer Champion the global economy as a force of economic growth ,Creating of job and prosperity
True/FalseQuestion Yankee bond is issued for domestic borrowers.
Correct Answer False
Your Answer True
Multiple Choice Multiple AnswerQuestion 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 monitordevelopments in Forex Market
Your Answer Clearing house for settlement and clearance for the operationsof Ads , Set up a market intelligence cell to study and monitordevelopments in Forex Market
True/FalseQuestion An AD can book a forward contract for a part of the amount of
Sale ContractCorrect Answer True
Your Answer False
True/FalseQuestion Sterling FRNs are issued in Europe, USA ,Asia
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Correct Answer False
Your Answer True
Match The Following
Question Correct Answer Your Answer
Bond basis to moneymarket basis
Bond basisx 360/365 Bond basisx 360/365
3 months LIBOR +2 % PA Floating rate Floating for floating ratecurrency swap
15% P.A. Fixed rate Fixed rate
Money market basis tobond basis
Money market basis x365/360
Money market basis x365/360
Select The BlankQuestion In Indian interbank market forward rates are generally quoted on
the basis of ________.Correct Answer Calendar month
Your Answer Calendar month
Multiple Choice Single AnswerQuestion In case of syndication of loans the amount of loan and currency
is finalised by :-Correct Answer Borrower
Your Answer Underwriter of the syndicate
Multiple Choice Single AnswerQuestion European currency Unit
Correct Answer Basket of Currencies of members of EMS
Your Answer Basket of Currencies of members of EMS
Select The BlankQuestion The counter party in option is ________.
Correct Answer The exchange
Your Answer Trustworthy corporation, who hedges the risks of marketuncertainty
Multiple Choice Single AnswerQuestion A Spot Transaction between Japanese Yen and Sterling carried
out on Friday in Singapore, the settlement day will be
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Correct Answer Following Tuesday if it is a working day in all the three centers
Your Answer Following Tuesday if it is a working day in all the three centers
Select The BlankQuestion EEFC account holder is allowed to have ________ facility.
Correct Answer Cheque book and nomination
Your Answer Cheque book and nomination
Multiple Choice Multiple AnswerQuestion A Usance bill of exchange may be drawn in 2 ways. Which are
they?
Correct Answer Documents against payment , Documents against acceptance
Your Answer Documents against payment , Documents against acceptance
Multiple Choice Single AnswerQuestion Why have futures and options come into existence?
Correct Answer To avoid business risk.
Your Answer To avoid business risk.
True/FalseQuestion In an interest rate swap if the payment schedules are identical,
only diffrence between the two payments is delivered.Correct Answer True
Your Answer True
Multiple Choice Multiple AnswerQuestion What are the main causes of fluctuations in Exchange rates?
Correct Answer Market demand and supply, sentiments , Governmentregulatios, fiscal policies, political instabilities
Your Answer Government regulatios, fiscal policies, political instabilities ,Market demand and supply, sentiments , The purchasing powerof currency changes every second
Multiple Choice Single AnswerQuestion What do you understand by a swap?
Correct Answer 2 counter parties agree to exchange streams of payments overa period of time
Your Answer 2 counter parties agree to exchange streams of payments overa period of time
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True/FalseQuestion Import finance is nomally available at rates of interest cheaper
than domestic finance rates.Correct Answer False
Your Answer False
Multiple Choice Single AnswerQuestion A weight list, a packing list used in international trade are which
type of documents?Correct Answer Operational Documents
Your Answer Operational Documents
Multiple Choice Multiple AnswerQuestion What do you understand by 'Foreign Exchange Risk'?
Correct Answer The change in value of currency alters the home currency valueof an asset , liability, , The change in value of currency alters thehome currency value of profit, loss, or future cash flows
Your Answer The change in value of currency alters the home currency valueof an asset , liability, , The change in value of currency alters thehome currency value of profit, loss, or future cash flows
Multiple Choice Single Answer
Question What Preshipment facility is granted by EXIM Bank to anexporter?
Correct Answer Preshipment credit beyond six months for construction andturnkey projects abroad
Your Answer Preshipment credit beyond six months for construction andturnkey projects abroad
Multiple Choice Single AnswerQuestion Which Indian Co. is not eligible to make investment abroad
under automatic route?Correct Answer Co which is caution listed by RBI
Your Answer Co which is caution listed by RBI
True/FalseQuestion Naked position is when investor does not hedge against market
risk.Correct Answer True
Your Answer True
Multiple Choice Multiple Answer
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Question In DAF, the frontier means :-
Correct Answer Frontier of exporter's country , Frontier of importer's country
Your Answer Frontier of exporter's country , Frontier of importer's country
Multiple Choice Single AnswerQuestion What is the volume of the world's average daily transactions in
foreign exchange?Correct Answer USD 1 trillion
Your Answer USD 1 trillion
Match The Following
Question Correct Answer Your Answer
European option On or after maturity On or after maturity
Out of money Loss Profit
In the money Profit Loss
American option Before maturity Before maturity
Select The BlankQuestion The Trans European Automated Real Time Gross Settlement
Express Transfer is popular in ________.Correct Answer Brussels
Your Answer Brussels
True/FalseQuestion PP Form is required when exports are made to any country by
post parcel on value payable basis.Correct Answer False
Your Answer False
Select The BlankQuestion When an Indian Company earns at least 50% of its average
turnover from a particular activity then that activity is consideredas ________.
Correct Answer Core activity
Your Answer Core activity
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Multiple Choice Single AnswerQuestion How many Countries participated in the third survey on Foreign
Exchange, coordinated by BIS in 1992?
Correct Answer 26
Your Answer 26
Select The BlankQuestion Indian Co. intending to make investment under Automatic route
needs to submit form ________ to RBI with enclosures.Correct Answer ODA
Your Answer ODA
Multiple Choice Single AnswerQuestion In International trade, Advance payment means :-
Correct Answer Providing up front cash
Your Answer Providing up front cash
True/FalseQuestion If ERD > IRD hen exporter should availa Rupee finance
Correct Answer True
Your Answer True
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Multiple Choice Multiple AnswerQuestion 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 monitordevelopments in Forex Market
Your Answer Clearing house for settlement and clearance for the operations ofAds , Make additional foreign currency available to ADs atcheaper rates
Select The BlankQuestion _______ is the agency of ICC which deals with the maritime
crime.Correct Answer International Maritime Bureau
Your Answer International Maritime Bureau
Multiple Choice Single AnswerQuestion Which of them are special funding facilities of IMF ?
Correct Answer Buffer Stock Facility
Your Answer Buffer Stock Facility
True/False
Question Cross currency forward contract is not meaningful if originalcontract is in Rupees to USD
Correct Answer True
Your Answer True
Multiple Choice Multiple AnswerQuestion What does a speculator accept while dealing with an option?
Correct Answer The exercise or strike price, the amount , The expiration date andtime, the method of payment
Your Answer The exercise or strike price, the amount , The expiration date and
time, the method of payment , The Market report of the exchangehich trades the option
Multiple Choice Single AnswerQuestion Which is the most actively traded currency in the international
market today?Correct Answer US Dollar
Your Answer US Dollar
Match The Following
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Question Correct Answer Your Answer
Intolerable risk Drop the investment project Drop the investment project
Country risk analysis Cost of evluation does notjustify analysis
Cost of evluation does notjustify analysis
Stock market analysis Banks are ahead Factors' values
Weightages % Factors' values 100% of total
Select The BlankQuestion Global capital market can be understood from the study of
_______.Correct Answer Yen,Euro Dollar, Swiss Francs, USD market, Govt Borrowings
ithin and outside the countryYour Answer Yen,Euro Dollar, Swiss Francs, USD market, Govt Borrowings
ithin and outside the country
Multiple Choice Single AnswerQuestion For a spot transaction carried out on Thursday, currencies will be
exchanged on :-Correct Answer Monday
Your Answer Monday
Multiple Choice Single AnswerQuestion Under which category of exchange rate did the Indian Rupee
came from June 92?Correct Answer Other managed Floating
Your Answer Pegged to Single currency
Match The Following
Question Correct Answer Your Answer
Maturity of future Time when actual commodityis delivered
Last date of exercising option
Note issuance facility Euronotes Euronotes
Bearer security issued incurrency other than that ofthe country of issue
Eurobonds Eurobonds
Margin on future Peformance bond or securitydeposit
Peformance bond or securitydeposit
True/FalseQuestion Postal receipt is an acknowledgement of receipt of goods, a quasi
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negotiable instrument.
Correct Answer False
Your Answer False
True/FalseQuestion The Prominent non banking financial institutions participating in
the FOREX markets are Pension funds, mutual funds, insuranceCos.
Correct Answer True
Your Answer True
Multiple Choice Multiple AnswerQuestion 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
Your Answer Faith money deposited by buyers and sellers ensures liquidity ,Margin ensures solvency for honouring contracts
Multiple Choice Single AnswerQuestion What is the volume of the world's average daily transactions in
foreign exchange?Correct Answer USD 1 trillion
Your Answer USD 1 trillion
Multiple Choice Single AnswerQuestion 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
Your Answer Which enables the investor to market the same in the secondarymarket
Multiple Choice Single Answer
Question What was the official foreign currency reserve of the group ofseven central Banks taken togeather in mid 1992?
Correct Answer USD 275 Billion
Your Answer USD 275 Billion
Multiple Choice Single AnswerQuestion What Preshipment facility is granted by EXIM Bank to an
exporter?Correct Answer Preshipment credit beyond six months for construction and
turnkey projects abroad
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Your Answer Preshipment credit up to six months for construction and turnkeyprojects abroad
Select The BlankQuestion Over the years ________has been the most widely accepted
currency in international capital market.Correct Answer American Dollar
Your Answer American Dollar
Select The BlankQuestion As a result of the world wars in the 20th century the ________ of
most of the countries suffered heavily.Correct Answer Economies
Your Answer Currencies
Multiple Choice Single AnswerQuestion Which currency is traded in one leg of about 70% of the world's
transactions?Correct Answer US Dollar
Your Answer US Dollar
Select The Blank
Question _______ is the acid test for events to be included in country risk.
Correct Answer Control by Government'
Your Answer Recurrence
Select The BlankQuestion The Trans European Automated Real Time Gross Settlement
Express Transfer is popular in ________.Correct Answer Brussels
Your Answer Brussels
Multiple Choice Single AnswerQuestion What is Risk Syndication facil ity?
Correct Answer Sharing of risk of non payment by supplier
Your Answer Sharing risk of Non payment by the Syndicate of Banks givingloans
True/False
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Question If ERD > IRD hen exporter should availa Rupee finance
Correct Answer True
Your Answer True
Multiple Choice Multiple AnswerQuestion The characteristics of an International documentary credit are :-
Correct Answer It is an undertaking given by the openers bank to pay certain sumof money , It is an undertaking given on behalf of a certain personto another person in different country
Your Answer It is an undertaking given by the openers bank to pay certain sumof money , It is an undertaking given on behalf of a certain personto another person in different country
Multiple Choice Multiple AnswerQuestion Which debits are permitted to EEFC accounts?
Correct Answer Payment of hotel bills abroad, payment for expenses on Heartoperation abroad , Payment to EOUs in India for servicesrendered by them
Your Answer Payment of hotel bills abroad, payment for expenses on Heartoperation abroad , Payment to EOUs in India for servicesrendered by them
True/False
Question Funding Options in domestic yen market are Futures, FRAs, Calland put options.Correct Answer True
Your Answer True
True/FalseQuestion There is no difference between CIP and CIF contracts except the
mode of transportation.Correct Answer True
Your Answer True
Multiple Choice Single AnswerQuestion Financial management is complex process for
Correct Answer Companies which have international trade
Your Answer Companies which have international trade
Select The BlankQuestion When an Indian Company earns at least 50% of its average
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turnover from a particular activity then that activity is consideredas ________.
Correct Answer Core activity
Your Answer Primary activity
Select The BlankQuestion A Credit can be a confirmed credit only if it is also ________.
Correct Answer An Irrevocable credit
Your Answer An Irrevocable credit
True/False
Question The volume of trading of Derivatives in the world trade market isgrowing but still only 5% of the total.
Correct Answer False
Your Answer False
Multiple Choice Single AnswerQuestion 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
Your Answer USD 1=Rs 50.5000
Multiple Choice Multiple AnswerQuestion Export finance
Correct Answer Preshipment credit , Post shipment credit , Duty Draw back
Your Answer Preshipment credit , Post shipment credit , Buyers credit
Multiple Choice Multiple AnswerQuestion Internationally only those currencies are in demand
Correct Answer Which are convertible , Which have liquidity confirmed in Euromarket operations
Your Answer Which are convertible , Which have liquidity confirmed in Euromarket operations , Which have greater intrinsic value
Multiple Choice Multiple AnswerQuestion What are the functions of Asian Development Bank?
Correct Answer Give Softloans to poorer countries in Asia , Give project financefrom resources raised in world capital market
Your Answer Give Softloans to poorer countries in Asia , Give project financefrom resources raised in world capital market
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Multiple Choice Multiple AnswerQuestion What does the word '"Tombstone" stand for?
Correct Answer Advertisement which lists the managers, underwriters, , List ofProviders of recently floated issue
Your Answer Advertisement which lists the managers, underwriters, , List ofProviders of recently floated issue
Select The BlankQuestion Short term instruments normally issued by corporate borrowers,
forhigh values, at a discount to face value are known as_______.
Correct Answer Euro Commercial Papers
Your Answer Euro Commercial Papers
Multiple Choice Single AnswerQuestion 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
Your Answer To weed out unviable projects and rank profitable ones
Multiple Choice Single AnswerQuestion Examples of hedge are:
Correct Answer Buy when you are having short position
Your Answer Buy when you are having short position
Multiple Choice Multiple AnswerQuestion What is the effect of cross currency option on the customer?
Correct Answer He gets the flexibility to exposure , He is exposed to additional riskof movement of rates between 3 currencies
Your Answer He gets the flexibility to exposure , He is exposed to additional riskof movement of rates between 3 currencies
Select The BlankQuestion Forward margin makes a currency cheaper then the currency is at
_______.Correct Answer Discount
Your Answer Discount
Multiple Choice Single AnswerQuestion Why does a person need protection from unfavourable movement
of exchange rate?
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Correct Answer Unfavourable fluctuations in exchange rate can wipe out thenormal business profit
Your Answer Unfavourable fluctuations in exchange rate can wipe out the
normal business profit
Multiple Choice Single AnswerQuestion The capital market is said to be volatile when
Correct Answer Prices of capital market instruments change and are expected tochange drastically
Your Answer Prices of capital market instruments change and are expected tochange drastically
True/FalseQuestion JV means Joint venture and WOS means World of Security.
Correct Answer False
Your Answer False
Multiple Choice Multiple AnswerQuestion 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 equivalentYour Answer Activity proposed need to be core activity , Financial commitment
in JV/WOS maximum $ 100 million or equivalent , Indian co
should not have been black listed
Multiple Choice Multiple AnswerQuestion What does the word '"Tombstone" stand for?
Correct Answer Advertisement which lists the managers, underwriters, , Listof Providers of recently floated issue
Your Answer Advertisement which lists the managers, underwriters, , Listof Providers of recently floated issue
True/FalseQuestion Out of 15 member countries in European Union 12 countries
commiteed themselves for a single currency.
Correct Answer False
Your Answer False
True/FalseQuestion The volume of trading of Derivatives in the world trade
market is growing but still only 5% of the total.Correct Answer False
Your Answer False
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Select The BlankQuestion A Credit can be a confirmed credit only if it is also
_______.Correct Answer An Irrevocable credit
Your Answer An Irrevocable credit
Match The Following
Question Correct Answer Your Answer
Intolerable risk Drop the investment project Drop the investment project
Country risk analysis Cost of evluation does not
justify analysis
Cost of evluation does not
justify analysisStock market analysis Banks are ahead Banks are ahead
Weightages % Factors' values Factors' values
Select The BlankQuestion Over the years ________has been the most widely
accepted currency in international capital market.Correct Answer American Dollar
Your Answer American Dollar
Multiple Choice Single AnswerQuestion What is the meaning of a country risk?
Correct Answer Risk of events in a particular country which may cause lossto a person dealing with that country
Your Answer Risk of events in a particular country which may cause lossto a person dealing with that country
Multiple Choice Multiple AnswerQuestion Which common details will be available in any bill of
Lading?Correct Answer Names of consigner, consignee , The port of loading andunloading, contract of shipment
Your Answer Names of consigner, consignee , The port of loading andunloading, contract of shipment
Multiple Choice Single AnswerQuestion What help does EXIM Bank provide under the scheme
'Direct Financial assistance to exporters'?Correct Answer Funds are provided under deferred payment terms to Indian
exporter for credit to foreign buyer
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Your Answer Funds are provided under deferred payment terms to Indianexporter for credit to foreign buyer
Match The FollowingQuestion Correct Answer Your Answer
PP Form Export Declaration form Export Declaration form
Health Certificate Fumigation certificate Fumigation certificate
Certificate of Inspection As per importersrequirement
As per importersrequirement
Certifiate of Origin Export Promotion Council Export Promotion Council
Select The BlankQuestion Even after liberalisation of exchange controls, the Euro
sterling market remained volatile because of uncertainties inUK and gyrations of sterling against major ________countries
Correct Answer OECD
Your Answer OECD
Multiple Choice Single AnswerQuestion How many INCOTERMS are there in "Departure" Group?
Correct Answer One
Your Answer Two
Multiple Choice Single AnswerQuestion What is a bill of lading?
Correct Answer Transport document representing movement of goods byater.
Your Answer Transport document representing movement of goods byater.
True/FalseQuestion The American Dollar market comprises of the domestic
segment of USD the offshore segment of USD.Correct Answer True
Your Answer True
Select The BlankQuestion The creditworthiness of the futures seller and the futures
buyer is ________ because of the presence of the Futures
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exchange.
Correct Answer Irrelevant
Your Answer Irrelevant
Multiple Choice Single AnswerQuestion What was the collective assessment of International
financial market about the country risk of many cnuntries inthe last decade?
Correct Answer Whatever it was, was disastrously wrong.
Your Answer Whatever it was, was disastrously wrong.
Multiple Choice Multiple AnswerQuestion How is the entry into any conuntry's money market or capital
market is restricted?Correct Answer Because of different tax systems , Because of different
credit standardsYour Answer Because of different tax systems , Because of different
credit standards
True/FalseQuestion Till August 1994 India was following the Indirect Methodof
Rate quotation.Correct Answer False
Your Answer True
Select The BlankQuestion In Indian interbank market forward rates are generally
quoted on the basis of ________.Correct Answer Calendar month
Your Answer Calendar month
Select The Blank
Question Rupee was liberalised on ________ account in 1993, andon current account in 1994.
Correct Answer Trade
Your Answer Trade
Multiple Choice Single AnswerQuestion Under which category of exchange rate did the Indian
Rupee came from June 92?Correct Answer Other managed Floating
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Your Answer Other managed Floating
Multiple Choice Multiple AnswerQuestion Which of these are considered as miscellaneous
documents?Correct Answer Packing list , Weight certificate
Your Answer Packing list , Weight certificate
True/FalseQuestion Funding Options in domestic yen market are Futures, FRAs,
Call and put options.Correct Answer True
Your Answer True
Select The BlankQuestion ECGC provides cover to an Indian contractor for
construction work abroad under ________.Correct Answer Construction works policy
Your Answer Construction works policy
Multiple Choice Single Answer
Question Equity can be raised internationallly by a company through:-Correct Answer Fund raising, underwriting, hedging , arbitration operations
Your Answer Fund raising, underwriting, hedging , arbitration operations
Multiple Choice Single AnswerQuestion How many Countries participated in the third survey on
Foreign Exchange, coordinated by BIS in 1992?Correct Answer 26
Your Answer 26
True/FalseQuestion In red clause credit some clauses are printed in Red ink.
Correct Answer True
Your Answer True
True/FalseQuestion Prior approval of RBI is needed for payment of all imports.
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Correct Answer False
Your Answer True
Multiple Choice Multiple AnswerQuestion The factors which affect the performance of an option are:-
Correct Answer Underlying asset price , Time before expiration, rate ofinterest
Your Answer Underlying asset price , Time before expiration, rate ofinterest
Multiple Choice Single AnswerQuestion What is the immediate cause for the growth of futures and
options in the last two decades?Correct Answer Increase in volatile trading conditions
Your Answer Management of external risk
Select The BlankQuestion For setting up joint ventures abroad or equity participation
abroad, EXIM bank provides funds under ________Scheme.
Correct Answer Overseas investment facility
Your Answer Overseas investment facility
Select The BlankQuestion o make the export more competitive and remunerative, the
Indian Govt extends ________ facility.Correct Answer Cash Incentives
Your Answer Advance against cash incentives
Multiple Choice Multiple AnswerQuestion What is the criteria for an Indian Company for Direct
Investment abroad?
Correct Answer Activity proposed need to be core activity , Financialcommitment in JV/WOS maximum $ 100 million orequivalent
Your Answer Activity proposed need to be core activity , Financialcommitment in JV/WOS maximum $ 100 million orequivalent
Multiple Choice Multiple AnswerQuestion External Commercial Debt market :-
Correct Answer Prevails in Domestic market of foreign country , Prevails inoffshore markets
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Your Answer Prevails in Domestic market of foreign country , Prevails inoffshore markets
Multiple Choice Single AnswerQuestion Financial management is complex process for
Correct Answer Companies which have international trade
Your Answer Companies which have international trade
Multiple Choice Multiple AnswerQuestion What do you understand by 'Foreign Exchange Risk'?
Correct Answer The change in value of currency alters the home currencyvalue of an asset , liability, , The change in value of
currency alters the home currency value of profit, loss, orfuture cash flows
Your Answer The change in value of currency alters the home currencyvalue of an asset , liability, , The change in value ofcurrency alters the home currency value of profit, loss, orfuture cash flows , Certainty of an event which wouldhappen in favour of the importer/ exporter
Multiple Choice Single AnswerQuestion For a spot transaction carried out on Tuesday, where both
centers have holiday on Wednesday, currencies will beexchanged on :-
Correct Answer Thursday if it is a working day at both the centers
Your Answer Friday
Multiple Choice Single AnswerQuestion Which details about forward contracts do the Exchange
Controls verify ?Correct Answer Particulars of cancellation of forward cover for the
equivalent of USD 500,000Your Answer Particulars of cancellation of forward cover for the
equivalent of USD 500,000
True/FalseQuestion In the forward rate quotations between two currencies,
hen one currency is at discount the other currency is atpremium.
Correct Answer True
Your Answer True
Multiple Choice Multiple AnswerQuestion Internationally only those currencies are in demand
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Correct Answer Which are convertible , Which have liquidity confirmed inEuro market operations
Your Answer Which are convertible , Which have liquidity confirmed in
Euro market operations
Select The BlankQuestion A Bill of exchange payable 45 days from date of shipment,
is a means of ________ from seller to the buyer.Correct Answer Credit
Your Answer Credit
Multiple Choice Single AnswerQuestion What Preshipment facility is granted by EXIM Bank to an
exporter?Correct Answer Preshipment credit beyond six months for construction and
turnkey projects abroadYour Answer Preshipment credit beyond six months for construction and
turnkey projects abroad
Select The BlankQuestion Global capital market can be understood from the study of
_______.Correct Answer Yen,Euro Dollar, Swiss Francs, USD market, Govt
Borrow