WorksheetsDerivatives Post CAT I Quiz 3
Total questions: 10
Worksheet time: 28mins
A -------------- is a foreign exchange agreement between two institutes to exchange the aspects - principal / interest payments of a loan in one currency for equivalent aspects an an equal in net present value loan in another currency
Interest rate swap
Currency swap
Capital swap
The major advantages of currency swap is /are
avoid higher interest rate
avoid exchange rate fluctuations risk
Both of the above
In currency swap, swap bank will ask the parties to raise the loan from the banks in
foreign currency
their currency
swap bank currency
The major reason behind currency swap is the --------------------- charged by the local banks to the foreign companies
Higher interest rate
Lower interest rate
more interest rate than swap bank
Suppose IBM wants to expand its business in India. Similarly, TATA wishes to enter the US market. One significant financial challenge that both companies will face is the unwillingness of domestic banks to extend loans to international corporations.
the unwillingness of international banks to extend loans to corporations in their currency.
the unwillingness of domestic banks to extend loans to international corporations.
the unwillingness of companies to raise loans to international banks.
Suppose IBM wants to expand its business in India. Similarly, TATA wishes to enter the US market. The US bank will perhaps be willing to lend a loan to TATA at 12%. Instead of 6% which is normally available for American companies. On the other hand, Indian banks will be offering a loan to IBM at an interest rate of 14%. Instead of 8% which is normally available to Indian companies. TATA needs $10,000,000 to launch their business in US and IBM needs Rs.600, 000, 000 to expand their business in 10 major cities in India. The exchange rate is Rs.60 / $. Though currency swap, TATA will pay interest amount every year,
$600,000 instead of $1,200,000.
$600,000 instead of $1,400,000.
$800,000 instead of $1,400,000.
Suppose IBM wants to expand its business in India. Similarly, TATA wishes to enter the US market. The US bank will perhaps be willing to lend a loan to TATA at 12%. Instead of 6% which is normally available for American companies. On the other hand, Indian banks will be offering a loan to IBM at an interest rate of 14%. Instead of 8% which is normally available to Indian companies. TATA needs $10,000,000 to launch their business in US and IBM needs Rs.600, 000, 000 to expand their business in 10 major cities in India. The exchange rate is Rs.60 / $. Though currency swap, IBM will pay interest amount every year,
Rs3,60,00,000 instead of Rs.7,20,00,000.
Rs48,000,000 instead of Rs.84,000,000.
Rs600,000 instead of Rs.1,200,000.
Suppose IBM wants to expand its business in India. Similarly, TATA wishes to enter the US market. The US bank will perhaps be willing to lend a loan to TATA at 12%. Instead of 6% which is normally available for American companies. On the other hand, Indian banks will be offering a loan to IBM at an interest rate of 14%. Instead of 8% which is normally available to Indian companies. TATA needs $10,000,000 to launch their business in US and IBM needs Rs.600, 000, 000 to expand their business in 10 major cities in India. The exchange rate is Rs.60 / $. Though currency swap, TATA will pay at the end of the tenure.
$1,200,000
Rs.648,000,000
$10,600,0000
Suppose IBM wants to expand its business in India. Similarly, TATA wishes to enter the US market. The US bank will perhaps be willing to lend a loan to TATA at 12%. Instead of 6% which is normally available for American companies. On the other hand, Indian banks will be offering a loan to IBM at an interest rate of 14%. Instead of 8% which is normally available to Indian companies. TATA needs $10,000,000 to launch their business in US and IBM needs Rs.600, 000, 000 to expand their business in 10 major cities in India. The exchange rate is Rs.60 / $. Though currency swap, IBM will pay at the end of the tenure.
$1,200,000
$10,600,000
Rs.648,000,000
Suppose IBM wants to expand its business in India. Similarly, TATA wishes to enter the US market. The US bank will perhaps be willing to lend a loan to TATA at 12%. Instead of 6% which is normally available for American companies. On the other hand, Indian banks will be offering a loan to IBM at an interest rate of 14%. Instead of 8% which is normally available to Indian companies. TATA needs $10,000,000 to launch their business in US and IBM needs Rs.600, 000, 000 to expand their business in 10 major cities in India. The exchange rate is Rs.60 / $. Though currency swap, TATA will save interest amount at the end of 10 years tenure.
6 million dollar
7 million dollar
3 million dollar
