IFM-24

1.  The Germany DM is selling for $ 0.62 & the buying rate for the French franc (FF) 0.17 $, ––––––––––––– is the FF/DM cross rate.

                    

• A.  FF 3.65/DM

• B. FF 5.81/DM

• C. DM 0.108/FF    

• D. None of the above

2.  –––––––––– is not a type of foreign exchange exposure.

            

     

• A.  Transaction exposure

• B.  Economic exposure

• C.  Translation exposure         

• D.  Participative exposure

3.  ___________ is not a approaches of centralized cash management

                                                

                   

• A. Netting    

• B. Cash Pooling

• C. Import and Export           

• D. Currency Diversification

4.  If the forward rate is lower than the spot rate in the forward market, the currency is trading at a forward …………………….

                           

• A. Premium

• B. Discount  

• C. Equal   

• D. Both of the above

5.  The Purchasing Power Parity (PPP) theory is a good predictor of ––––––––––.

• A. The long-run tendencies between changes in the price level and the exchange rate of two countries

• B. Interest rate differentials between two countries when there are strong barriers preventing trade between the two countries

• C. Either b or c

• D. None of the above

6.  The term Euro Currency market refers to

• A The international foreign exchange market

• B The market where the borrowing and lending of currencies take place outside the country of issue

• C The countries which have adopted Euro as their currency

• D The market in which Euro is exchanged for other currencies

7.  The foreign direct investment includes __________

                                                       

  

• A. tangible good

• B. intangible good  

• C. intellectual property

• D. human resources

8.  IRP theory stresses on the fact that the size of the forward premium or discount on a foreign currency is ––––––––––––––to the difference between the spot and forward interest rates of the countries in comparison.

                                

• A. In sync with

• B. Not Equal  

• C. Equal

• D. Not in sync with

9.  The most common way that professional dealers and brokers state foreign exchange quotations and the way they appear on all computer trading screens worldwide is called –––––––––––– terms.

                        

• A. American

• B. European

• C. Indian

• D. Singaporean

10.  ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­–––––––––––––– means avoidance of a foreign exchange risk.

                                       

• A. Arbitrage       

• B. Hedging  

• C. Trading   

• D. Speculating