Top 50+ Solved Foreign Exchange Market MCQ Questions Answer
From 1 to 12 of 12
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 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. 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.
Q. The immediate (two-day) exchange of one currency for another is a
a. Forward transaction.
b. Spot transaction.
c. Money transaction.
d. Exchange transaction.
Q. An agreement to exchange dollar bank deposits for euro bank deposits in one month is a
a. Spot transaction.
b. Future transaction.
c. Forward transaction.
d. Monthly transaction.
Q. In the foreign exchange market, if the interest rate on foreign deposits increases, holding everything elseconstant,
a. The expected return schedule for foreign deposits shifts to the right.
b. The dollar depreciates.
c. The foreign currency appreciates.
d. All of the above.
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