Top 80+ Solved Foreign Exchange Management MCQ Questions Answer
Q. _______________ is a process of taking advantage of differentials in interest ratesof two currencies while eliminating exchange risk.
a. Hedging
b. Insurance
c. Covered – Interest Arbitrage
d. Exposure
Q. Quotation where the price of one unit of foreign currency is given in terms of localcurrency units is called as
a. Indirect quotation
b. . Direct quotation
c. Open-ended quotation
d. Close – ended quotation
Q. An operation in order to protect the domestic currency value of an asset or a liabilitythat is denominated in foreign currency is called as
a. Hedging
b. Hermes
c. Indexation
d. Leading
Q. Difference between buying and selling rates in an exchange rate or interest ratequotation is known as
a. Strike price
b. Spread
c. Swap points
d. Spot rate
Q. The price which one subsidiary or one unit of business charges from another forselling goods or providing services is
a. Transfer price
b. Strike price
c. Spot price
d. Forward rate
Q. The bond that does not pay any interest and issued at a price lower than itsreimbursement value is called as
a. Zero coupon bond
b. Coupon bond
c. Euro bond
d. Domestic bond
Q. ____________ means using short-term forward contracts to offset “paper” gainsand losses on the long-term assets and liabilities of foreign subsidiaries.
a. Hedging transaction exposure
b. Hedging balance-sheet exposure
c. Hedging economic exposure
d. Hedging cost exposure
Q. Which exchange rate theory focuses on the inflation – exchange rate relationship?
a. Interest rate parity
b. International Fisher Effect
c. Purchasing power parity
d. Traditional Model
Q. The exchange rate prevailing at a financial reporting date
a. Closing exchange rate
b. Opening exchange rate
c. Fixed exchange rate
d. Fluctuating exchange rate
Q. The bank account of a non-resident of a country, where the amount of currency inthe account cannot be transferred to another country is called as
a. Nostro account
b. Blocked Account
c. Foreign account
d. Capital account
Q. Funds that cannot be remitted from the subsidiary to the parent due to hostgovernment restrictions is known as
a. Close – ended funds
b. Open – ended funds
c. Blocked funds
d. Restricted funds
Q. Exchange rate between currency A and currency B, given the values of currencies Aand B with respect to a third currency is known as
a. Golden standard
b. Flexible exchange rate
c. Fixed exchange rate
d. Cross exchange rate A