international finance combined

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LIST OF ATTEMPTED QUESTIONS AND ANSWERS

Multiple Choice Multiple AnswerQuestion What schemes have been floated by RBI for facilitating Inter

bank transactions?Correct Answer Clearing house for settlement and clearance for the operations

of Ads , Set up a market intelligence cell to study and monitordevelopments in Forex Market

Your Answer Clearing house for settlement and clearance for the operationsof Ads , Make additional foreign currency available to ADs atcheaper rates

Select The BlankQuestion ________ is the agency of ICC which deals with the maritime

crime.Correct Answer International Maritime Bureau

Your Answer International Maritime Bureau

Multiple Choice Single AnswerQuestion Which of them are special funding facilities of IMF ?

Correct Answer Buffer Stock Facility

Your Answer Buffer Stock Facility

True/FalseQuestion Cross currency forward contract is not meaningful if original

contract is in Rupees to USDCorrect Answer True

Your Answer True

Multiple Choice Multiple AnswerQuestion What does a speculator accept while dealing with an option?

Correct Answer The exercise or strike price, the amount , The expiration dateand time, the method of paymentYour Answer The exercise or strike price, the amount , The expiration date

and time, the method of payment , The Market report of theexchange which trades the option

Multiple Choice Single AnswerQuestion Which is the most actively traded currency in the international

market today?Correct Answer US Dollar


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Your Answer US Dollar

Match The FollowingQuestion Correct Answer Your Answer

Intolerable risk Drop the investmentproject

Drop the investmentproject

Country risk analysis Cost of evluation doesnot justify analysis

Cost of evluation does notjustify analysis

Stock market analysis Banks are ahead Factors' values

Weightages % Factors' values 100% of total

Select The BlankQuestion Global capital market can be understood from the study of

________.Correct Answer Yen,Euro Dollar, Swiss Francs, USD market, Govt Borrowings

within and outside the countryYour Answer Yen,Euro Dollar, Swiss Francs, USD market, Govt Borrowings

within and outside the country

Multiple Choice Single AnswerQuestion For a spot transaction carried out on Thursday, currencies will

be exchanged on :-

Correct Answer Monday

Your Answer Monday

Multiple Choice Single AnswerQuestion Under which category of exchange rate did the Indian Rupee

came from June 92?Correct Answer Other managed Floating

Your Answer Pegged to Single currency


Maturity of future Time when actualcommodity is delivered

Last date of exercisingoption

Note issuance facility Euronotes Euronotes

Bearer security issued incurrency other than thatof the country of issue

Eurobonds Eurobonds


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Margin on future Peformance bond orsecurity deposit

Peformance bond orsecurity deposit

True/FalseQuestion Postal receipt is an acknowledgement of receipt of goods, a

quasi negotiable instrument.Correct Answer False

Your Answer False

True/FalseQuestion The Prominent non banking financial institutions participating in

the FOREX markets are Pension funds, mutual funds,insurance Cos.

Correct Answer True

Your Answer True

Multiple Choice Multiple AnswerQuestion What are margins, with reference to futures market?

Correct Answer Faith money deposited by buyers and sellers ensures liquidity ,Margin ensures solvency for honouring contracts

Your Answer Faith money deposited by buyers and sellers ensures liquidity ,Margin ensures solvency for honouring contracts

Multiple Choice Single AnswerQuestion What is the volume of the world's average daily transactions in

foreign exchange?Correct Answer USD 1 trillion

Your Answer USD 1 trillion

Multiple Choice Single AnswerQuestion NIF is basically an agreement :-

Correct Answer By underwriting bank to support funding for a certain period,

against which borrowers can issue short term papersYour Answer Which enables the investor to market the same in thesecondary market

Multiple Choice Single AnswerQuestion 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


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Multiple Choice Single AnswerQuestion What Preshipment facility is granted by EXIM Bank to an

exporter?

Correct Answer Preshipment credit beyond six months for construction andturnkey projects abroad

Your Answer Preshipment credit up to six months for construction andturnkey projects abroad

Select The BlankQuestion Over the years ________has been the most widely accepted

currency in international capital market.Correct Answer American Dollar

Your Answer American Dollar

Select The BlankQuestion As a result of the world wars in the 20th century the ________

of most of the countries suffered heavily.Correct Answer Economies

Your Answer Currencies

Multiple Choice Single AnswerQuestion Which currency is traded in one leg of about 70% of the world's

transactions?Correct Answer US Dollar


Select The BlankQuestion ________ is the acid test for events to be included in country

risk.Correct Answer Control by Government'

Your Answer Recurrence

Select The Blank

Question The Trans European Automated Real Time Gross SettlementExpress Transfer is popular in ________.

Correct Answer Brussels

Your Answer Brussels

Multiple Choice Single AnswerQuestion What is Risk Syndication facility?

Correct Answer Sharing of risk of non payment by supplier


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Your Answer Sharing risk of Non payment by the Syndicate of Banks givingloans

True/FalseQuestion If ERD > IRD hen exporter should availa Rupee finance

Correct Answer True

Your Answer True

Multiple Choice Multiple AnswerQuestion The characteristics of an International documentary credit are :-

Correct Answer It is an undertaking given by the openers bank to pay certainsum of money , It is an undertaking given on behalf of a certainperson to another person in different country

Your Answer It is an undertaking given by the openers bank to pay certainsum of money , It is an undertaking given on behalf of a certainperson to another person in different country

Multiple Choice Multiple AnswerQuestion Which debits are permitted to EEFC accounts?

Correct Answer Payment of hotel bills abroad, payment for expenses on Heartoperation abroad , Payment to EOUs in India for servicesrendered by them

Your Answer Payment of hotel bills abroad, payment for expenses on Heart

operation abroad , Payment to EOUs in India for servicesrendered by them

True/FalseQuestion Funding Options in domestic yen market are Futures, FRAs,

Call and put options.Correct Answer True

Your Answer True

True/FalseQuestion There is no difference between CIP and CIF contracts except

the mode of transportation.Correct Answer True

Your Answer True

Multiple Choice Single AnswerQuestion Financial management is complex process for

Correct Answer Companies which have international trade


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Your Answer Companies which have international trade

Select The BlankQuestion When an Indian Company earns at least 50% of its average

turnover from a particular activity then that activity isconsidered as ________.

Correct Answer Core activity

Your Answer Primary activity

Select The BlankQuestion A Credit can be a confirmed credit only if it is also ________.

Correct Answer An Irrevocable credit

Your Answer An Irrevocable credit

True/FalseQuestion The volume of trading of Derivatives in the world trade market

is growing but still only 5% of the total.Correct Answer False

Your Answer False

Multiple Choice Single AnswerQuestion Punjab National Bank Mumbai Branch quoted USD 1= Rs50.5000/52.5050. Which is the offered rate for Rs?

Correct Answer USD 1=Rs 50.5000

Your Answer USD 1=Rs 50.5000

Multiple Choice Multiple AnswerQuestion Export finance

Correct Answer Preshipment credit , Post shipment credit , Duty Draw back

Your Answer Preshipment credit , Post shipment credit , Buyers credit

Multiple Choice Multiple AnswerQuestion Internationally only those currencies are in demand

Correct Answer Which are convertible , Which have liquidity confirmed in Euromarket operations

Your Answer Which are convertible , Which have liquidity confirmed in Euromarket operations , Which have greater intrinsic value

Multiple Choice Multiple Answer


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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 marketYour Answer Give Softloans to poorer countries in Asia , Give project finance

from resources raised in world capital market

Multiple Choice Multiple AnswerQuestion What does the word '"Tombstone" stand for?

Correct Answer Advertisement which lists the managers, underwriters, , List ofProviders of recently floated issue

Your Answer Advertisement which lists the managers, underwriters, , List ofProviders of recently floated issue

Select The BlankQuestion Short term instruments normally issued by corporateborrowers, forhigh values, at a discount to face value areknown as ________.

Correct Answer Euro Commercial Papers

Your Answer Euro Commercial Papers

Multiple Choice Single AnswerQuestion 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 Single AnswerQuestion Examples of hedge are:

Correct Answer Buy when you are having short position

Your Answer Buy when you are having short position


Question What is the effect of cross currency option on the customer?

Correct Answer He gets the flexibility to exposure , He is exposed to additionalrisk of movement of rates between 3 currencies

Your Answer He gets the flexibility to exposure , He is exposed to additionalrisk of movement of rates between 3 currencies

Select The BlankQuestion Forward margin makes a currency cheaper then the currency is

at ________.Correct Answer Discount


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Your Answer Discount

Multiple Choice Single AnswerQuestion Why does a person need protection from unfavourable

movement of exchange rate?Correct Answer Unfavourable fluctuations in exchange rate can wipe out the

normal business profitYour Answer Unfavourable fluctuations in exchange rate can wipe out the

normal business profit

Multiple Choice Single AnswerQuestion The capital market is said to be volatile when

Correct Answer Prices of capital market instruments change and are expected

to change drasticallyYour Answer Prices of capital market instruments change and are expectedto change drastically

True/FalseQuestion JV means Joint venture and WOS means World of Security.

Correct Answer False

Your Answer False


Question What is the criteria for an Indian Company for DirectInvestment abroad?

Correct Answer Activity proposed need to be core activity , Financialcommitment in JV/WOS maximum $ 100 million or equivalent

Your Answer Activity proposed need to be core activity , Financialcommitment in JV/WOS maximum $ 100 million or equivalent ,Indian co should not have been black listed

Chapter 1 Introduction to international capital markets

Euro currency ; domestic markets ; US Japan ; Switzerland ; UK ; Australia ; Canada ;European ; centers in ECU;

1

Chapter 2 International Finance Markets - the U.S. dollar Market ;

The U.S. Dollar Market ; The Japanese Yen Market ; The Sterling Market ; The EuroMarket Has Been discussed in the next chapter ; Recent development in international

Finance Markets ;

5 10

Chapter 3 International Monetary and Financial SystemThe countrys central ban agreed to buy back their currency at a certain rate of gold;Melting down of gold was freely allowed ; There was unrestricted movement of gold (i.e.

import and / or export)The total money supply in the country was determined by the quantum of gold reserves in

the country

13 14

The international monetary fund ; quotas ; funding facilities ; regular facilities tranchepolicies ; restore Tranche credit Tranche ; extended arrangement (extended fund facility

15 17


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(EEF) ; Standard Arrangement (enlarged Arrears Policy)

Special facilities (compensatory and contingency financing facility (CCFF)Buffer stock Financing Facility ; Supplemental Reserve Policy (SRP); Reserve Tranche ;

Credit Tranche ; Stand by arrangement ;Extended arrangement or extended fund facilities (EFF) special facilities ; CCFF ; Buffer

stock financing Facility (BSFF) ; Supplemental resources facility (SRF) Enhancedstructural adjustment facility (ESAF) The fixed exchange rate system

18 19

Problems faced by the fixed exchange rate system ; failure of fixed rate system ; the

European monetary system (EMS) ; Economic and monetary union ; Recent developments ;post Maastricht developments; emergence of EURO

20 23

The group of seven ; special drawing rights (SDRS) ; The liquidity problems (SDRS) ; theworld bank group ; the world bank; international development agency (IDA) ; international

finance corporation (IFC) ; The multinational investment Guarantee Agency (MIGA)

24 27

Chapter 4 External commercial borrowing country ; company ; Equity ; Fund raising ;underwriting ; hedging ; arbitraging ; note issuance facility ; Mechanism and

documentation ; syndicated loans ; floating rate notes ;

31 35

Flip Flop FRN ; MIS Mich FRN ; MINI Max FRN ; Capped FRNs, Perpetual FRNs;VRN structured FRNs; Terms and conditions of FRN Ero Commercial paper (ECP) ; ADRs

and GDRs; GDR Global depositary Receipts ; The roles of different parties involved inlaunching of GDRGDR Global Depositary Receipts ; The roles of different parties involved in launching of

GDR steps involved in issuance of GDR are as follows

36 39

Pricing and Closing ; costs ; Advantages & Disadvantages of external commercialborrowing

40 41

Chapter 5 Documents used in International Trade ;Regulatory requirements ; operational requirements ; commercial documents ; financial

documents transport documents ; risk covering documents ; official / regulatory documents; miscellaneous documents ; Commercial documents ; proforma invoice ; commercial

invoice ; consular invoice customs invoice ; legalized invoice ; combined certificate oforigin and value ; financial documents ; bill of exchange ;

43 46

The second of the same tenor and date unpaid ; the first of the same tenor and date unpaid ;

or similar words ; sight B/E; Tenor ; time B/E; DP Basis ; document against Payment Basis; Documents against Acceptance Basis Transport documents; bill of lading ; received forshipment bill of lading ; on board bill of lading ;

47 49

Short form bill of lading ; long form bill of lading clean bill of lading ; claused bill of lading

; through bill of lading ; straight bill of lading ; charter party Bill of lading ; container bill oflading container bill of lading ; combined transport B/L or Mulit Modal B/L lash bill of

lading house bill of lading ; Airway bill ; Air consignment Note ; House Air way bill ;Postal Receipt ; Courier /Expected delivery service ; multimodal transport document ; riskcovering documents ; insurance policy ;

50 53

Insurance cover note ; official documents export declaration forms ; export certificate;

Certificate of origin ; Miscellaneous documents ; packing list ; weight certificate ;certificate of analysis and quality ; certificate of inspection ; health certificate ;

phytosanitary / Radiation / Fumigation

55 57

Chapter 6 Methods of payment ; advance payment ; bill for collection ; open account ;barter trade ; bank guarantee ; letter of credit (L / C) Seller wants buyer wants ; parties to a

61 66


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documentary credit ; applicant issuing bank advising ; confirming bank beneficiary ;

negotiating bank ; reimbursing bank

Types of letters of credit ; revocal letter of credit ; irrevocable letter of credit ; confimedirrevocable letter of credit ; transferable l / c revolving letter of credit ; credit available byinstallments; back to back letter of credit ; anticipatory credit or red clause letter of credit ;

green clause letter of credit ; deferred payment letter of credit ; standby letter of credit ;flow chart of export transaction under letter of credit

67 69

Flow chart of export transaction under letter of credit ; various steps in the transaction are as

under ; steps no. description

70 71

Chapter 7 Export / Import Finance ; - Part I import finance ; import financing throughtrust receipts / import loans ; import financing through issuing l/ c or bank guarantee ; partII Export Finance Timely ; adequate ; cheaper on liberal terms ; sources for raising

finance ; own funds ; 2 friends and relative ; 3 advance payment from buyer ; 4 Trade creditfrom suppliers 5 banks and financial institutions ; pre-shipment credit (P.C)

73 74

Post shipment credit ; advance against cash incentives / duty draw back ; forfeiting ;

rediscounting of export bills abroad ; buyers credit ; suppliers credit

75 -76

Chapter 8 Procedure in connection with foreign investment in India Seciton Iforeign direct investment ; FERA ; the practice at which a company can issue shares to non

residents ; fema ; esop ; section II Foreign technical collaboration ;

79 83

General Hotel & Tourism Related Industries ; procedure for granting approval; I / We

hereby certify that ; Documentation ; Standard conditions attached to approval fortechnology agreement ; no objection ; the agreement shall be subject to Indian laws:

84 88

Section III Portfolio investment ; explanation ; the regulations regarding portfolio

investments by NRIs / PIOs are as under ; NRI / PIOs ; Section IV Other investments ;Section V procedure for opening branch / project / Liaison office ;

89 - 92

Chapter 9 Direct investment outside India overseas investment division TDR ADRGDR the criteria for investment under the automatic route are as under ; JV/WOS; ODA;

The schemes for overseas investment by partnership firms ; criteria for overseas investmentby a registered partnership firm under the automatic route ;

95 99

The procedure to be followed by a partnership firm for making investment under the

automatic route ; the procedure to be followed by partnership firms which are not eligibleunder the automatic route ; restrictions for setting up of a second generation company ;resident individual India can acquire foreign securities without prior approval in the

following cases ; provided that ; WOS

100 102

Chapter 10 Taxation ; Bilateral relief

Unilateral relief ; for the purpose of this provision

105 106

Part 2 Forex risk management and hedging techniques

Chapter 1 Foreign exchange markets The international Market ; survey were ; the

market ; the participants ; information and communication system ; the payment s ystem ;the foreign exchange market in India

109 114

Chapter 2 Exchange Rates Exchange rage quotes ; direct and indirect rates ; directrates ; indirect rates; spot and forward rates value rate; ready or cash ; value today ; TOM;

spot ; forwards; glossary of market terms; Foreign exchange risks ; transactions exposure ;translation exposure ; economic exposure;

117 123

Translation moving towards a consensus ; economic exposure ; an overview ; scenario

exchange rages in India ; Inward remittances export encashment of foreign currency

124 127


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travelers cheques ; encashment of foreign currency notes; outward remittances ; imports ;

issuing foreign currency travelers cheques issuing foreign currency notes ;

Type of transaction exchange rate nomenclature ; Factors affecting movement of exchangerates ; summary

128 129

Chapter 3 Forward contracts - Forward cover for merchants forward purchase cover -forward sales contract - repayment of foreign currency loans period of delivery cross

currency booking (sale / Purchase ) ; utilization of the forward cover ; cancellation ;calculation of exchange rates for forward contracts

131 137

Cancellation ; early delivery and rollover of forward contracts ; forward sale contracts ;

forward purchase contract ; early delivery ; rollover charges

138 141

Chapter 4 Options and Futures History and development ; recent trends ; key features ofoptions and futures ; premium ; maturity or expiration date ; exercise ; in the money ; at themoney ; out of the money American option European option ; underlying asset price time

before expiration ; underlying asset price ; time before expiration the rate of interestvolatility

143- 147

Pricing and analysis ; pricing of options ; underlying asset price ; exercise price ; options

and futures products today ; interest rate options ; foreign exchange options and futures ;equity linked options ; commodity linked futures and options

148 152

Chapter 5 - SwapsWhat are swaps ; interest rate swaps ; lowering financial cost ; hedge exposure to interest

rate risk ; restructuring the debt in the balance sheet ; amortizing and accreting swaps ;forward swaps ; Reversible swaps ; basis swaps

155 157

Currency swaps ; lowering funding cost ; entering restricted capital markets ; reducing

currency risk ; supply demand imbalances in the markets ; amortizing currency swaps ;accreting currency swaps ; floating for floating rate currency swaps ; interest payments ;asset swaps

158 161

PART 3 AGENCIES INVOLVED IN INTERNATIONAL TRADE

Chapter 1 Export import Bank of India ; Functions of Exim Bank ; the exim bank

performs the following functions ; incidental functions ; operations programmes ; directfinancial assistance to exporters ; consultancy and technology services ; pre-shipment credit

; facilities for export oriented units ; overseas investment facility buyer credit facilities fordeemed exports small scale industry export bills rediscounting; the latest new schemes inoperation since 1992 are the following

163 166

Chapter 2 Reserve Bank of India Exchange controls in India RBI as the exchange

control authority ; Authorized dealers (Ads) ; Money changers ; other receipts ; payment for

imports ; other payments ; delegation to Ads; securities ; foreign currency accounts;liberalization of exchange control

169 173

Sodhani Committee Recommendations ; Exchange rate management ; 174 177

Chapter 3 Foreign Exchange dealers association of India ; Uniform customs andpractice for collection ;

179 180

Chapter 4 International chamber of commerce ICC WCF IBCC WCF 183 183

Chapter 5 Export credit guarantee corporation of India ; ECGC; need for export creditinsurance ; credit insurance policies ; scr or standard policy ; turnover policy ; small

exporter policy ; specific shipment policy (short term); buyer wise policy ; specific policyfor supply contract insurance cover for buyers credit and line of credit

189 190

Services Policy ; construction works policy ; maturity factoring ; Guarantees to banks ; 191


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packing credit guarantee ; export production finance guarantee ; post shipment credit

guarantee ; export finance guarantee ; export performance guarantee; export finance(overseas lending ) Guarantee

Part 4 Miscellaneous

Chapter 1 Exchange Earners foreign currency (EEFC)Status holder exporter ; individual professional ; others; permissible credits ; permissible

debits ;

195

Chapter 2 Country Risk ; Quantifying country risk ; A comprehensive example ; use ofcountry risk ; assessment ;

199

Chapter 3 International capital Budgeting - The Basic Frame work 203 204

Chapter 4 Incoterms Group E departure EXW ; Group F Main carriage unpaid ; FAS ;FOB ; CFR ; CIF ; CPT ; CIP ; Group C; Group D ; Arrival DAF ; DES ; DEQ; DDU CTD

/ MTO ; DDP ; delivered duty paid (CTD / MTO)

207- 212

Chapter 5 Actuals ; arbitrage ; bankers acceptance bond (BAS) ; Bearer Bond ; Bid rate; Bond ; Bull; call option ; caps ; cash commodity ; cash market ; cedel ; certificate of

deposit (CD) class of option ; closing price ; commission ; commercial paper (CP) ; contractspecifications ; convertible bond ; coupon ; cover; delivery ; delivery month ; equity ; equity

swaps ; equity collar ; Eurobond ; Euro clear ; euro commercial paper; euro currency ;

215 217

Exercise price ; expiration date; floating rate note ; fundamental Analysis ; futures contracthedge ; Hybrid ; Interest Rate swap; Intermediation ; Intrinsic Value ; Libor ; Long margin; margin c all maturity naked position ; note issuance facility (NIF)

218 -219

Option ; overbought ; oversold ; physical market ; position ; premium purchaser ; put option

; settlement price short ; speculator ; strike price ; straight debt tap ; technical analysistranche ; tombstone volatility ; volume ; withholding tax ; yankee bond ;

220 221

Chapter 1 Introduction to international capital markets 1Ero currency market ; Domestic market ; US, Japan Switzerland ; uk, australiacanada ; european conters in ECU ; Euro ; Asian doller market ; forex marker 1

SDR ; ECU ; US dollar ; German ; Swiss ; Japanees ; France ; Canada ; Australia; 2Chaper - 2 - International financial Markets - The U.S.Dollar Market ; pricing ;federal reservice board; curency ; central bank of US ; 5

The Japanese Yen Market ; Mof; Long Term Prime Rate ; 1970 japanese 6The Sterling Market ; 20th 19th century 1979 ; OECD Organization for economicco-operation & development EMS Exchange rate Mechanism; FRN ; Bulldog; 7the EURO Market has been discussed in the nex chapter Recent development ininternational financial markets ; septer 11 enron 7

LtCN (Long term capital Management Brazil china and mexico; 81990 ; 1980 ; severe tests financial system; securitization forces banks ; attractiveto browwerw; legal issues flexibility ; financial market development segement of ; 9swaps cash flow ; roject related; gain access to international ; marketability ; newfinancing techniques; 10

Chapter 3 International Monetary and Financial System 131945 ; 1944 ; intenrational world Bank for reconstruciton and development; secondworld war was european ; IMF International Monetary Fund; Gold standard firstworld war 13The country's Central Bank agreed to buy back their currency at a certain rate ofgold; 13


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melting down of gold was freely allowed 13There was unrestricted movement of gold (I.e. import and / export 14The total money supply in the country was determined by the quantum of gold

reserves in the country 141870 ; 1914 ; 1821 ; 1834 ; 1870 ; European countries gold standard in 1933 ;1930 International Monetary Co-operation ; IBRD ; IMF ; 14popularly known as world bank IMF ; the international monetary fund 1945 ; 1971

; 25 years ; aims 15SDR ((special drawing rights ) 25% 1960 ; 1963 ; Gross domestic product; 5 years; SDR 146 bn to SDR 212 ; 45% ; 1998 ; Two parts 16Funding Facilities ; Regular Facilities ; Special facilities ; restore tranche credittranche ; compensatory and contingenc y financing facility (CCFF) ; 16Extended arrangement (Extended Fund Facility EEF) ; Buffer stock FinancingFacility ; 16Standard Arrangement (Enlarged Arrears Policy ) ; Supplemental Reserve Policy(Supplemental Reserve Policy (SRP 17

Reserve Tranche ; Credit Tranches ; Stand - By Arrangement 17Extended arrangement or extended fund facilities (EFF) 18Special Facilities ; CCFF ; Buffer Stock Financing Facility ; BSFF ; SupplementalResource Facility (SRF) ; 1997 18Enhance Structural Adjustment Facility (ESAF) ; The fixed exchange rate systemUS dollars 35 ounce of gold 19Problem faced by the fixed exchange rate system ; 1960 ; value apprehension ;delay in adjustment 20failure of fixed rate system ; the european monetary system (EMS) EuropeanCommunity 20Currency Snake ; 1973 ; EMS EC ECU European Currency Unit ; SDR ; ERM ; DM; matrix german bundesbank 21

EM ; PST ; ERM ; Economic and monetary Union ;


True/FalseQuestion Integrated branches of Commercial banks handle forex

transactions as well as options, swaps, futures, arbitrageoperations

Correct Answer True

Your Answer True



Your Answer False

Select The BlankQuestion The rate of interest on rupee finance for exports is not

exceeding ________ less than PLR.


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Correct Answer 0.025

Your Answer 50 basis points over LIBOR


Correct Answer The exercise or strike price, the amount , The expiration dateand time, the method of payment

Your Answer The exercise or strike price, the amount , The expiration dateand time, the method of payment

Multiple Choice Single AnswerQuestion In the syndicated loan arrangement the borrower has to execute

:-Correct Answer Single Principal loan agreement

Your Answer Single Principal loan agreement

True/FalseQuestion At Least one principal Lender bank is essential for issue of the

ADR or GDR.Correct Answer False

Your Answer True

Multiple Choice Single AnswerQuestion US financial system is the freest system because

Correct Answer Institutions can introduce new products and instuments at theprice of their choice.

Your Answer Institutions can introduce new products and instuments at theprice of their choice.

Multiple Choice Single AnswerQuestion 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/FalseQuestion Till August 1994 India was following the Indirect Methodof Rate

quotation.Correct Answer False

Your Answer False


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Select The BlankQuestion 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 AnswerQuestion 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 AnswerQuestion 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 chequesand also Give export finance

Select The BlankQuestion Any company involved in foreign exchange transactions is

exposed to ________ risk.Correct Answer Currency

Your Answer Currency

Multiple Choice Multiple AnswerQuestion What are the features of Settlement price ?

Correct Answer Price established by the clearing house at the end of eachtrading 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 eachtrading session , It is used to determine the net gain, loss,margin call and next days price limits

Multiple Choice Multiple AnswerQuestion What are the activities of ICC?

Correct Answer Aribtration and dispute resolving , Canvass for open tradecombat commercial crime

Your Answer Aribtration and dispute resolving , Canvass for open tradecombat commercial crime , Increased Govt regulation ofBusiness

True/False


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Question Cause of increase in cost of public issues Underwriting fees ,selling commission

Correct Answer True

Your Answer False

Select The BlankQuestion 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 theBanker, hence the bank has to be very conservative in quotingrates.


Your Answer True

Multiple Choice Multiple AnswerQuestion 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 andpayment,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 AnswerQuestion Sterling Market is attractive for an international investor because

Correct Answer Gilts offer higher attractive margin , Choice of issuing mediumterm and long term bonds

Your Answer Gilts offer higher attractive margin , Choice of issuing mediumterm and long term bonds , Linking of issues to currency swaps


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True/FalseQuestion In red clause credit some clauses are printed in Red ink.

Correct Answer True

Your Answer False



Your Answer Payment of hotel bills abroad, payment for expenses on Heartoperation abroad , Payment to EOUs in India for servicesrendered by them

Multiple Choice Single AnswerQuestion 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


Multiple Choice Single Answer

Question Why are various methods of financial analysis used forassessing a cross border project ?

Correct Answer To weed out unviable projects and rank profitable ones


Multiple Choice Multiple AnswerQuestion Criteria for investment abroad under automatic route :-

Correct Answer Activity for investment is core activity of Indian Company. , TotalFinancial commitment in JV/WOS as per prescribed ceiling

Your Answer ctivity for investment is core activity of Indian Company. , Total

Financial commitment in JV/WOS as per prescribed ceiling

Multiple Choice Multiple AnswerQuestion 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.



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Question Large number of exporters from which country are enjoying theprivilege of receiving up front cash from importers in Russia?

Correct Answer United Kingdom

Your Answer United Kingdom

True/FalseQuestion 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 necessarydocuments in advance of the public issue under the facilityknown as ________.

Correct Answer Shelf Registration

Your Answer Shelf Registration

Select The BlankQuestion In Overseas market the forward rate is generally quoted on the

basis of ________.Correct Answer Fixed date

Your Answer Calendar month

Select The BlankQuestion Forward Margin makes a currency costlier then the currency is

at ________.Correct Answer Premium



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 AnswerQuestion What are the functions of Asian Development Bank?

Correct Answer Give Softloans to poorer countries in Asia , Give project financefrom resources raised in world capital market


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Your Answer Give Softloans to poorer countries in Asia , Give project financefrom resources raised in world capital market

Multiple Choice Single AnswerQuestion Fixed, Floating or Limited flexibility are used in the context of

Correct Answer Exchange Rates

Your Answer Exchange Rates

Select The BlankQuestion In mid 1992 ________ rejected the ratification of Maastricht

treatyCorrect Answer Denmark

Your Answer UK

Multiple Choice Multiple AnswerQuestion 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 agreementsYour Answer Hedges, interest rate swaps, currency swaps. , Caps and

collars, and forward rate agreements


Question To whom is an AD required to report the cancellation of forwardcontracts?

Correct Answer No one at all.

Your Answer To Reserve Bank of India, fortnightly

Select The BlankQuestion ECGC provides cover to an Indian contractor for construction

ork abroad under ________.Correct Answer Construction works policy

Your Answer Export Performance Guarantee

True/FalseQuestion he Negotiating bank examines the documents submitted by the

seller and makes payment if they comply the terms andconditions of the LC.

Correct Answer True

Your Answer True



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Question What was the official foreign currency reserve of the group ofseven central Banks taken togeather in mid 1992?

Correct Answer USD 275 Billion


Multiple Choice Multiple AnswerQuestion 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 isat ________.

Correct Answer Discount


Multiple Choice Single AnswerQuestion Name the common forex derivatives :-

Correct Answer Options, futures

Your Answer Options, futures

True/FalseQuestion Country risk analysis is a futile exercise in the background of

cost of analysis.Correct Answer True

Your Answer False

Select The BlankQuestion Even after liberalisation of exchange controls, the Euro sterling

market remained volatile because of uncertainties in UK andgyrations of sterling against major ________ countriesCorrect Answer OECD

Your Answer OECD

Match The Following


Issues linked withLIBOR,LIBID,LIMEAN

FRNs FRNs


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Issue of bonds withoutfixed rate of interest,linked to short term

interest rate in the globalmarket

FloatingRate Note FloatingRate Note

Issue of loansinternationally,througharranger, underwriter,comanager, for a largeamount for sharing risk oflending

Syndicated Loans Syndicated Loans

Equity issues in theforeign markets either asdirect investments orportfolio investments.

American or GlobalDepository Receipts

American or GlobalDepository Receipts


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Multiple Choice Single AnswerQuestion Proforma Invoice, Commercial Invoice, Consaular Invoice are

hich type of documents?Correct Answer Commercial Documents

Your Answer Commercial Documents

True/FalseQuestion Charter party bills of lading are generally not acceptable to

bankers as security because Sea Charters are full of problems.Correct Answer True

Your Answer True

Multiple Choice Multiple AnswerQuestion Why does a Transaction exposure arise?

Correct Answer Trading flows , Dividend or capital flows

Your Answer Trading flows , Dividend or capital flows

Multiple Choice Single AnswerQuestion If a dealer of securities is quoting rate as 200-250 then the rate

200 signifies which rate with reference to him?Correct Answer Bid rate

Your Answer Bid rate

Select The BlankQuestion A Documentary credit issued on the strength of another

documentary credit is known as ________.Correct Answer Back to Back credit

Your Answer Back to Back credit



Your Answer Which are convertible , Which have liquidity confirmed in Euromarket operations

True/False


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Question Tranche' is a managed issue of securities in smallerdenominations.

Correct Answer True

Your Answer False



Your Answer True


_______.Correct Answer Yen,Euro Dollar, Swiss Francs, USD market, Govt Borrowings

ithin and outside the countryYour Answer Yen,Euro Dollar, Swiss Francs, USD market, Govt Borrowings

ithin and outside the country

Multiple Choice Multiple AnswerQuestion Which events can lead to materialisation of country risk?

Correct Answer Change in Government policies , Change in Government rulesand laws

Your Answer Change in Government policies , Change in Government rulesand laws , Unpredicted Earthquake, Tsunami waves

Multiple Choice Multiple AnswerQuestion What is a 'speculator'?

Correct Answer Trader who is neither hedger nor arbitragor , He takes risks forprofit

Your Answer Trader who is neither hedger nor arbitragor , He takes risks forprofit

Select The BlankQuestion The major industrial power whose economy was not affected

after the II world war was ________.Correct Answer USA

Your Answer USA




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Multiple Choice Multiple AnswerQuestion What do you understand by Commercial Risk?

Correct Answer Protracted default by the buyer , Insolvency of the buyer

Your Answer Protracted default by the buyer , Insolvency of the buyer

Select The BlankQuestion Legalised invoice is also called ________ invoice.

Correct Answer isaed

Your Answer isaed

Multiple Choice Single AnswerQuestion For a spot transaction carried out on Thursday, currencies will

be exchanged on :-Correct Answer Monday

Your Answer Monday

True/False

Question The American Dollar market comprises of the domestic segmentof USD the offshore segment of USD.Correct Answer True

Your Answer True

Match The Following


LastStage Form a single currency Meet in Maastricht inNetherland

The First stage in theEuropeand and MonetaryUnion (EMU)

Free movement of capitalin EC Establish EURO Bank

Stage II in EMU Establishment of European MonetaryInstitute

Establishment of EuropeanMonetary Institute

Stage III in EMU Members to meet theconvergence criteria andfix the exchange rates

Members to meet theconvergence criteria andfix the exchange rates

Select The Blank


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Question Under the ________ standard the Country's Central Bankpromised to buy back the currency at certain rate of Gold.

Correct Answer Gold

Your Answer Gold

True/FalseQuestion An Indian exporting goods to New York receives dollars in New

York.Correct Answer True

Your Answer True

Multiple Choice Multiple AnswerQuestion The factors which affect the performance of an option are:-

Correct Answer Underlying asset price , Time before expiration, rate of interest

Your Answer Underlying asset price , Time before expiration, rate of interest

Multiple Choice Multiple AnswerQuestion Which contracts are used for transportation by road?

Correct Answer FCA , CPT

Your Answer FCA , CPT , CFR

True/FalseQuestion Bid rate is bidders buying rate and offered r ate is bidders selling

rate.Correct Answer True

Your Answer False

Match The Following


Cancellation of contractsabove USD 500000

ECD ECD

Forward Purchasecontract currency atpremium

Presume earliest delivery Presume earliest delivery

Forward purchasecontract currency atdiscount

Presume latest delivery Presume latest delivery

Exchange margins FEDAI FEDAI


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Your Answer Other managed Floating

Multiple Choice Multiple AnswerQuestion Which two countries were included to convert the group of five

into the group of seven?Correct Answer Italy , Canada

Your Answer Canada , Italy

Multiple Choice Single AnswerQuestion Who can open an EEFC account?

Correct Answer Individuals , firms, companies, resident in India

Your Answer Individuals , firms, companies, resident in India

Multiple Choice Single AnswerQuestion Method of advance payment is not disadvantageous to :-

Correct Answer The seller

Your Answer The seller

Multiple Choice Single AnswerQuestion What is the immediate cause for the growth of futures and

options in the last two decades?Correct Answer Increase in volatile trading conditions

Your Answer Increase in volatile trading conditions

Multiple Choice Single AnswerQuestion What do you mean by a derivative?

Correct Answer One which has been derived from other fundamentalinstruments

Your Answer Derived from Mathematical expressions

Multiple Choice Single AnswerQuestion "Currency Snake"


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Correct Answer Plus or minus movement of exchange rate around the parity rate

Your Answer Currency of European Country in the early 70's

True/FalseQuestion Postal receipt is an acknowledgement of receipt of goods, a

quasi negotiable instrument.Correct Answer False

Your Answer False

Multiple Choice Single AnswerQuestion In which currency can the EEFC account be opened?

Correct Answer Any Convertible currency

Your Answer Any Convertible currency

Multiple Choice Multiple AnswerQuestion Criteria for Direct investment abroad under normal route :-

Correct Answer iability of the proposal, and excellent track record of business ,Experience and expertise of promoters, benefit to the country

Your Answer Total Financial commitment in JV/WOS as per prescribed ceiling, Activity for investment is core activity of Indian Co.

Select The BlankQuestion _______ enables bankers to extend purchase, negotiation or

discount of export bills.Correct Answer Post shipment credit guarantee

Your Answer Post shipment credit guarantee

Multiple Choice Single AnswerQuestion For setting up a joint venture or WOS abroad, Indian banks

operating in India need a clearance :-Correct Answer Under Banking Regulation Act

Your Answer Under Banking Regulation Act





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True/FalseQuestion Indian companies are now allowed to freely invest abroad up to

$1.5 million, raised through GDE or EEFC without prior

permission from RBI.Correct Answer False

Your Answer False




True/FalseQuestion Terms in an Irrevocable credit can not be alterred at all.


Your Answer True

Select The BlankQuestion Position in a currency is said to be ________, when sales equal

purchases.

Correct Answer SquareYour Answer Square

Multiple Choice Multiple AnswerQuestion How is the entry into any conuntry's money market or capital

market is restricted?Correct Answer Because of different tax systems , Because of different credit

standardsYour Answer Because of different tax systems , Because of different credit

standards

Select The BlankQuestion The currency notes and coins of individual countries

participating in "Euro" have ceased to be a legal tender from_______.

Correct Answer 2002

Your Answer 2002

Select The BlankQuestion Partnership firm not eligible for Overseas Direct Investment

needs to apply to RBI Approval in form ________.


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Correct Answer ODI

Your Answer ODI

Multiple Choice Single AnswerQuestion Where does the word derivative originate from?

Correct Answer Mathematics

Your Answer Mathematics

Select The BlankQuestion To make the export more competitive and remunerative, the

Indian Govt extends ________ facility.

Correct Answer Cash Incentives

Your Answer Cash Incentives

Multiple Choice Single AnswerQuestion The financial system of any country consists of

Correct Answer Network of commercial banks, domestic and foreign investmentbanks, NBFCs, etc

Your Answer The Central bank, IMF and world bank


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Select The BlankQuestion Association of several scheduled commercial banks for forex

business is ________.Correct Answer Foreign Exchange Dealers Association of India

Your Answer Foreign Exchange Dealers Association of India

True/FalseQuestion Installment credit is issued for specific quantities of goods to be

shipped every week or month.Correct Answer True

Your Answer True

Select The BlankQuestion Combined Certificate of Origin and Value are required by

_______.Correct Answer Commonwealth Countries

Your Answer Commonwealth Countries

Select The BlankQuestion The creditworthiness of the futures seller and the futures buyer

is ________ because of the presence of the Futures exchange.Correct Answer Irrelevant

Your Answer Irrelevant

Select The BlankQuestion When interest rate changes by 0.05 per cent then it has

changed ________ basis points.Correct Answer 50

Your Answer 5

Multiple Choice Multiple AnswerQuestion What were the primary objectives of the group of seven

countries?Correct Answer Bring down the external value of US Dollar , Bring some stability

to exchange rates of all the countriesYour Answer Bring down the external value of US Dollar , Bring some stability

to exchange rates of all the countries



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Question The crisis in global capital market in 2002-04 was due to

Correct Answer Collapse of Enron , Collapse of Argentina's currency board ,

The war against terrorismYour Answer Collapse of Enron , Collapse of Argentina's currency board

Multiple Choice Multiple AnswerQuestion Mr A sells an option conferring the right to buy a kilogram of

silver at Rs 8000/- for next six months means :-Correct Answer The buyer of option can buy silver from Mr A at 8000/- per Kg, in

next 6 months, even if the price goes up, , The buyer of optioncan sell silver to Mr A at 8000/- per Kg, in next 6 months, even ifthe price goes down.

Your Answer The buyer of option can buy silver from Mr A at 8000/- per Kg, innext 6 months, even if the price goes up, , Mr A has choice ofselling or not selling silver on his own

Multiple Choice Multiple AnswerQuestion Major investors in NIF are :-

Correct Answer Commercial Banks , Non banking Finance companies ,Insurance Companies

Your Answer Commercial Banks , Non banking Finance companies ,Insurance Companies

True/FalseQuestion With the advent of futures and Options there is no need for

additional instruments of risk hedging.Correct Answer False

Your Answer False

Select The BlankQuestion During the fixed rate exchange system prevailing in India, the

intervention currency was ________.Correct Answer Sterling Pound

Your Answer USDollar

Multiple Choice Single AnswerQuestion What help does EXIM Bank provide under the scheme 'Direct

Financial assistance to exporters'?Correct Answer Funds are provided under deferred payment terms to Indian

exporter for credit to foreign buyerYour Answer Funds are provided under deferred payment terms to Indian

exporter for credit to foreign buyer



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Question What is a bill of lading?

Correct Answer Transport document representing movement of goods by water.

Your Answer Transport document representing movement of goods by water.

Multiple Choice Single AnswerQuestion Which controls are not permitted by IMF?

Correct Answer Current account controls

Your Answer Exchange controls


Question What are the objectives of International Chamber ofCommerce?

Correct Answer Champion the global economy as a force of economic growth ,Creating of job and prosperity

Your Answer Champion the global economy as a force of economic growth ,Creating of job and prosperity

True/FalseQuestion Yankee bond is issued for domestic borrowers.


Your Answer True

Multiple Choice Multiple AnswerQuestion What schemes have been floated by RBI for facilitating Inter

bank transactions?Correct Answer Clearing house for settlement and clearance for the operations

of Ads , Set up a market intelligence cell to study and monitordevelopments in Forex Market

Your Answer Clearing house for settlement and clearance for the operationsof Ads , Set up a market intelligence cell to study and monitordevelopments in Forex Market

True/FalseQuestion An AD can book a forward contract for a part of the amount of

Sale ContractCorrect Answer True

Your Answer False

True/FalseQuestion Sterling FRNs are issued in Europe, USA ,Asia


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Your Answer True

Match The Following


Bond basis to moneymarket basis

Bond basisx 360/365 Bond basisx 360/365

3 months LIBOR +2 % PA Floating rate Floating for floating ratecurrency swap

15% P.A. Fixed rate Fixed rate

Money market basis tobond basis

Money market basis x365/360

Money market basis x365/360

Select The BlankQuestion In Indian interbank market forward rates are generally quoted on

the basis of ________.Correct Answer Calendar month


Multiple Choice Single AnswerQuestion In case of syndication of loans the amount of loan and currency

is finalised by :-Correct Answer Borrower

Your Answer Underwriter of the syndicate

Multiple Choice Single AnswerQuestion European currency Unit

Correct Answer Basket of Currencies of members of EMS

Your Answer Basket of Currencies of members of EMS

Select The BlankQuestion The counter party in option is ________.

Correct Answer The exchange

Your Answer Trustworthy corporation, who hedges the risks of marketuncertainty

Multiple Choice Single AnswerQuestion A Spot Transaction between Japanese Yen and Sterling carried

out on Friday in Singapore, the settlement day will be


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Correct Answer Following Tuesday if it is a working day in all the three centers

Your Answer Following Tuesday if it is a working day in all the three centers

Select The BlankQuestion EEFC account holder is allowed to have ________ facility.

Correct Answer Cheque book and nomination

Your Answer Cheque book and nomination

Multiple Choice Multiple AnswerQuestion A Usance bill of exchange may be drawn in 2 ways. Which are

they?

Correct Answer Documents against payment , Documents against acceptance

Your Answer Documents against payment , Documents against acceptance

Multiple Choice Single AnswerQuestion Why have futures and options come into existence?

Correct Answer To avoid business risk.

Your Answer To avoid business risk.

True/FalseQuestion In an interest rate swap if the payment schedules are identical,

only diffrence between the two payments is delivered.Correct Answer True

Your Answer True

Multiple Choice Multiple AnswerQuestion What are the main causes of fluctuations in Exchange rates?

Correct Answer Market demand and supply, sentiments , Governmentregulatios, fiscal policies, political instabilities

Your Answer Government regulatios, fiscal policies, political instabilities ,Market demand and supply, sentiments , The purchasing powerof currency changes every second

Multiple Choice Single AnswerQuestion What do you understand by a swap?

Correct Answer 2 counter parties agree to exchange streams of payments overa period of time

Your Answer 2 counter parties agree to exchange streams of payments overa period of time


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True/FalseQuestion Import finance is nomally available at rates of interest cheaper

than domestic finance rates.Correct Answer False

Your Answer False

Multiple Choice Single AnswerQuestion A weight list, a packing list used in international trade are which

type of documents?Correct Answer Operational Documents

Your Answer Operational Documents

Multiple Choice Multiple AnswerQuestion What do you understand by 'Foreign Exchange Risk'?

Correct Answer The change in value of currency alters the home currency valueof an asset , liability, , The change in value of currency alters thehome currency value of profit, loss, or future cash flows

Your Answer The change in value of currency alters the home currency valueof an asset , liability, , The change in value of currency alters thehome currency value of profit, loss, or future cash flows


Question What Preshipment facility is granted by EXIM Bank to anexporter?

Correct Answer Preshipment credit beyond six months for construction andturnkey projects abroad

Your Answer Preshipment credit beyond six months for construction andturnkey projects abroad

Multiple Choice Single AnswerQuestion Which Indian Co. is not eligible to make investment abroad

under automatic route?Correct Answer Co which is caution listed by RBI

Your Answer Co which is caution listed by RBI

True/FalseQuestion Naked position is when investor does not hedge against market

risk.Correct Answer True

Your Answer True



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Question In DAF, the frontier means :-

Correct Answer Frontier of exporter's country , Frontier of importer's country

Your Answer Frontier of exporter's country , Frontier of importer's country




Match The Following


European option On or after maturity On or after maturity

Out of money Loss Profit

In the money Profit Loss

American option Before maturity Before maturity

Select The BlankQuestion The Trans European Automated Real Time Gross Settlement

Express Transfer is popular in ________.Correct Answer Brussels


True/FalseQuestion PP Form is required when exports are made to any country by

post parcel on value payable basis.Correct Answer False

Your Answer False


turnover from a particular activity then that activity is consideredas ________.


Your Answer Core activity


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Multiple Choice Single AnswerQuestion How many Countries participated in the third survey on Foreign

Exchange, coordinated by BIS in 1992?

Correct Answer 26

Your Answer 26

Select The BlankQuestion Indian Co. intending to make investment under Automatic route

needs to submit form ________ to RBI with enclosures.Correct Answer ODA

Your Answer ODA

Multiple Choice Single AnswerQuestion In International trade, Advance payment means :-

Correct Answer Providing up front cash

Your Answer Providing up front cash

True/FalseQuestion If ERD > IRD hen exporter should availa Rupee finance

Correct Answer True

Your Answer True


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Multiple Choice Multiple AnswerQuestion What schemes have been floated by RBI for facilitating Inter bank

transactions?Correct Answer Clearing house for settlement and clearance for the operations of

Ads , Set up a market intelligence cell to study and monitordevelopments in Forex Market

Your Answer Clearing house for settlement and clearance for the operations ofAds , Make additional foreign currency available to ADs atcheaper rates

Select The BlankQuestion _______ is the agency of ICC which deals with the maritime

crime.Correct Answer International Maritime Bureau

Your Answer International Maritime Bureau

Multiple Choice Single AnswerQuestion Which of them are special funding facilities of IMF ?

Correct Answer Buffer Stock Facility

Your Answer Buffer Stock Facility

True/False

Question Cross currency forward contract is not meaningful if originalcontract is in Rupees to USD

Correct Answer True

Your Answer True


Correct Answer The exercise or strike price, the amount , The expiration date andtime, the method of payment

Your Answer The exercise or strike price, the amount , The expiration date and

time, the method of payment , The Market report of the exchangehich trades the option

Multiple Choice Single AnswerQuestion Which is the most actively traded currency in the international

market today?Correct Answer US Dollar


Match The Following


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Intolerable risk Drop the investment project Drop the investment project

Country risk analysis Cost of evluation does notjustify analysis

Cost of evluation does notjustify analysis

Stock market analysis Banks are ahead Factors' values

Weightages % Factors' values 100% of total


_______.Correct Answer Yen,Euro Dollar, Swiss Francs, USD market, Govt Borrowings

ithin and outside the countryYour Answer Yen,Euro Dollar, Swiss Francs, USD market, Govt Borrowings

ithin and outside the country

Multiple Choice Single AnswerQuestion For a spot transaction carried out on Thursday, currencies will be

exchanged on :-Correct Answer Monday

Your Answer Monday



Your Answer Pegged to Single currency

Match The Following


Maturity of future Time when actual commodityis delivered

Last date of exercising option

Note issuance facility Euronotes Euronotes

Bearer security issued incurrency other than that ofthe country of issue

Eurobonds Eurobonds

Margin on future Peformance bond or securitydeposit

Peformance bond or securitydeposit

True/FalseQuestion Postal receipt is an acknowledgement of receipt of goods, a quasi


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negotiable instrument.


Your Answer False

True/FalseQuestion The Prominent non banking financial institutions participating in

the FOREX markets are Pension funds, mutual funds, insuranceCos.

Correct Answer True

Your Answer True

Multiple Choice Multiple AnswerQuestion What are margins, with reference to futures market?

Correct Answer Faith money deposited by buyers and sellers ensures liquidity ,Margin ensures solvency for honouring contracts

Your Answer Faith money deposited by buyers and sellers ensures liquidity ,Margin ensures solvency for honouring contracts




Multiple Choice Single AnswerQuestion NIF is basically an agreement :-

Correct Answer By underwriting bank to support funding for a certain period,against which borrowers can issue short term papers

Your Answer Which enables the investor to market the same in the secondarymarket


Question What was the official foreign currency reserve of the group ofseven central Banks taken togeather in mid 1992?

Correct Answer USD 275 Billion



exporter?Correct Answer Preshipment credit beyond six months for construction and

turnkey projects abroad


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Your Answer Preshipment credit up to six months for construction and turnkeyprojects abroad




Select The BlankQuestion As a result of the world wars in the 20th century the ________ of

most of the countries suffered heavily.Correct Answer Economies

Your Answer Currencies

Multiple Choice Single AnswerQuestion Which currency is traded in one leg of about 70% of the world's

transactions?Correct Answer US Dollar


Select The Blank

Question _______ is the acid test for events to be included in country risk.

Correct Answer Control by Government'

Your Answer Recurrence

Select The BlankQuestion The Trans European Automated Real Time Gross Settlement

Express Transfer is popular in ________.Correct Answer Brussels


Multiple Choice Single AnswerQuestion What is Risk Syndication facil ity?

Correct Answer Sharing of risk of non payment by supplier

Your Answer Sharing risk of Non payment by the Syndicate of Banks givingloans

True/False


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Question If ERD > IRD hen exporter should availa Rupee finance

Correct Answer True

Your Answer True

Multiple Choice Multiple AnswerQuestion The characteristics of an International documentary credit are :-

Correct Answer It is an undertaking given by the openers bank to pay certain sumof money , It is an undertaking given on behalf of a certain personto another person in different country

Your Answer It is an undertaking given by the openers bank to pay certain sumof money , It is an undertaking given on behalf of a certain personto another person in different country



Your Answer Payment of hotel bills abroad, payment for expenses on Heartoperation abroad , Payment to EOUs in India for servicesrendered by them

True/False

Question Funding Options in domestic yen market are Futures, FRAs, Calland put options.Correct Answer True

Your Answer True

True/FalseQuestion There is no difference between CIP and CIF contracts except the

mode of transportation.Correct Answer True

Your Answer True






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turnover from a particular activity then that activity is consideredas ________.


Your Answer Primary activity

Select The BlankQuestion A Credit can be a confirmed credit only if it is also ________.

Correct Answer An Irrevocable credit


True/False

Question The volume of trading of Derivatives in the world trade market isgrowing but still only 5% of the total.


Your Answer False

Multiple Choice Single AnswerQuestion Punjab National Bank Mumbai Branch quoted USD 1= Rs

50.5000/52.5050. Which is the offered rate for Rs?Correct Answer USD 1=Rs 50.5000


Multiple Choice Multiple AnswerQuestion Export finance

Correct Answer Preshipment credit , Post shipment credit , Duty Draw back

Your Answer Preshipment credit , Post shipment credit , Buyers credit



Your Answer Which are convertible , Which have liquidity confirmed in Euromarket operations , Which have greater intrinsic value

Multiple Choice Multiple AnswerQuestion What are the functions of Asian Development Bank?

Correct Answer Give Softloans to poorer countries in Asia , Give project financefrom resources raised in world capital market

Your Answer Give Softloans to poorer countries in Asia , Give project financefrom resources raised in world capital market


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Select The BlankQuestion Short term instruments normally issued by corporate borrowers,

forhigh values, at a discount to face value are known as_______.

Correct Answer Euro Commercial Papers

Your Answer Euro Commercial Papers

Multiple Choice Single AnswerQuestion 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


Multiple Choice Single AnswerQuestion Examples of hedge are:

Correct Answer Buy when you are having short position

Your Answer Buy when you are having short position

Multiple Choice Multiple AnswerQuestion What is the effect of cross currency option on the customer?

Correct Answer He gets the flexibility to exposure , He is exposed to additional riskof movement of rates between 3 currencies

Your Answer He gets the flexibility to exposure , He is exposed to additional riskof movement of rates between 3 currencies

Select The BlankQuestion Forward margin makes a currency cheaper then the currency is at

_______.Correct Answer Discount


Multiple Choice Single AnswerQuestion Why does a person need protection from unfavourable movement

of exchange rate?


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Correct Answer Unfavourable fluctuations in exchange rate can wipe out thenormal business profit

Your Answer Unfavourable fluctuations in exchange rate can wipe out the

normal business profit

Multiple Choice Single AnswerQuestion The capital market is said to be volatile when

Correct Answer Prices of capital market instruments change and are expected tochange drastically

Your Answer Prices of capital market instruments change and are expected tochange drastically



Your Answer False

Multiple Choice Multiple AnswerQuestion What is the criteria for an Indian Company for Direct Investment

abroad?Correct Answer Activity proposed need to be core activity , Financial commitment

in JV/WOS maximum $ 100 million or equivalentYour Answer Activity proposed need to be core activity , Financial commitment

in JV/WOS maximum $ 100 million or equivalent , Indian co

should not have been black listed


Correct Answer Advertisement which lists the managers, underwriters, , Listof Providers of recently floated issue

Your Answer Advertisement which lists the managers, underwriters, , Listof Providers of recently floated issue

True/FalseQuestion Out of 15 member countries in European Union 12 countries

commiteed themselves for a single currency.


Your Answer False

True/FalseQuestion The volume of trading of Derivatives in the world trade

market is growing but still only 5% of the total.Correct Answer False

Your Answer False


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Select The BlankQuestion A Credit can be a confirmed credit only if it is also

_______.Correct Answer An Irrevocable credit


Match The Following


Intolerable risk Drop the investment project Drop the investment project

Country risk analysis Cost of evluation does not

justify analysis

Cost of evluation does not

justify analysisStock market analysis Banks are ahead Banks are ahead

Weightages % Factors' values Factors' values

Select The BlankQuestion Over the years ________has been the most widely

accepted currency in international capital market.Correct Answer American Dollar


Multiple Choice Single AnswerQuestion What is the meaning of a country risk?

Correct Answer Risk of events in a particular country which may cause lossto a person dealing with that country

Your Answer Risk of events in a particular country which may cause lossto a person dealing with that country

Multiple Choice Multiple AnswerQuestion Which common details will be available in any bill of

Lading?Correct Answer Names of consigner, consignee , The port of loading andunloading, contract of shipment

Your Answer Names of consigner, consignee , The port of loading andunloading, contract of shipment

Multiple Choice Single AnswerQuestion What help does EXIM Bank provide under the scheme

'Direct Financial assistance to exporters'?Correct Answer Funds are provided under deferred payment terms to Indian

exporter for credit to foreign buyer


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Your Answer Funds are provided under deferred payment terms to Indianexporter for credit to foreign buyer


PP Form Export Declaration form Export Declaration form

Health Certificate Fumigation certificate Fumigation certificate

Certificate of Inspection As per importersrequirement

As per importersrequirement

Certifiate of Origin Export Promotion Council Export Promotion Council

Select The BlankQuestion Even after liberalisation of exchange controls, the Euro

sterling market remained volatile because of uncertainties inUK and gyrations of sterling against major ________countries

Correct Answer OECD

Your Answer OECD

Multiple Choice Single AnswerQuestion How many INCOTERMS are there in "Departure" Group?

Correct Answer One

Your Answer Two

Multiple Choice Single AnswerQuestion What is a bill of lading?

Correct Answer Transport document representing movement of goods byater.

Your Answer Transport document representing movement of goods byater.

True/FalseQuestion The American Dollar market comprises of the domestic

segment of USD the offshore segment of USD.Correct Answer True

Your Answer True

Select The BlankQuestion The creditworthiness of the futures seller and the futures

buyer is ________ because of the presence of the Futures


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exchange.

Correct Answer Irrelevant

Your Answer Irrelevant

Multiple Choice Single AnswerQuestion What was the collective assessment of International

financial market about the country risk of many cnuntries inthe last decade?

Correct Answer Whatever it was, was disastrously wrong.

Your Answer Whatever it was, was disastrously wrong.

Multiple Choice Multiple AnswerQuestion How is the entry into any conuntry's money market or capital

market is restricted?Correct Answer Because of different tax systems , Because of different

credit standardsYour Answer Because of different tax systems , Because of different

credit standards

True/FalseQuestion Till August 1994 India was following the Indirect Methodof

Rate quotation.Correct Answer False

Your Answer True

Select The BlankQuestion In Indian interbank market forward rates are generally

quoted on the basis of ________.Correct Answer Calendar month


Select The Blank

Question Rupee was liberalised on ________ account in 1993, andon current account in 1994.

Correct Answer Trade

Your Answer Trade

Multiple Choice Single AnswerQuestion Under which category of exchange rate did the Indian

Rupee came from June 92?Correct Answer Other managed Floating


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Your Answer Other managed Floating

Multiple Choice Multiple AnswerQuestion Which of these are considered as miscellaneous

documents?Correct Answer Packing list , Weight certificate

Your Answer Packing list , Weight certificate



Your Answer True

Select The BlankQuestion ECGC provides cover to an Indian contractor for

construction work abroad under ________.Correct Answer Construction works policy

Your Answer Construction works policy


Question Equity can be raised internationallly by a company through:-Correct Answer Fund raising, underwriting, hedging , arbitration operations

Your Answer Fund raising, underwriting, hedging , arbitration operations

Multiple Choice Single AnswerQuestion How many Countries participated in the third survey on

Foreign Exchange, coordinated by BIS in 1992?Correct Answer 26

Your Answer 26

True/FalseQuestion In red clause credit some clauses are printed in Red ink.

Correct Answer True

Your Answer True

True/FalseQuestion Prior approval of RBI is needed for payment of all imports.


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Your Answer True

Multiple Choice Multiple AnswerQuestion The factors which affect the performance of an option are:-

Correct Answer Underlying asset price , Time before expiration, rate ofinterest

Your Answer Underlying asset price , Time before expiration, rate ofinterest

Multiple Choice Single AnswerQuestion What is the immediate cause for the growth of futures and

options in the last two decades?Correct Answer Increase in volatile trading conditions

Your Answer Management of external risk

Select The BlankQuestion 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

Select The BlankQuestion o make the export more competitive and remunerative, the

Indian Govt extends ________ facility.Correct Answer Cash Incentives

Your Answer Advance against cash incentives

Multiple Choice Multiple AnswerQuestion What is the criteria for an Indian Company for Direct

Investment abroad?

Correct Answer Activity proposed need to be core activity , Financialcommitment in JV/WOS maximum $ 100 million orequivalent

Your Answer Activity proposed need to be core activity , Financialcommitment in JV/WOS maximum $ 100 million orequivalent

Multiple Choice Multiple AnswerQuestion External Commercial Debt market :-

Correct Answer Prevails in Domestic market of foreign country , Prevails inoffshore markets


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Your Answer Prevails in Domestic market of foreign country , Prevails inoffshore markets




Multiple Choice Multiple AnswerQuestion What do you understand by 'Foreign Exchange Risk'?

Correct Answer The change in value of currency alters the home currencyvalue of an asset , liability, , The change in value of

currency alters the home currency value of profit, loss, orfuture cash flows

Your Answer The change in value of currency alters the home currencyvalue of an asset , liability, , The change in value ofcurrency alters the home currency value of profit, loss, orfuture cash flows , Certainty of an event which wouldhappen in favour of the importer/ exporter

Multiple Choice Single AnswerQuestion For a spot transaction carried out on Tuesday, where both

centers have holiday on Wednesday, currencies will beexchanged on :-

Correct Answer Thursday if it is a working day at both the centers

Your Answer Friday

Multiple Choice Single AnswerQuestion Which details about forward contracts do the Exchange

Controls verify ?Correct Answer Particulars of cancellation of forward cover for the

equivalent of USD 500,000Your Answer Particulars of cancellation of forward cover for the

equivalent of USD 500,000

True/FalseQuestion In the forward rate quotations between two currencies,

hen one currency is at discount the other currency is atpremium.

Correct Answer True

Your Answer True



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Correct Answer Which are convertible , Which have liquidity confirmed inEuro market operations

Your Answer Which are convertible , Which have liquidity confirmed in

Euro market operations

Select The BlankQuestion A Bill of exchange payable 45 days from date of shipment,

is a means of ________ from seller to the buyer.Correct Answer Credit

Your Answer Credit


exporter?Correct Answer Preshipment credit beyond six months for construction and

turnkey projects abroadYour Answer Preshipment credit beyond six months for construction and

turnkey projects abroad


_______.Correct Answer Yen,Euro Dollar, Swiss Francs, USD market, Govt

Borrow