Top 80+ Solved Foreign Exchange Management MCQ Questions Answer
Q. The margin for a currency future should be maintained with the clearinghouse by
a. The buyer.
b. The seller.
c. Both the buyer and the seller.
d. Either the buyer or the seller as per the agreement between them.
Q. The marking to market in respect of a currency future refers to
a. Putting up for sale specific lot of futures.
b. Adjusting the margin money of buyer and seller to reflect the current value of futures
c. Quoting rates for different maturities.
d. Allotting futures among different brokers.
Q. For the balance kept in the margin account for futures
a. Interest is paid at riskless rate.
b. Interest is paid at LIBOR rate
c. Interest is paid for the surplus over the required minimum.
d. No interest is pai
Q. A feature of currency option that distinguishes it from other derivatives is
a. It carries premium to be paid up front.
b. It is optional to enter into the contract.
c. The buyer has only right, but no obligation to execute the contract
d. The seller has the right, but no obligation to execute the contract.
Q. The following statement with respect to currency option is wrong
a. Call option will be used by exporters.
b. Put option gives the buyer the right to sell the foreign currency.
c. Foreign currency- Rupee option is available in India.
d. An American option can be executed on any day during its currency.
Q. For contingency exposure of foreign exchange, the best derivative that can be usedto hedge is
a. Forwards.
b. Futures.
c. Options.
d. Swaps.
Q. The strike price under an option is
a. The price at which the option is auctioned
b. The exchange rate which the currencies are agreed to be exchanged under the contract
c. . Lower of the market price and the agreed price
d. None of the above
Q. An option at-the-money when
a. The strike price is greater than the spot price, in the case of a call option.
b. The strike price is greater than spot price, in the case of a put option.
c. The option has a ready market.
d. The strike price and the spot price are the same.
Q. Zero coupon swap is an arrangement
a. Involving exchange of zero coupon bonds.
b. Whereby only one party makes payment periodically.
c. Whereby one of the counter-parties makes payment in lump sum instead of periodically.
d. None of the above.
Q. The acronym CIRCUS stands for
a. Current Interest Rate Swap.
b. Circular Currency Swap.
c. Combined Income Range Currency Swap.
d. Combined Interest Rate and Currency Swap.
Q. A forward rate agreement helps the user to
a. Fix the cost of borrowing.
b. Reduce the cost of borrowing.
c. Cover exchange risk
d. Avail tax benefit
Q. The swap arrangement where principal amounts are not exchanged, but periodicalpayments will be a
a. Currency swap
b. Cross currency interest swap
c. Interest rate swap.
d. Non-Financial swap.
Q. An interest rate cap is a series of
a. Call options
b. Put options.
c. Periodical payments
d. Differential payments.
Q. Which of the following is not an example of an international trade draft?
a. Time draft.
b. Sight draft.
c. Both the first and second answers are correct
d. Usance draft