Top 150+ Solved Banking and Finance 2 MCQ Questions Answer
Q. India’s foreign exchange rate system is?
a. Free float
b. Managed float
c. Fixed
d. Fixed target of band
Q. Hedging transaction is indicated by
a. Transactions in odd amounts
b. Presentation of documentary support
c. Frequency of such transactions
d. None of the above
Q. The acronym SWIFT stands for
a. Safety Width in Financial Transactions.
b. Society for Worldwide International Financial Telecommunication.
c. Society for Worldwide Interbank Financial Telecommunication.
d. Swift Worldwide Information for Financial Transaction.
Q. Indirect rate in foreign exchange means
a. The rate quoted with the units of home currency kept fixed.
b. The rate quoted with units of foreign currency kept fixed.
c. The rate quoted in terms of a third currency.
d. None of the above.
Q. The exchange rate is
a. The price of one currency relative to gold.
b. The value of a currency relative to inflation.
c. The change in the value of money over time.
d. The price of one currency relative to another.
Q. India is facing continuous deficit in its balance of payments. In the foreign exchange market rupee isexpected to
a. Depreciate.
b. Appreciate.
c. Show no specific tendency.
d. Depreciate against currencies of the countries with positive balance of payment and appreciate
Q. The effect of speculation on exchange rate is
a. It causes violent fluctuations in exchange rate.
b. It aggravates the market trends.
c. Either or both of A and B.
d. Neither A nor B.
Q. The demand for domestic currency in the foreign exchange market is indicated by the followingtransactions in balance of payment.
a. Export of goods and services
b. Import of goods and services.
c. Export of goods and services and capital inflows.
d. Import of goods and services and capital outflows.
Q. If PPP holds
a. The nominal exchange rate will not change.
b. The real exchange rate will not change.
c. Both real and nominal exchange rates will not change.
d. Both real and nominal exchange will move together
Q. A spot transaction in the foreign exchange market involves the
a. Exchange of exports and imports at a specified future date.
b. Exchange of bank deposits at a specified future date.
c. Immediate (within two days) exchange of exports and imports.
d. Immediate (within two days) exchange of bank deposits.
Q. Forward exchange rates
a. Involve the immediate exchange of bank deposits.
b. Involve the exchange of bank deposits at some specified future date.
c. Involve the immediate exchange of imports and exports.
d. None of the above.
Q. When the value of the British pound changes from $1.50 to $1.25, the pound has ________ and the dollarhas ________.
a. appreciated; appreciated
b. depreciated; appreciated
c. appreciated; depreciated
d. depreciated; depreciated
Q. The foreign exchange market
a. Is organized as an over-the-counter market in which several hundred dealers stand ready to buy and sell deposits denominated in foreign currencies.
b. Is very competitive.
c. Functions no differently from a centralized market.
d. All of the above.
Q. In the long run, ________ affect the exchange rate.
a. relative price levels
b. tariffs and quotas
c. productivity
d. All of the above.
Q. Exchange rates are determined in
a. The money market.
b. The foreign exchange market.
c. The stock market.
d. The capital market.