Foreign Exchange money market 4

If PPP holds

• The nominal exchange rate will not change.

• The real exchange rate will not change.

• Both real and nominal exchange rates will not change.

• Both real and nominal exchange will move together

Which of the following statement is true about Commercial Paper?

• It is a promissory note

• It is traded in the money market

• It was introduced in 1990

• It is a secure Instrument

What is Notice Money?

• It is an overnight loan in the Money Market

• It is loan of above1 day to 14 days in the money market

• It is loan of above14 day to 364 days in the money market

• It is an amount charged on ISD

A spot transaction in the foreign exchange market involves the

• Exchange of exports and imports at a specified future date.

• Exchange of bank deposits at a specified future date.

• Immediate (within two days) exchange of exports and imports.

• Immediate (within two days) exchange of bank deposits.

Hedging transaction is indicated by

• Transactions in odd amounts

• Presentation of documentary support

• Frequency of such transactions

• None of these

The demand for domestic currency in the foreign exchange market is indicated by the followingtransactions in balance of payment

• Export of goods and services

• Import of goods and services.

• Export of goods and services and capital inflows.

• Import of goods and services and capital outflows.

What is Term Money?

• It is an overnight loan in the Money Market

• It is loan of above1 day to 14 days in the money market

• It is loan of above14 day to 364 days in the money market

• It is a loan provided on certain terms and conditions by Bank to its customer

Forward exchange rates

• Involve the immediate exchange of bank deposits.

• Involve the exchange of bank deposits at some specified future date.

• Involve the immediate exchange of imports and exports.

• None of these

Indirect rate in foreign exchange means

• The rate quoted with the units of home currency kept fixed.

• The rate quoted with units of foreign currency kept fixed.

• The rate quoted in terms of a third currency.

• None of these

Which of the following statement is false about Treasury Bills?

• It is a secure Instrument

• It is a promissory note

• It is issued by government

• It is issued maximum for maturity of 1 year