International Finance - 3

LIST OF ATTEMPTED QUESTIONS AND ANSWERS
True/False
Question
Integrated branches of Commercial banks handle forex transactions as well as options, swaps, futures, arbitrage operations
Correct Answer
True
Your Answer
True

True/False
Question
JV means Joint venture and WOS means World of Security.
Correct Answer
False
Your Answer
False

Select The Blank
Question
The rate of interest on rupee finance for exports is not exceeding ________ less than PLR.
Correct Answer
0.025
Your Answer
50 basis points over LIBOR

Multiple Choice Multiple Answer
Question
What does a speculator accept while dealing with an option?
Correct Answer
The exercise or strike price, the amount , The expiration date and time, the method of payment
Your Answer
The exercise or strike price, the amount , The expiration date and time, the method of payment

Multiple Choice Single Answer
Question
In the syndicated loan arrangement the borrower has to execute :-
Correct Answer
Single Principal loan agreement
Your Answer
Single Principal loan agreement

True/False
Question
At Least one principal Lender bank is essential for issue of the ADR or GDR.
Correct Answer
False
Your Answer
True

Multiple Choice Single Answer
Question
US financial system is the freest system because
Correct Answer
Institutions can introduce new products and instuments at the price of their choice.
Your Answer
Institutions can introduce new products and instuments at the price of their choice.

Multiple Choice Single Answer
Question
In a coupon swap who is called the buyer?
Correct Answer
One who pays the fixed rate of interest
Your Answer
One who pays the fixed rate of interest

True/False
Question
Till August 1994 India was following the Indirect Methodof Rate quotation.
Correct Answer
False
Your Answer
False

Select The Blank
Question
For setting up joint ventures abroad or equity participation abroad, EXIM bank provides funds under ________ Scheme.
Correct Answer
Overseas investment facility
Your Answer
Overseas investment facility

Multiple Choice Single Answer
Question
Under the automatic route of Direct Investment Abroad, what is the restriction on market purchases?
Correct Answer
50% of the net worth of the investing company
Your Answer
50% of the net worth of the investing company

Multiple Choice Single Answer
Question
What are the powers of money changers?
Correct Answer
Purchase and sell foreign currency notes and travellers cheques
Your Answer
Purchase and sell foreign currency notes and travellers cheques and also Give export finance

Select The Blank
Question
Any company involved in foreign exchange transactions is exposed to ________ risk.
Correct Answer
Currency
Your Answer
Currency

Multiple Choice Multiple Answer
Question
What are the features of Settlement price ?
Correct Answer
Price established by the clearing house at the end of each trading session , It is used to determine the net gain, loss, margin call and next days price limits
Your Answer
Price established by the clearing house at the end of each trading session , It is used to determine the net gain, loss, margin call and next days price limits

Multiple Choice Multiple Answer
Question
What are the activities of ICC?
Correct Answer
Aribtration and dispute resolving , Canvass for open trade combat commercial crime
Your Answer
Aribtration and dispute resolving , Canvass for open trade combat commercial crime , Increased Govt regulation of Business

True/False
Question
Cause of increase in cost of public issues Underwriting fees , selling commission
Correct Answer
True
Your Answer
False

Select The Blank
Question
The currency swaps used ________.
Correct Answer
To lower the risk of currency exposure
Your Answer
To lower the risk of currency exposure

True/False
Question
The Option period in the forward contract is at the option of the Banker, hence the bank has to be very conservative in quoting rates.
Correct Answer
False
Your Answer
True

Multiple Choice Multiple Answer
Question
Which factors affect the exchange rates in short time period?
Correct Answer
Demand and supply, interest rates, inflation, , Sentiment, Speculation
Your Answer
Demand and supply, interest rates, inflation, , Sentiment, Speculation , GDP,Balance of trade and payment,Unemployment

Match The Following
Question
Correct Answer
Your Answer
Departure
EXW
EXW
Main carriage paid
CFR
CFR
Main carriage unpaid
FAS
FAS
Arrival
DES
DES

Multiple Choice Multiple Answer
Question
Sterling Market is attractive for an international investor because
Correct Answer
Gilts offer higher attractive margin , Choice of issuing medium term and long term bonds
Your Answer
Gilts offer higher attractive margin , Choice of issuing medium term and long term bonds , Linking of issues to currency swaps

True/False
Question
In red clause credit some clauses are printed in Red ink.
Correct Answer
True
Your Answer
False

Multiple Choice Multiple Answer
Question
Which debits are permitted to EEFC accounts?
Correct Answer
Payment of hotel bills abroad, payment for expenses on Heart operation abroad , Payment to EOUs in India for services rendered by them
Your Answer
Payment of hotel bills abroad, payment for expenses on Heart operation abroad , Payment to EOUs in India for services rendered by them

Multiple Choice Single Answer
Question
Punjab National Bank Mumbai Branch quoted USD 1= Rs 50.5000/52.5050. Which is the bid rate for USD?
Correct Answer
USD 1=Rs 50.5000
Your Answer
USD 1=Rs 50.5000

Multiple Choice Single Answer
Question
Why are various methods of financial analysis used for assessing a cross border project ?
Correct Answer
To weed out unviable projects and rank profitable ones
Your Answer
To weed out unviable projects and rank profitable ones

Multiple Choice Multiple Answer
Question
Criteria for investment abroad under automatic route :-
Correct Answer
Activity for investment is core activity of Indian Company. , Total Financial commitment in JV/WOS as per prescribed ceiling
Your Answer
Activity for investment is core activity of Indian Company. , Total Financial commitment in JV/WOS as per prescribed ceiling

Multiple Choice Multiple Answer
Question
Who can issue the Certificate of Inspection?
Correct Answer
Export Inspection Council , Person authorised by Importer.
Your Answer
Export Inspection Council , Person authorised by Importer.

Multiple Choice Single Answer
Question
Large number of exporters from which country are enjoying the privilege of receiving up front cash from importers in Russia?
Correct Answer
United Kingdom
Your Answer
United Kingdom

True/False
Question
In developed markets, speculators play important role in determining the trend of currency rates.
Correct Answer
True
Your Answer
True

Select The Blank
Question
In US Capital Market a Company prepares all the necessary documents in advance of the public issue under the facility known as ________.
Correct Answer
Shelf Registration
Your Answer
Shelf Registration

Select The Blank
Question
In Overseas market the forward rate is generally quoted on the basis of ________.
Correct Answer
Fixed date
Your Answer
Calendar month

Select The Blank
Question
Forward Margin makes a currency costlier then the currency is at ________.
Correct Answer
Premium
Your Answer
Discount

Multiple Choice Multiple Answer
Question
These are the parties to the documentary credit :-
Correct Answer
Negotiating Bank, advising bank , Reimbursing bank, Confirming bank
Your Answer
Negotiating Bank, advising bank , Reimbursing bank, Confirming bank

Multiple Choice Multiple Answer
Question
What are the functions of Asian Development Bank?
Correct Answer
Give Softloans to poorer countries in Asia , Give project finance from resources raised in world capital market
Your Answer
Give Softloans to poorer countries in Asia , Give project finance from resources raised in world capital market

Multiple Choice Single Answer
Question
Fixed, Floating or Limited flexibility are used in the context of
Correct Answer
Exchange Rates
Your Answer
Exchange Rates

Select The Blank
Question
In mid 1992 ________ rejected the ratification of Maastricht treaty
Correct Answer
Denmark
Your Answer
UK

Multiple Choice Multiple Answer
Question
Under the liberalisation through FEMA, what can an AD offer to the clients, without the prior permission of RBI or Government?
Correct Answer
Hedges, interest rate swaps, currency swaps. , Caps and collars, and forward rate agreements
Your Answer
Hedges, interest rate swaps, currency swaps. , Caps and collars, and forward rate agreements

Multiple Choice Single Answer
Question
To whom is an AD required to report the cancellation of forward contracts?
Correct Answer
No one at all.
Your Answer
To Reserve Bank of India, fortnightly

Select The Blank
Question
ECGC provides cover to an Indian contractor for construction work abroad under ________.
Correct Answer
Construction works policy
Your Answer
Export Performance Guarantee

True/False
Question
The Negotiating bank examines the documents submitted by the seller and makes payment if they comply the terms and conditions of the LC.
Correct Answer
True
Your Answer
True

Multiple Choice Single Answer
Question
What was the official foreign currency reserve of the group of seven central Banks taken togeather in mid 1992?
Correct Answer
USD 275 Billion
Your Answer
USD 275 Billion

Multiple Choice Multiple Answer
Question
What are the sources of raising funds for exports?
Correct Answer
Suppliers credit , Forfaiting
Your Answer
Suppliers credit , Forfaiting

Select The Blank
Question
Forward margin makes a currency cheaper then the currency is at ________.
Correct Answer
Discount
Your Answer
Discount

Multiple Choice Single Answer
Question
Name the common forex derivatives :-
Correct Answer
Options, futures
Your Answer
Options, futures

True/False
Question
Country risk analysis is a futile exercise in the background of cost of analysis.
Correct Answer
True
Your Answer
False

Select The Blank
Question
Even after liberalisation of exchange controls, the Euro sterling market remained volatile because of uncertainties in UK and gyrations of sterling against major ________ countries
Correct Answer
OECD
Your Answer
OECD

Match The Following
Question
Correct Answer
Your Answer
Issues linked with LIBOR,LIBID,LIMEAN
FRNs
FRNs
Issue of bonds without fixed rate of interest, linked to short term interest rate in the global market
FloatingRate Note
FloatingRate Note
Issue of loans internationally,through arranger, underwriter,co manager, for a large amount for sharing risk of lending
Syndicated Loans
Syndicated Loans
Equity issues in the foreign markets either as direct investments or portfolio investments.
American or Global Depository Receipts
American or Global Depository Receipts