T.Y B.COM
SEMESTER - 6
INTERNATIONAL FINANCE
(IF)
MCQS
1. 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
2. Exchange rates are determined in
A) the money market
B) the foreign exchange market
C) the stock market
D) the capital market
3. Although market trades are said to involve the buying and selling of currencies, most trades involve the buying and selling of
A) bank deposits denominated in different currencies
B) SDRs
C) gold
D) ECUs
4. The immediate (two-day) exchange of one currency for another is a
A) forward transaction
B) spot transaction
C) money transaction
D) exchange transaction
5. 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
6. Today 1 euro can be purchased for $1.10. This is the
A) spot exchange rate
B) forward exchange rate
C) fixed exchange rate
D) money exchange rate
7. In an agreement to exchange dollars for euros in three months at a price of $0.90 per euro, the price is the
A) spot exchange rate
B) money exchange rate
C) forward exchange rate
D) monthly exchange rate
8. When the value of the British pound changes from $1.25 to $1.50, then
A) the pound has appreciated and the dollar has appreciated
B) the pound has depreciated and the dollar has appreciated
C) the pound has appreciated and the dollar has depreciated
D) the pound has depreciated and the dollar has depreciated
9. When the value of the British pound changes from $1.50 to $1.25, then
A) the pound has appreciated and the dollar has appreciated
B) the pound has depreciated and the dollar has appreciated
C) the pound has appreciated and the dollar has depreciated
D) the pound has depreciated and the dollar has depreciated
10. When the value of the dollar changes from 0.5 pounds to 0.75 pounds, then
A) the pound has appreciated and the dollar has appreciated.
B) the pound has depreciated and the dollar has appreciated.
C) the pound has appreciated and the dollar has depreciated.
D) the pound has depreciated and the dollar has depreciated.
11. When the value of the dollar changes from 0.75 pounds to 0.5 pounds, then
A) the pound has appreciated and the dollar has appreciated
B) the pound has depreciated and the dollar has appreciated
C) the pound has appreciated and the dollar has depreciated
D) the pound has depreciated and the dollar has depreciated
12. When the exchange rate for the Mexican peso changes from 9 pesos to the dollar to 10 pesos to the dollar, then
A) the peso has appreciated and the dollar has appreciated.
B) the peso has depreciated and the dollar has appreciated.
C) the peso has appreciated and the dollar has depreciated.
D) the peso has depreciated and the dollar has depreciated.
13. When the exchange rate for the Mexican peso changes from 10 pesos to the dollar to 9 pesos to the dollar, then
A) the peso has appreciated and the dollar has appreciated.
B) the peso has depreciated and the dollar has appreciated.
C) the peso has appreciated and the dollar has depreciated.
D) the peso has depreciated and the dollar has depreciated.
14. In April 2000, one U.S. dollar traded on the foreign exchange market for about 7.2 French francs. Therefore, one French franc would have purchased about
A) 4.10 U.S. dollars
B) 1.40 U.S. dollars
C) 0.41 U.S. dollars
D) 0.14 U.S. dollars
15. In April 2000, one U.S. dollar traded on the foreign exchange market for about 44 Indian rupees. Thus, one Indian rupee would have purchased about
A) 0.01 U.S. dollars
B) 0.02 U.S. dollars
C) 0.20 U.S. dollars
D) 2.00 U.S. dollars
16. In April 2000, one U.S. dollar traded on the foreign exchange market for about 180 Spanish pesetas. Therefore, one Spanish peseta would have purchased about
A) 0.005 U.S. dollars.
B) 0.05 U.S. dollars.
C) 0.50 U.S. dollars.
D) 5.00 U.S. dollars.
17. In April 2000, one U.S. dollar traded on the foreign exchange market for about 1.47 Canadian dollars. Therefore, one Canadian dollar would have purchased about
A) 2.30 U.S. dollars.
B) 1.15 U.S. dollars.
C) 0.67 U.S. dollars.
D) 0.56 U.S. dollars.
18. At the beginning of 1980, the French franc was valued at 25 cents and in early 1988 it was valued at 17.5 cents. Thus, from 1980 to 1988, the dollar _____ and the franc _____.
A) appreciated; appreciated
B) appreciated; depreciated
C) depreciated; depreciated
D) depreciated; appreciated
19. If the dollar _____ from 1.0 European euros per dollar to 0.9 euros per dollar, the euro _____ from 1.0 dollar to 1.1 dollars per euro.
A) appreciates; appreciates
B) appreciates; depreciates
C) depreciates; depreciates
D) depreciates; appreciates
20. If the dollar _____ from 5 Mexican pesos per dollar to 10 pesos per dollar, the peso _____ from 20 cents to 10 cents per peso.
A) appreciates; appreciates
B) appreciates; depreciates
C) depreciates; depreciates
D) depreciates; appreciates
21. If the dollar appreciates from 5 French francs per dollar to 10 francs per dollar, the franc depreciates from _____ cents to _____ cents per franc.
A) 20; 10
B) 10; 20
C) 10; 25
D) 20; 25
22. If the British pound appreciates from $0.50 to $0.75 per U.S. dollar, the dollar depreciates from _____ to _____ pounds per dollar.
A) 2; 2.5
B) 2; 1.33
C) 2; 1.5
D) 2; 1.25
23. If the Japanese yen appreciates from one cent to two cents per yen, the dollar depreciates from _____ to _____ yen per dollar.
A) 100; 50
B) 10; 5
C) 5; 10
D) 50; 100
24. If the dollar appreciates from 1.5 Brazilian reals per dollar to 2.0 reals per dollar, the real depreciates from _____ to _____ dollars per real.
A) $0.67; $0.50
B) $0.33; $0.50
C) $0.75; $0.50
D) $0.50; $0.67
25. If the relative price of the dollar changes from1.5 Brazilian reals to 2.0 reals per dollar, the dollar is said to _____ and the real is said to ______.
A) appreciate; appreciate
B) appreciate; depreciate
C) depreciate; depreciate
D) depreciate; appreciate
26. If the relative price of the dollar changes from 2.0 Brazilian reals to 1.5 reals per dollar, the dollar is said to _____ and the real is said to ______.
A) appreciate; appreciate
B) appreciate; depreciate
C) depreciate; depreciate
D) depreciate; appreciate
27. If the exchange rate between the dollar and the euro changes from 1.0 to 1.1 euros per dollar, the
A) euro appreciates and the dollar depreciates.
B) dollar depreciates and the euro appreciates.
C) euro depreciates and the dollar appreciates.
D) dollar depreciates and the euro depreciates.
28. If the exchange rate between the dollar and the euro changes from 1.1 to 1.0 euros per dollar, the
A) euro appreciates and the dollar appreciates.
B) dollar depreciates and the euro appreciates.
C) euro depreciates and the dollar appreciates.
D) dollar depreciates and the euro depreciates.
29. If the exchange rate between the dollar and the euro changes from 90 to 95 cents per euro, the
A) euro appreciates and the dollar appreciates.
B) dollar depreciates and the euro appreciates.
C) euro depreciates and the dollar appreciates.
D) dollar depreciates and the euro depreciates.
30. If the exchange rate between the dollar and the euro changes from 99 to 97 cents per euro, the
A) euro appreciates and the dollar appreciates.
B) dollar depreciates and the euro appreciates.
C) dollar depreciates and the euro depreciates.
D) dollar appreciates and the euro depreciates
31. If the dollar price of a euro increases from $0.90 to $1.00, the euro
A) depreciates from 1.11 euros per dollar to 1 euro per dollar
B) appreciates from 1.11 euros per dollar to 1 euro per dollar
C) depreciates from 1 euro per dollar to 1.11 euros per dollar
D) appreciates from 1 euro per dollar to 1.11 euros per dollar
32. If the Swiss franc price of a dollar increases from1.50 Swiss francs to 1.6 Swiss francs per dollar, the dollar
A) appreciates from $0.67 per Swiss franc to $0.625 per Swiss franc
B) depreciates from $0.67 per Swiss franc to $0.625 per Swiss franc
C) appreciates from $0.625 per Swiss franc to $0.67 per Swiss franc
D) depreciates from $0.625 per Swiss franc to $0.67 per Swiss franc
33. When the exchange rate for the German mark changes from $0.50 to $0.30, then, holding everything else constant,
A) the mark has appreciated and German cars sold in the United States become more expensive
B) the mark has appreciated and German cars sold in the United States become less expensive
C) the mark has depreciated and American wheat sold in Germany becomes more expensive
D) the mark has depreciated and American wheat sold in Germany becomes less expensive
34. If the dollar appreciates relative to the British pound,
A) British dishes will become cheaper in the United States
B) American wheat will become cheaper in Great Britain
C) British dishes will become more expensive in the United States
D) no change will occur
35. If the dollar depreciates relative to the British pound
A) British dishes will become cheaper in the United States
B) American wheat will become more expensive in Great Britain
C) British dishes will become more expensive in the United States
D) both (b) and (c) will occur
36. If the dollar depreciates relative to the British pound
A) British dishes will become more expensive in the United States
B) American computers will become less expensive in Great Britain
C) Swiss chocolate will become cheaper in the United States
D) both (a) and (b) will occur
37. If the dollar depreciates relative to the Swiss franc
A) Swiss chocolate will become cheaper in the United States
B) American computers will become more expensive in Switzerland
C) Swiss chocolate will become more expensive in the United States
D) Swiss computers will become cheaper in the United States
38. If the dollar depreciates relative to the Swiss franc
A) Swiss chocolate will become more expensive in the United States.
B) American computers will become less expensive in Switzerland.
C) Swiss chocolate will become cheaper in the United States.
D) both (a) and (b) of the above
39. If the dollar appreciates relative to the Swiss franc
A) Swiss chocolate will become more expensive in the United States
B) American computers will become less expensive in Switzerland
C) Swiss chocolate will become cheaper in the United States
D) both (a) and (b) of the above
40. All else constant, an appreciation of the Swiss franc causes
A) Swiss watches sold in the United States to become more expensive
B) American computers sold in Switzerland to become more expensive
C) American automobiles sold in Switzerland to become cheaper
D) both (a) and (c) of the above are true
41. When a country’s currency appreciates (rises in value relative to other currencies), the country’s goods abroad become _____ expensive and foreign goods in that country become _____ expensive (holding domestic prices constant in the two countries).
A) more; less
B) more; more
C) less; less
D) less; more
42. When a country’s currency depreciates, its goods abroad become _____ expensive while foreign goods in that country become _____ expensive.
A) more; less
B) more; more
C) less; less
D) less; more
43. According to the law of one price, if the price of Colombian coffee is 100 Colombian pesos per pound and the price of Brazilian coffee is 4 Brazilian reals per pound, then the exchange rate between the Colombian peso and the Brazilian reals is:
A) 40 pesos per real
B) 100 pesos per real
C) 25 pesos per real
D) 0.4 pesos per real
44. The starting point for understanding how exchange rates are determined is a simple idea called _____, which states: if two countries produce an identical good, the price of the good should be the same throughout the world no matter which country produces it.
A) Gresham’s law
B) the law of one price
C) purchasing power parity
D) arbitrage
45. The _____ states that exchange rates between any two currencies will adjust to reflect changes in the price levels of the two countries.
A) theory of purchasing power parity
B) law of one price
C) theory of money neutrality
D) quantity theory of money
46. The theory of PPP suggests that if one country’s price level rises relative to another’s, its currency should
A) depreciate
B) appreciate
C) float
D) none of the above
47. The theory of PPP suggests that if one country’s price level falls relative to another’s, its currency should
A) depreciate
B) appreciate
C) float
D) none of the above
48. The theory of PPP suggests that if one country’s price level rises relative to another’s, its currency should
A) depreciate in the long run.
B) appreciate in the long run.
C) depreciate in the short run.
D) both (a) and (c) of the above.
49. The theory of PPP suggests that if one country’s price level falls relative to another’s, its currency should
A) depreciate in the long run.
B) appreciate in the long run.
C) appreciate in the short run.
D) depreciate in the short run.
50. The theory of purchasing power parity cannot fully explain exchange rate movements because
A) not all goods are identical in different countries.
B) monetary policy differs across countries.
C) some goods are not traded between countries.
D) of both (a) and (c) of the above.
51. The foreign direct investment includes _______ .
A) Intellectual properties
B) Human resources
C) Tangible goods
D) Intangible goods
52. The three disputes of FDI are over ______ .
A) Concern
B) Interest
C) Regard
D) Hobby
53. The Treaty of Rome was signed in the year ______ .
A) 1959
B) 1957
C) 1956
D) 1955
54. When did Austria join the European Union?
A) 1997
B) 1993
C) 1995
D) 1999
55. For spreading information, the foreign policy decision-makers rely on _______ .
A) Bureaucrats
B) Politicians
C) Media
D) Public
56. More expansion of foreign direct investment can boost __________ .
A) Money circulation
B) Demand
C) Employment
D) Unemployment
57. How will the offer curve react when customers are heterogeneous?
A) Zero quadrant
B) Negative quadrant
C) Optimum quadrant
D) Positive quadrant
58. Which of the following are improved when capital and labor are moved internationally?
A) Economic growth gains
B) Capital gains
C) Gains from income
D) Gains from trade
59. Which industry will have a free entry?
A) Mineral mining
B) Cable television
C) T-shirt silk screening
D) Satellite radio
60. What is it called when a country is specialized in a particular good and then it trades the good with other countries?
A) Agreement
B) Interdependence
C) Correlation
D) Dependence
T.Y B.COM
SEMESTER - 6
INTERNATIONAL FINANCE
(IF)
MCQS : UNIT - 3
---> FDI
---> IMF AND INTERNATIONAL LIQUIDITY
----> INTERNATIONAL LIQUIDITY
---> SPECIAL DRAWING RIGHTS (SDR) “PAPER GOLD”
FDI
1. According to _____ FDI means the “Investment that is made to acquire a lasting interest in an enterprise, operating in an ECONOMY other than that of investor.”
[A] World bank
[B] IMF
[C] WTO
[D] RBI
2. Which thing involves the investment as well as some degree of control (at least 10 to 25%) and participation in management?
[A] FDI
[B] Stock exchange
[C] FII
[D] FPI
3. In FDI, there is an injection of foreign money, technology, entrepreneurship, ____________and so on.
[A] Managerial skill
[B] politics
[C] corruption
[D] power
4. Primary aim of the FDI is?
[A] To have the 20% profit share in management
[B] To have the investor’s effective voice in the management of the enterprise.
[C] To have the investor’s effective share in profit of the enterprise.
[D] To have the promoters effective voice in the management of the enterprise.
5. ______ is purely motivated by the profit without any managerial control.
[A] FDI
[B] FPI
[C] FII
[D] MNC
6. Following are the objectives / motivations of FDI…
[A] Sale expansion
[B] Resource acquisition
[C] Diversification
[D] All of the above
7. The FDI can be distinguished into following two categories.
[A] Horizontal Foreign Investment (HFI)
[B] Horizontal direct investment
[C] Vertical foreign Investment (VFI)
[D] Both A and C
8. Investment of a firm in foreign country to provide same product which it produces in its home country, it is an example of which investment?
[A] HFI
[B] VFI
[C] FPI
[D] MNC
9. LG makes investment in India to produce home appliances it is an example of which investment?
[A] VFI
[B] FDI
[C] FPI
[D] HFI
10. Which investment includes geographical (spatial) diversification of firm’s product line?
[A] VFI
[B] HFI
[C] FPI
[D] FII
11. Which investment is meant for integration process in the production?
[A] HFI
[B] FPI
[C] VFI
[D] FII
12. Which investment includes Backward Vertical Integration and Forward Vertical Integration?
[A] VFI
[B] FPI
[C] FII
[D] HFI
13. HFI integration takes place at different stages of value addition process. True or false?
[A] True
[B] False
[C] Partly true
[D] Can’t say
14. In Which Integration, a firm (Manufacturer of Finished product) makes an investment in the foreign country to produce the intermediate goods, which are to be used in its domestic production process?
[A] Backward vertical integration
[B] Forward vertical integration
[C] Both A and B
[D] Only B
15. In Which types of investment firm becomes its own supplier of the intermediate goods?
[A] Forward vertical integration
[B] Backward vertical integration
[C] Only B
[D] Both A and B
16. India’s oil refinery (e.g. IOCL) makes an investment in the extraction plants of oil rich countries outside India. It is called ______ Vertical Integration.
[A] Backward
[B] Forward
[C] Horizontal
[D] Straight
17. In Which investment a firm (Manufacturer of Finished product) makes an investment in the foreign country to sell or market it directly to the foreign buyers?
[A] Backward
[B] Forward
[C] Horizontal
[D] Straight
18. India’s oil refinery (e.g. IOCL) makes an investment in the Petrol pumps, Gasoline pumps in the countries outside India. It is called ____ Vertical Integration.
[A] Backward
[B] Forward
[C] Horizontal
[D] Straight
19. The main object of the FDI is to acquire / retain control over the markets and productive resources. True or False?
[A] True
[B] False
[C] Partly true
[D] Can’t say
20. Major areas of the FDI include...
[A] Oil
[B] Ores
[C] Service
[D] All of the above
21. FDI is advantageous to both lending nations and borrowing nations. True or False?
[A] True
[B] False
[C] Partly true
[D] Can’t say
22. Advantages to the LENDING nation includes
[A] FDI creates “additional source” of supply of required goods
[B] FDI raises the “purchasing power” of borrowing nation in foreign market
[C] FDI Provides Export benefits in long – run:
[D] All of the above
23. In of FDI, if there is condition that the borrowing nation should spend the proceeds only on the exports of lending country. it is called?
[A] Soft loan
[B] Tied loan
[C] Grant
[D] None
24. Advantages to the BORROWING nation Includes?
[A] FDI helps to “offset temporary BOP deficit”:
[B] FDI serves as “additional source” of capital formation:
[C] FDI brings “entrepreneurial talents and technical know-how” and FDI serves as “source of financing the war”:
[D] All of the above
25. When a borrowing nation gets a monetary gold from the lending nation, the borrowing nation becomes stronger in terms of the monetary base. True or False?
[A] True
[B] False
[C] Partly true
[D] Can’t say
26. When the money supply in the borrowing nation increases, it creates positive impact on the________
[A] Prices,
[B] Demand and
[C] Incomes.
[D] All of the above
27. When FDI comes into the country, it creates inflow of capital. It is registered as ________
[A] Debit item in the capital account of the BOP.
[B] Credit item in the capital account of the BOP.
[C] Credit item in the current account of the BOP.
[D] Debit item in the current account of the BOP.
28. Inflow of FDI helps the borrowing nation to remove....
[A] Debt
[B] loan
[C] The temporary BOP deficit without any financial burden of the BOP
[D] The permanent BOP deficit without any financial burden of the BOP
29. When country wants to develop and grow faster, it needs not only the capital but also the pre – requisites of growth such as _______
[A] Entrepreneurial talents
[B] Latest technical knowhow.
[C] Only A
[D] Both A and B
30. When FDI is allowed, the poor countries get entrepreneurial talents, technical knowledge, managerial expertise, professional marketing strategies and so on. True or False?
[A] False
[B] True
[C] Partly false
[D] Can’t say
31. Negative Impacts Of FDI Includes....
[A] Over dependence of host country on foreign technology.
[B] Threat to domestic industry.
[C] Distortions in wage & salary structure:
[D] All of the above
INTERNATIONAL LIQUIDITY
1. Concept of international liquidity is associated with?
[A] BOP
[B] International payments
[C] Deficit
[D] International debt
2. International payments arise out of....
[A] International trade in goods and services
[B] International capital movements.
[C] Only B
[D] Both A and B
3. What is refers to generally accepted official means of setting imbalance in international payments.
[A] GOLD
[B] International liquidity
[C] BOP
[D] IMF
4. International liquidity includes all those assets which are internationally acceptable without lose of value in discharge of debts. True or false?
[A] False
[B] True
[C] Partly true
[D] Can’t say
5. Dollar reserves of countries other than the U.S.A and Pound sterling reserves of the countries other than U.K. These two are known as.....
[A] “Key currencies” of the world.
[B] Main currencies
[C] Dominant currencies
[D] Powerful currencies
6. Which Items / Elements are Included in International Liquidity?
[A] The official reserves of gold and foreign exchange held by monetary authorities of a country.
[B] The foreign exchange earning [net surplus in current and capital current A/c]
[C] The borrowing facilities available from international monetary institutions such as IMF.
[D] All of the above
7. The supply of international liquidity includes:
[A] Gold mines of a country
[B] Foreign exchange earnings
[C] Unilateral transfers
[D] All of the above
8. Capital inflow, & Receipt of gold and foreign exchange by the monetary authority of a country Is a part supply of international liquidity.
True
9. Demand for international liquidity arises out Of.....
[A] Demand for imported goods and foreign services
[B] Unilateral transfers
[C] Capital outflow
[D] All of the above
10. Reasons for shortage of international liquidity includes…..
[A] Deficit in BOP
[B] Attitudes of developed countries
[C] High Tariff Barriers and Uneven Distribution of International Reserves
[D] All of the above
11. What Are The Results Of Devaluation Of Home Currency?
[A] Increase in Imports
[B] Decrease in Imports
[C] Increase in Exports
[D] Both B and C
12. In most of the less developed countries of third world, there is persistent deficit in BOP. Further, their deficit is continuously rising, due to continuous rise in international prices. TRUE or FALSE?
[A] True
[B] False
[C] Partly True
[D] Both A and C
13. Less developed countries are unable to increase their exports and export earnings Because Of Following Reasons.
[A] Heavy Tariff
[B] Low Tariff
[C] Government Control
[D] Deficit Bop
14. There Is Uneven Distribution of International Reserve In Favor Of _____________ Countries
[A] Developing
[B] Developed
[C] Underdeveloped
[D] Only A and B
15. Measures to solve the problem of international liquidity includes
[A] Limiting Imports:
[B] Export Promotion:
[C] Increase in BOP Surplus:
[D] Both A and B
16. The developed countries should try to reduce their BOP surplus by following measures..
[A] To accept payment from developing countries in the form of their domestic currency.
[B] To accept the goods of developing countries in exchange of their exports.
[C] To change in Official Rate of Exchange (Devaluation):
[D] All of The Above
IMF AND INTERNATIONAL LIQUIDITY
1. Which of the following statement is not true about the International Monetary Fund?
[A] IMF was established along with the word bank
[B] IMF is the result of the Bretton Woods conference
[C] Christine Lagarde is the current Chief Executive Officer of the IMF
[D] Currently 193 countries are the members of the IMF
2. When was IMF established?
[A] Dec. 27, 1945
[B] Jan. 30, 1947
[C] Jan.1, 1946
[D] Sept. 24, 1947
3. Which of the following statement is NOT correct regarding the membership of the IMF?
[A] Currently its membership is 189
[B] All "member countries" of the IMF are members of the United Nations
[C] All member countries of the IMF are not sovereign states
[D] Nauru is the latest member of the IMF
4. The value of Special Drawing Right (SDR) is determined by the basket of __________ currencies.
[A] 4
[B] 5
[C] 6
[D] 7
5. Which of the following currency has largest weightage in the determination of the value of the SDR?
[A] Japanese Yen
[B] Euro
[C] US Dollar
[D] British Pound
6. Which of the following is not the objective of the IMF?
[A] To promote international monetary cooperation
[B] To ensure balanced international trade
[C] To ensure exchange rate stability
[D] To provide loan to private sectors
7. Which of the following statement is NOT correct about the quota at the IMF?
[A] Voting power in the IMF is based on a quota system
[B] USA has highest quota in the IMF
[C] Germany has third highest quota in the IMF
[D] Indian quota in the IMF stands at 2.79% of the total quota.
8. If the Balance of Payment of a country is adverse, then which institution will help that country?
[A] World Bank
[B] World Trade Organization
[C] International Monetary Fund
[D] Asian Development Bank
9. Which of the following currency is not included in the calculation of SDR value?
[A] Yen
[B] Yuan
[C] Rupee
[D] Pound sterling
10. Which of the following is known as the Paper Gold?
[A] US Dollar
[B] Pound
[C] Demand draft
[D] Special Drawing Right
11. What is the role of the IMF?
[A] It controls the budgets of national governments
[B] It acts as a forum for international economics
[C] It observes world exchange rates, balance of payments and multilateral payments
[D] It seeks to promote free international trade
12. What is the IMF’s primary objective?
[A] The overall promotion of world trade
[B] The fixation of the value of world currencies
[C] The promotion of free trade
[D] The promotion of its policies in certain countries around the world
13. How does the IMF meet its primary objective?
[A] By promoting free international trade
[B] By overseeing the balance of payments, acting as a forum of world negotiation and regulating world exchange rates
[C] By acting as an arbitrator for the dispute settlement of world trade matters
[D] By aligning its primary objective with the monetary objectives of national governments
14. IMF was established FOR...
[A] To achieve an orderly conduct of international trade,
[B] Exchange rate stability
[C] To increase the sources of international liquidity
[D] all
15. IMF was established as a result of the Bretton Woods Agreement concluded in 1944. TRUE OR FLASE?
[A] TRUE
[B] FALSE
[C] CANT SAY
[D] PARTLY TRUE
16. Objectives of IMF includes...
[A] To solve the problem of BOP difficulties of the member countries.
[B] To achieve exchange rate stability AND To promote multilateral trade among the member countries.
[C] To remove trade barriers among the member countries.
[D] ALL OF THE ABOVE
17. Any country can become a member of IMF, if,
[A] It is willing to become a member of World Bank. I.e. International Bank for Reconstruction & Development
[B] It is willing to pay subscription.
[C] It is member of UNO
[D] Both A and B
18. The subscription clause of IMF includes….
A] 25% of Subscription Must Be Paid In the Form of Gold of US Dollar, &
[B] 75% Of Subscription Must Be Paid In Terms Of Domestic Currency.
[C] 75% in gold form
[D] Both A and B.
19. Which Measures Are Taken By IMF For Member Countries?
[A] SDR and Quota:
[B] Selling Gold and Borrowings:
[C] Assistance to Member Countries
[D] All
20. Under general review of quota reserve OF IMF has increased from $ _______ billion in 1947 to $ _______ billion in 1988.
[A] 50 to 150
[B] 70 200
[C] 76 to 212
[D] 75 to 250
21. IMF increases its fund by selling Gold to member countries. True or false?
[A] True
[B] False
[C] Partly true
[D] Can’t say
22. IMF borrows from
[A] The Governments of member countries,
[B] General Banks & private institutions of developed countries
[C] OPEC
[D] all of the above
23. What is the full form of OPEC?
[A] Organization of petroleum earning Countries
[B] Organization of product and Exporting Countries
[C] Organization of power Exporting Countries
[D] Organization of petroleum Exporting Countries
24. What are the borrowing limits in IMF?
[A] A member can draw [borrow] upto 25% of its quota, every year. However, such drawing should be repaid within a period of 3 to 5 years.
[B] A member can draw further from the balance quota in four instalments upto 100% of its quota from credit trenched annually
[C] A member can draw [borrow] upto 50 % of its quota, every year. However, such drawing should be repaid within a period of 5 to 10 years.
[D] BOTH A AND B
25. Under the credit tranche, now the members can draw up to _________ of their quota.
[A] 50 %
[B] 150%
[C] 300%
[D] 400%
26. If a member country requires fund, it can purchase foreign exchange from the fund in exchange of its domestic currency. But, in this case, it must repurchase its domestic currency within --------- years.
[A] 3 TO 5
[B] 5 TO 10
[C] 10 TO 12
[D] 3 TO 7
27. If a country does not – repurchase its domestic currency within a fixed period,
[A] IMF cannot force it to repurchase its currencies.
[B] It can charge interest on this amount
[C] It can stop further assistance until repurchase of domestic currency
[D] All of the above
28. Which New Credit Facilities Has Been Started BY IMF IN 1960?
[A] Buffer stock financial facility,
[B] Extended fund facility,
[C] Supplementary financing facility,
[D] All of the above
29. What is the full form of IDA?
[A] Indian Domestic Assistance
[B] Indian Development Assistance
[C] International Development by America
[D] International Development Assistance
SPECIAL DRAWING RIGHTS (SDR) “PAPER GOLD”
1. The post war international monetary system was known as ………….
[A] Currency reserve standard
[B] Currency reserve RATE
[C] Paper Standard
[D] GOLD reserve standard
2. What is The Full Form of SDR?
[A] Special discount rate
[B] Special development reserve
[C] Special drawing rights
[D] Special drawing rate.
3. SDR is also known as……?
[A] gold standard
[B] Paper standard
[C] Paper gold
[D] IMF standard
4. When SDR came into existence (operation)?
[A] January 1970
[B] January 1980
[C] January 1990
[D] January 1985
5. SDRs are regarded as the “international reserves”, which are allocated annually by the collective decisions of participating members in the IMF. True or False?
[A] True
[B] False
[C] Partly false
[D] Partly true
6. What is the main aim of creating the SDR?
[A] To increase the availability of resources of the IMF.
[B] To increase the dollar in world
[C] To give loan to member countries
[D] all of the above
7. SDR is similar to the concept of ___________ which the central bank of the country applies to the commercial banks in the country to supplement the resources of the banking system.
[A] Currency Creation
[B] Credit Creation
[C] Giving Loans
[D] Giving Subsidies
8. On Which Bases SDR should allocated to member counties?
[A] SDR should be allocated to the member countries on the basis of their quotas to IMF
[B] SDR should be allocated to the member countries on the basis of their quotas to World Bank
[C] SDR should be allocated to the member countries on the basis of their quotas to world trade
[D] all of the above
9. When SDR has been created?
[A] SDR is created by the common agreement at the London conference on July 1990
[B] SDR is created by the common agreement at the Bretton wood conference on July 1969.
[C] SDR is created by the common agreement at the American conference on July 1969.
[D] SDR is created by the common agreement at the Paris conference on July 1969
10. SDR is gold paper. It means the value of the SDR is fixed in gold. True or false?
[A] False
[B] True
[C] Partly True
[D] Partly False
11. SDRs are transferable assets under the designation issued by the IMF, subject to certain limits on holding. True or false?
[A] True
[B] False
[C] Partly True
[D] Can’t Say
12. The SDRs serve two purposes…
[A] To serve as a “supplement” to the existing international reserve.
[B] To serve as the Principal reserve asset” of the international monetary system.
[C] To solve deficit bop
[D] Both A and B
13. Till July 1974, the value of SDR was expressed as 1 SDR = _______ Dollar.
[A] 5
[B] 10
[C] 1
[D] 2
14. In Which Year the SDR was delinked from the U.S. dollar and “new scheme” was devised?
[A] 1974
[B] 1985
[C] 1990
[D] 1977
15. Under new scheme value of SDR was expressed in terms of?
[A] “Standard basket of cash”
[B] “Standard base of currencies”
[C] “Standard basket of currencies”
[D] “Standard base of cash”
16. SDR has become a new
[A] International method of payment.
[B] International method of trade.
[C] International money.
[D] International money control system.
17. SDR (paper gold has increased the impotence of yellow metal as an international means of payment. True or false.
[A] True
[B] False
[C] Partly true
[D] Can’t say
T.Y B.COM
SEMESTER - 6
INTERNATIONAL FINANCE
(IF)
MCQS : UNIT-IV
INTERNATINOAL BANKING & EURO CURRENCY MARKET
1. Which bank is related to the acceptance foreign currency deposit, provide finance to international business operators & indulge in hedging & advisory services.
(a) Joint venture banks
(b) Off shore banks
(c) International bank
(d) RBI
2. The major difference between domestic bank & foreign banks in terms of:
(a) Deposit
(b) Loans
(c) Investment made
(d) All of the above
3. Most of the world's 50 largest banks are from:
(a) Japan, US
(b) France
(c) UK & Germany
(d) All of the above
4. Who has pointed out the reasons for the growth of international banking.
(a) Rugman & Kamath
(b) Marshall & Mill
(c) Adam Smith
(d) Ricardo
5. Out of the following which is not the reason for growth of international banks.
(a) Prestige
(b) Growth
(c) High marginal cost
(d) Knowledge
6. Which bank provide services like trade financing, honoring letter of credit & accepting the draft
(a) International traders
(b) Correspondent bank
(c) Offshore bank
(d) Joint-venture banks
7. Joint venture bank also known as:
(a) Consolidation bank
(b) Consortium bank
(c) Merger bank
(d) None
8. Offshore financial center (OFC) adopt Government banking system such as:
(a) Insurance
(b) Low deposits & low time period
(c) Easy method of funding
(d) All of the above
9. Out of the following which is the advantage of OFC (Offshore Financial Centre)
(a) Hiding interest income
(b) Economic crime
(c) Illegal Activity
(d) Anti-National Activity
10. Asian Development Bank (ADB) was set up on:
(a) January 1966
(b) 19th December 1966
(c) 19th January 1966
(d) December 1980
11. ADB having head quarter
(a) Russia
(b) UK
(c) Manila
(d) Denmark
12. How many countries signed charter for ADB.
(a) 33
(b) 23
(c) 39
(d) 34
13. ECAFE stands for:
(a) Economic committee for Asia & Far East
(b) Economic commission for Asia & Far East
(c) Economic commission for Asia & From East
(d) Economic committee for Africa & Far east
14. At present ADB having membership of ___________ Countries.
(a) 56
(b) 76
(c) 46
(d) 36
15. How many members in Board of Directors of ADB.
(a) 20
(b) 15
(c) 25
(d) 10
16. Which function is not performed by Board of Governance.
(a) Help regional members
(b) Entry of New member
(c) Change in authorized capital
(d) Help regional members
17. ADB started its operations with an authorized capital of
(a) $ 4.9 Billion
(b) $ 2.9 Million
(c) $ 5.9 Billion
(d) $ 2.9 Billion
18. In 1992 authorized capital of ADB raised to:
(a) $ 25 Billion
(b) S 25 Million
(c) $ 20 Million
(d) None
19. 50% of authorized capital of ADB contributed by:
(a) Japan
(b) Germany
(c) U.K
(d) USA
20. ADB provides the financial assistance in terms of which types of loans?
(a) Project loans
(b) Sector loan
(c) Programme loan
(d) All of the above
21. Which type of the loan relate to implementation of a policy.
(a) Short term loan
(b) Sector loan
(c) Project loan
(d) Programme loans
22. ADB provides all direct loans or a period of ______ years.
(a) 25
(b) 10
(c) 30
(d) 20
23. What is the grace period of direct loans provided by ADB?
(a) Seven years
(b) One year
(c) Three years
(d) Five years
24. For lending by ADB out of special fund, sanction made on the basis of _______ of the total number of governors required.
(a) 2/3
(b) 1/4
(c) 1/2
(d) 2/4
25. Since July 1990, ADB charges _________ % interest rate annually on Dollar loan:
(a) 6.53%
(b) 7.51%
(c) 6.57%
(d) 5.53%
26. ADB has been providing assistance in the field of:
(a) Energy, health
(b) Agriculture & Agro based industries
(c) Development Banking, Transport, Education
(d) All of the above
27. Though India has been a founder member of ADB, lending to India commenced only in _______.
(a) 1996
(b) 1956
(c) 1976
(d) 1986
28. In recent years ADB has shifted loans for:
(a) Public resource management
(b) Urban environmental improvement
(c) Health, Nutrition & Housing finance
(d) All of the above
29. Eurocurrency market is an international market whose major location is in _______
(a) Germany
(b) Italy
(c) London
(d) Spain
30. The main participants in the Eurocurrency market are:
(a) Commercial bank
(b) Large MNC
(c) Government Agencies
(d) All of the above
31. Eurocurrency were put into circulation since.
(a) 1-1-2001
(b) 1-1-2002
(c) 1-1-2003
(d) 1-4-2002
32. Euro is administered by European system of central bank having headquarter in ________
(a) Germany
(b) Netherland
(c) France
(d) Greece
33. Euro-market function on the principles of:
(a) Deposit creation
(b) Investment multiplier
(c) Credit creation
(d) None
34. Euro-dollar loans are generally for ________period.
(a) Short
(b) Long
(c) Very long
(d) Reasonable
35. Euro- market help to reduce international liquidity problem by way of:
(a) Trading to finance
(b) Enable exporter & importer to obtain credit
(c) Provide opportunities to short funds
(d) All above
36. Euro-dollar as a source of international liquidity also known as:
(a) Motor currency
(b) Trade currency
(c) Vehicle currency
(d) Growing currency
37. International bank for reconstruction & development (IBRD) established in ________
(a) 1944
(b) 1945
(c) 1939
(d) 1954
38. IBRD start functioning from ________
(a) 1955
(b) 1945
(c) 1946
(d) 1956
39. IBRD established on proposal of
(a) IMF
(b) FDI
(c) UNO
(d) WTO
40. World Bank & IMF are ________ each other.
(a) Competitive
(b) Complementary
(c) Substitute
(d) Joint
41. There are ________ member countries in IBRD.
(a) 182
(b) 183
(c) 187
(d) 1988
42. Both IMF & IBRD are lending institutions. The IMF for _______ & the IBRD for _______.
(a) Short term, long term
(b) Long term, short term
(c) Short term, short term
(d) Long term, long term
43. IBRD is a three ties basis, how many countries in their board of governors
(a) Top ten countries
(b) Top seven
(c) Top five
(d) None
44. Board of governors in IBRD appointed for _______ years.
(a) Five
(b) Three
(c) Seven
(d) Any one of them
45. For technical purpose, Board of IBRD delegates power to ______ in day to day administration.
(a) President
(b) Chairman
(c) Secretary
(d) Executive Directors
46. Under IBRD how many executive directors at present:
(a) 9
(b) 19
(c) 21
(d) 29
47. How many executive directors in IBRD are nominated by large shareholders countries.
(a) Five
(b) Six
(c) Seven
(d) Ten
48. Countries paying highest subscription amount to IBRD using.
(a) Monopoly power
(b) Veto Power
(c) Immunity power
(d) Mind power
49. In recent years IBRD has made loans for specific development projects in the field of:
(a) Agriculture
(b) Power
(c) Transport & Industry
(d) All of the above
50. What institute in International scenario are known as "Bretton woods" twin sisters
(a) IMF & WTO
(b) IBRD & World Bank
(c) IMF & World Bank
(d) WHO & WTO
51. In which year IBRD launched its cancer as the multilateral development bank.
(a) 1946
(b) 1944
(c) 1936
(d) 1941
52. In 2012 how many countries were the member of IBRD.
(a) 182
(b) 186
(c) 188
(d) 189
53. In addition to Financial Assistance, world bank puts more emphasis on.
(a) Institutional technical assistance
(b) Infrastructure assistance
(c) Provide advice & expertise
(d) All of the above
54. Which organization is called "knowledge bank"
(a) IBRD
(b) IMF
(c) FDI
(d) ADB
55. "MDG" stands for:
(a) Millennium detail goals
(b) Millennium development goals
(c) Multiple development goal
(d) Mumbai disaster gins
56. Which loan is disbursed by world bank in exchange for policy reforms like liberalization, privatization, tax reforms etc.
(a) Sectoral loans
(b) Project loans
(c) Structural adjustment loan (SAL)
(d) None of the above
57. International finance corporation (IFC) established in:
(a) 1955
(b) 1956
(c) 1966
(d) 1944
58. IFC having member countries:
(a) 133
(b) 166
(c) 134
(d) 139
59. Which corporation is legally & financially separate from the IBRD,
(a) IFC
(b) IMF
(c) FCI
(d) WTO
60. IFC having main responsibilities...
(a) Provide risk capital
(b) Development of local market
(c) Stimulate international flow of capital
(d) All of the above
61. Loans made by IFC to private firms in the developing countries usually for a period.
(a) Six to eleven years
(b) Seven to twelve years
(c) Seven to twelve months
(d) Six to twelve months
62. What is the key feature of IFC for granting loans:
(a) Private enterprises
(b) Investment made in conjunction with private business
(c) Both (a) & (b)
(d) None
T.Y B.COM
SEMESTER - 6
INTERNATIONAL FINANCE
(IF)
MCQS = MARCH 2015
(1) On the balance of payments merchandise imports are classified in the .......... account.
(a) Current
(b) Capital
(c) Official settlement
(d) None of the above
(2) In BOP the transaction of direct investment in foreign countries pertains to the account of
(a) Official settlement
(b) current
(c) foreign exchange
(d) capital
(3) The relationship between the exchange rate and the prices of tradable goods is known as
(a) Asset-maker theory
(b) Monetary theory
(c) PPP theory
(d) BOP Theory
(4) In Marshall-Lerner condition deals with the impact of currency depreciation on
(a) Service goods
(b) Domestic liquidity
(c) Relative prices
(d) PPP theory
(5) Which of the following is true for the J-curve effect in the long run?
(a) Demand tends to be most elastic
(b) Demand tends to be most inelastic
(c) Applies to interest rate effect
(d) Applies to income effect
(6) The ............. effect suggest that following currency depreciation a country's trade balance Worsens for a period before it improves
(a) Marshall-Lerner
(b) J - curve
(c) Price
(d) Income
(7) A nation experiences external balance if it achieves
(a) An increase in its money supply
(b) No change in its international gold stock
(c) An increase in interest rate
(d) Equilibrium in its BOP
(8) identify the most outdated instrument of external payments
(a) Bank draft
(b) Letter of credit
(c) Telegraphic transfer
(d) Bills of exchange
(9) The developing country gains if the price elasticity of demand for export is
(a) Inelastic
(b) Elastic
(c) Unit elastic
(d) None of the above
(10) A country will experience deficit tendency in BOP if there is
(a) Right shift in both demand & supply
(b) Right shift in supply
(c) Left shift in demand
(d) None of the above
T.Y B.COM
SEMESTER - 6
INTERNATIONAL FINANCE
(IF)
MCQS
1. Global bond market consists of all bonds sold by issued companies, governments, or other firms
A. within their own countries
B. outside their own countries
C. to London banks
D. to developing nations only
2. more instability in currency is called as
A. country risk
B. financial risk
C. currency risk
D. liquidity risk
3. Foreign bonds issued in Japan are known
A. bulldog bonds
B. dragon bonds
C. Yankee bonds
D. samurai bonds
4. Largest number of buyers and sellers, greater the
A. liquidity
B. speculation
C. hedging
D. forward rate
5. Exchange rate entail delivery of trade currency within two business days know as
A. forward rate
B. future rate
C. spot rate
D. bid rate
6. Differences in nominal interest rates are removed in exchange rate is
A. fisher effect
B. Leontief paradox
C. Combined equilibrium theory
D. purchasing power parity
7. Simplicity with which bondholders and shareholders can change their investments into cash is known
A. barter
B. hedging
C. arbitrage
D. liquidity
8. Eurobonds are admired because
A. they are less risky than traditional bonds
B. European companies are considered very stable
C. of absence of government regulation
D. they are always denominated in euro
9. Bid quote is for
A. seller
B. buyer
C. hedger
D. speculator
10. Bid-ask spread in foreign exchange market is the
A. price of currency in foreign exchange market
B. difference between bid and ask quotes for a currency
C. price at which a bank will buy a currency
D. price a bank will pay for a currency
11. Not aim of international capital market is
A. preserving hard currencies to finance trade deficits
B. reducing cost of money to borrowers
C. reducing investor risk
D. expanding money supply for borrowers
12. which of following causes do investors employ foreign exchange market
A. currency hedging
B. currency speculation
C. currency conversion
D. all of above
13. in 1944 international accord is recognized as
A. Breton Wood Agreement
B. Exchange Agreement
C. International Trade
D. Fisher Effect
14. If a company agreements today for several future date of real currency exchange, they will be building use of a
A. stock rate
B. stock rate
C. futures rate
D. forward rate
15. International Money Market is for about
A. 2 years
B. 3 years
C. 5 years
D. 1 years
16. Case of foreign exchange
A. Exchange of claims denominated in another currency
B. exchange of bank deposits
C. Exchange of cash issued by a foreign central bank
D. All of above
17. Gold standard introduced in
A. 1913
B. 1990
C. 1876
D. 1944
18. Market in which currencies buy and sell and their prices settle on is called the
A. Eurocurrency market
B. international capital market
C. international bond market
D. foreign exchange market
19. International capital market
A. innovative financial instruments
B. information technology
C. deregulation
D. foreign exchange rates
20. Order cost is cost of the
A. executing order
B. processing order
C. opportunity cost
D. none of these
21. International capital market
A. limits available set of lending opportunities
B. increases overall portfolio risk for investors
C. allows investors to reduce risk by holding international securities whose price move independently
D. is easily accessible to everyone
22. Ask quote is for
A. seller
B. buyer
C. hedger
D. speculator
23. A firm that purpose to connect sellers and buyers of foreign currency denominated bank deposits is entitled
A. a wholesaler
B. a broker
C. a bank
D. an investor
24. A simultaneous purchase and sale of foreign exchange for two different dates
A. currency devalue
B. currency swap
C. currency valuation
D. currency exchange
25. If your local currency is in variable form and foreign currency is in fixed form quotation will be:
A. indirect
B. direct
C. local form
D. foreign form
26. In a quote exchange rate, currency that is to be purchase with another currency is called:
A. liquid currency
B. foreign currency
C. local currency
D. base currency
27. Holding an inventory have
A. buying cost
B. selling cost
C. opportunity cost
D. exchange rate risk
28. Today, important factor that result in augmentation in international bond market is
A. low interest rates
B. high interest rates
C. moderate interest rates
D. all of above
29. World
A. interbank market
B. Eurocurrency market
C. securities exchanges
D. over-the-counter market
30. Governments enforce currency limitations to
A. protect a currency from speculators
B. keep resident individuals and businesses from investing in other nations
C. preserve hard currencies to finance trade deficits or repay debts
D. all of above
31. In primary markets, the first time issued shares to be publicly traded, in stock markets is considered as
A. traded offering
B. public markets
C. issuance offering
D. initial public offering
32. The exchange markets and over the counter markets are considered as two types of
A. floating market
B. risky market
C. secondary market
D. primary market
33. The current market price of common stock is $15 and the conversion rate received on conversion is $320 to calculate
A. $3,800
B. $2,800
C. $4,800
D. $5,800
34. The transaction cost of trading of financial instruments in centralized market is classified as
A. flexible costs
B. low transaction costs
C. high transaction costs
D. constant costs
35. The bonds that are backed by cash flow from project and are sold to finance particular project are classified as
A. finance bonds
B. revenue bonds
C. financing bonds
D. project bonds
36. The equation that shows the relationship between expected inflation, real interest rates, and nominal interest rates is called the
A. interest rate parity equation
B. Fisher equation
C. GDP deflator
D. net inflation index
37. Which of the following is not an example of a frequently used Euro-instrument?
A. Eurobond
B. Euro note
C. Euro stock
D. Euro commercial paper
38. When was IMF established?
A. Dec. 27, 1945
B. Jan. 30, 1947
C. Jan.1, 1946
D. Sept. 24, 1947
39. Which of the following is NOT a restriction to international trade?
A. Exchange Controls
B. GATT
C. Subsidies
D. Quotas
40. Balance of payments of a country includes:
A. Balance of trade
B. Capital receipts and payments
C. Saving and investment account
D. Both (a) and (b)
41. It helps countries to meet deficit in balance of payments:
A. IMF
B. WTO
C. World Bank
D. UNO
42. Export of goods is called trade in:
A. Visible goods
B. Invisible goods
C. Basic goods
D. Non-real goods
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