international financial managementn2
TRANSCRIPT
MBA (n2) -4(Finance) International Financial Management (MF0015)
(Unit-1) International Financial Environment
Q: 1) …………. Means a company involved in producing and selling goods services in more than one country?
Ans: Multinational Corporation
Q:2) The full form of MNC is ………….?
Ans: Multinational Corporation
Q:3) The reduction of relative and absolute poverty , the increase of employment and the improvement of social welfare are additional ……….. Of MNC?
Ans: Goals
Q:4) As business expands, the awareness of opportunities in foreign markets also…………………?
Ans: Increases
Q:5) The liberalization and Globalization have propelled the growth of ……………..?
Ans: Indian Companies
Q:6) How many Indian Companies have entered the elite list of fortune 500?
Ans: 6 Indian Companies
Q:7) The term globalization encompasses a range of……………?
Ans: Social, Political and economic changes
Q:8) Globalization increases the ability f firms to do business across ….?
Ans: National boundaries
Q:9) …………… is a phenomenon that no development agenda can afford to ignore?
Ans: Globalization
Q: 10) ………. Hs grown more quickly than the world economy in recent years, a trend that is likely to continue?
Ans: Foreign trade
Q: 11) An ………….. Is necessary so that all decisions of the organization contribute towards the fulfillment of this purpose?
Ans: Objective
Q: 12) The usually accepted objective of an MNC is to …………?
Ans: Maximize the shareholders wealth
Q: 13) …………… makes the MNC task much more complex than that of the domestic firms?
Ans: The objective of maximizing the wealth of the shareholders
Q: 14) In Foreign Exchange market currency future options and derivatives are regularly traded. State true or false?
Ans: True
Q: 15) The manager can use the ………. Tool to reduce the firms overall tax burden?
Ans: Taxation tool
Q: 16) ………….. Enables a firm to use its technology in foreign markets without a substantial investment in foreign countries?Ans: Licensing
Q: 17) Methods of International business are………………?
Ans: 1) Licensing 2) Franchising 3) Joint ventures 4) Management contracts 5) Establishing new foreign subsidiary
Q:18) ………………… means a firm in one country authorizing a firm in another country to utilize its brand names , logos etc. for some royalty payment?
Ans: Franchising
Q: 19) The …………. Market deals with foreign exchange delivered within 2 days or less?
Ans: Spot
Q: 20) ………….. Market is for foreign exchange to be delivered in 3 days or more?
Ans: The forward market
Q: 21) In quoting the forward rate of currency, a bank will quote a …………….. And offer rate for delivery?
Ans: Bid
Q: 22) …………….. is the effect that unexpected Exchange rate changes have on the value of the firm?
Ans: Exchange Risk
Q: 23) If the value of the foreign currency rises than ……………?
Ans: The Indian firm has to pay more domestic currency to get the required amount of foreign currency?
Q: 24) The type of Foreign exchange exposures are ……………..?
Ans: 1) Translation 2) Transaction 3) Economy
Q: 25) Match the stages of International Monetary System with the appropriate years:-
A) The Gold Standard i) 1973B) The Inter-War Years ii) 1876-1913 C) The Bretton Woods System iii) 1914-1944 D) D) Flexible Exchange Rate Regime iv) 1945-1973
Ans: A-ii, B-iii, C-iv, D-i
Q: 26) A company can have …………….. to say Pound /Rupee rates even if it does not have any transaction or translation exposure in the British currency?
Ans: Economy Exposures
Q:27) ………… arises from the possibility of incurring foreign exchange Gains or losses on transaction already entered into and denominated in a foreign currency?
Ans: Transaction exposures
Q: 28) The Revived Bretton Woods System was identified in…………?
Ans: 2003
Q: 29) The full form of SDR is …………..?
Ans: Special Drawing Right
Q: 30) State the full form of:-
A) ERM………..?
Ans: European exchange rate mechanism
B) ECU…………..?
Ans: European currency unit
Q: 31) The Smithsonian Agreement was signed in ………….. And was also known as the ………………..?
Ans: December1971, Snake
Q: 32) The ……… was Designed to keep the European Economic Community Countries Exchange rates within a narrower band of ………………. For their currencies?
Ans: Snake, 1.125%
Q: 33) ……………………. Is moving in a direction similar to that of Japan nearly a quarter of e century ago?
Ans: South Korea
Q: 34) The World Bank is the International Bank for ………………. & …………….?
Ans: IBRD & IDA
Q: 35) The IBRD has two affiliates and these are …………?
Ans: IFC and MIGA
Q: 36) The IFC and MOGA are sometimes referred to as ………….?
Ans: World Bank group
Q: 37) State the full form of the following:-
A) IBRD………………?
Ans: International bank for reconstruction and development
B) IDA……………..?
Ans: International development association
C) IFC……………?
Ans: International Finance Corporation
D) MIGA……………….?
Ans: Multilateral investment guarantee agency
Q: 38) More than …………… countries are eligible for IDA financing?
Ans: 40
Q: 39) There are …………. Countries that are members of the IFC?
Ans: 182
Q: 40) MIGA was established in …………….. ?
Ans: 1988
Q: 41) Currently MIGA has ……………. Members?
Ans: 175
Q: 42) Asian Development Bank is owned and financed by it’s ……………. Members?
Ans: 67
(Unit-2) The balance of payments
Q: 43) …………….. Includes exports and imports of goods and services, capital inflows and outflows?
Ans: Economic transactions
Q; 44) changes in Bop may predict the imposition or removal of foreign exchange controls. True or false?
Ans: True
Q: 45) The BOP helps to forecast resident of service in an India hotel is a ……………… transaction?
Ans: Credit
Q: 47) Transactions that expend or use up foreign exchange are recorded as ……… and are entered with a …… sign?
Ans: Debits, (-)
Q: 48) When India residents purchase foreign services, foreign exchange is used and the entry is recorded as ………………?
Ans: Debit
Q: 49) The transaction that involves the receipts of payments from foreigners is …………….?
Ans: Credit transactions
Q: 50) An increase in foreign assets of the nation and a reduction in the assets abroad are the forms of ………………?
Ans: Capital inflows
Q: 51) When an India resident sells a foreign stock, Indian assets abroad…………………?
Ans: Decreases
Q: 52) The balance of payment statement records all types of ………………. That a country consummates over a certain period of time?
Ans: International transactions
Q: 53) The current account is divided into…………..?
Ans: 1) The merchandise trade balance 2) The service balance 3) The balance on unilateral transfers
Q: 54) A …………. In the current account represents an inflow of funds while a ………. Represents an outflow of funds?
Ans: Surplus, Deficit
Q: 55) …………….. are the gifts and grants by both private parties and govt.?
Ans: Unilateral transfers
Q: 56) Govt. transfers includes ………………?
Ans: Money, gods and services sent as aid to other countries
Q: 57) Capital account is divided into………………?
Ans”: 1) Direct Investment 2) Portfolio investment 3) Other capital flows
Q; 58) Capital flows represent the ………. Of capital account and represent claims with a maturity of less than ……….?Ans: Third category, one year
Q: 59) Officials reserves are ………….?
Ans: Govt. owned assets
Q: 60) The official reserves account represents only purchases and sales by the ………. Of the country?
Ans: Central Bank (RBI)
Q: 61) The BOP has ………… categories?
Ans: Three
Q: 62) There are transaction rules in Current account given below, Complete them correctly:-
A) In investment, income pay is ……………… and Receive is ……….?
Ans: Debit, Credit
B) In Unilateral Transfers, Give is ………. And receive is …………?
Ans: Debit and Credit
Q: 63) Portfolio investments are of …………………?
Ans: Long-term and short-term
(Unit-3) The Foreign Exchange market
Q: 64) Globally, operations in foreign exchange market started in……………?
Ans: After the breakdown of Bretton Woods System 1971
Q: 65) A ….. Is only freely convertible currency deposited in a bank outside its country of origin?
Ans: Eurocurrency
Q: 66) Any convertible currency can exist in …………….?
Ans: Euro
Q: 67) Banks in which Eurocurrencies are deposited are called as ……………..?Ans: Euro banks
Q: 68) The Eurocurrency market is mainly a ……………..?
Ans: Euro dollar
Q: 69) euro currency market exists for demand deposits. True or false?
Ans: False because it exists only for the savings and time deposits
Q: 70) At the end of each period, the interest for the next period is calculated at the same fixed margin over the new……………?
Ans: LIBOR
Q: 71) In Euro currency market the maturity of loan can vary from …………?
Ans: 3 to10 years
Q: 72) Lenders in this market are almost exclusively……………?
Ans: Banks
Q: 73) The managers charge the borrower a once and for all fee of …………….. Of the loan value?
Ans: 0.25% to 1%
Q: 74) Forward rates are usually quoted for fixes periods of ……………. From the day of the contract?
Ans: 30, 60, 90 or 180
Q: 75) In European terms, the rate is quoted in terms of the number of units if the foreign currency for one unit of domestic currency is called ………………….?
Ans: An indirect quote
Q; 76) The difference between the spot rate and the forward rate is ……………?
Ans: spread
Q: 77) The foreign exchange transaction that are settled immediately are said to be occur in the ………………?
Ans: Spot market
Q: 78) Crude oil is an example of ……………?
Ans: Future
Q: 79) The settlement of foreign exchange transaction are made through the ……………….?
Ans: 1) NASTRO a/c 2) VOSTRO a/c 3) LORO a/c
Q: 80) The a/c maintain by an authorized dealer with a foreign bank is called…………?
Ans: ‘’NOSTRO a/c” or “Our a/c with you”
Q: 81) The exchange rate between any two non-dollar currencies is referred to as a ……………….?
Ans: Cross rate
Q: 82) The number of units of a foreign currency that are required to purchase one dollar is ……………?
Ans: Indirect quotation
Q: 83) Direct quotation is also known as …………………?
Ans: American quotation
Q: 84) Direct exchange rate quotations are most frequently used by the banks in dealing with…………?
Ans: Non – bank customers
Q: 85) The exchange rate between any two non-dollar currencies is referred to as a ………………..?
Ans: cross rate
Q: 86) The practice of taking advantage of a price differential between two or more markets is …………….?
Ans: Arbitrage
Q: 87) Arbitrage is…………….?
Ans: Risk- free profit
Q: 88) The rate of the exchange foe that currency at that exact particular time is …………………?
Ans: The spot rate
Q: 89) The differential that exists between the forward and the spot rate is known as ……………………..?
Ans: The swap rate
Q: 90) The floating that exists between the forward and the spot rate is known as………………?
Ans: The swap rate
Q: 91) The types of pegged floats are ………….?
Ans: 1) The crawling bands 2) Pegging with horizontal bands and crawling bands
Q: 92) State the full forms of:-
A) FEDAI……………..?
Ans: Foreign exchange dealers association of India
B) CCIL……………?
Ans: Clearing Corporation of India Limited
Q: 93) The Sodhani Committee was set up in……………?
Ans: 1994
(Unit-4) Forwards, Swaps and Interest Parity
Q: 94) ………… is a negotiated agreement between two parties?
Ans: a forward contract
Q: 95) The process of …………….. helps in keeping the exchange rate between any two currencies the same in different monetary centers?
Ans: arbitrage
Q: 96) The triangular arbitrage operates in the same manner as …………..?
Ans: Two-point arbitrage
Q: 97) ………………. To the international flow of short-term liquid capital to earn a higher return abroad?
Ans: Interest arbitrage
Q: 98) State the full form of CIA…………….?
Ans: Covered interest arbitrage
Q: 99) A …….. Is a contract between two counter parties to exchange two streams of payments for an agreed period of time?
Ans: Swap
Q: 100) Swaps are not debt instruments to raise capital, but a tool used for………….?
Ans: Financial management
Q: 101) …………… are given a bid and ask?
Ans: Interbank quotations
Q: 102) ……….. Is the price at which a dealer will sell the other currency?
Ans: An offer or ask
Q: 103) A ……….. is the price in one currency at which a dealer will buy another currency?
Ans: Bid
Q: 104) A …………. Is a double leg deal in which one buys spot currency X selling currency Y and simultaneously sells forward currency X buying currency Y?
Ans: Swap transaction
Q: 105) Options could be of ………….?
Ans: European and American style
Q: 106) ……………… is one option, which can be exercised by the buyer on or before the expiration date?
Ans: American Style option
Q: 107) The person selling an option in the market is known as ……………..?
Ans: Option writer
(Unit-5)Currency and Interest rates Futures
Q: 108) A forward contract is a negotiated ………….. between two parties?
Ans: Agreement
Q: 109) State the full form of:-
A) IMM…………….?
Ans: International Money Exchange
B) CME…………?
Ans: Chicago Mercantile Exchange
Q: 110) ………………. In currency futures has expanded rapidly at the CME?
Ans: Trading activity
Q: 111) The Specified price is known as …………….?
Ans: The future price
Q: 112) Each contract also specifies the ………………… which may be nearly or more deferred in time?
Ans: Delivery month
Q: 113) Future contract represents an……………?
Ans: Institutionalized, standardized form of forward contract
Q: 114) ……………. Category of futures contracts of futures contacts includes genuine metal and petroleum contracts?
Ans: Metallurgical futures contracts
Q: 115) The contracts months depends on the …………..?
Ans: Seasonality and trading activity
Q: 116) Complete the formula:-
FB=………………….?
Ans: IB+ (RF-D)
Q: 117) The margin levels may allow leverage of up to………….?
Ans: 30-40 times
Q: 118) The changing nature of the futures market has meant new types of …………….?
Ans: market participants
Q: 119) In…………… contracts no cash flows occur until delivery?
Ans: Forward
Q: 120) There are only few maturity dates in …………..?
Ans: Futures contracts
Q: 121) ………….. Of currency futures contracts are settled through delivery?
Ans: Les than 2%
Q: 122) Normally futures contracts are settled through ………….?
Ans: Contract reversal
Q: 123) The mechanics of futures trading consists of …………………..?
Ans: 1) Components of futures trade 2) Execution of futures trade
Q: 124) Upon completion of the futures contracts, the …………… is returned?
Ans: Margin
Q: 125) For most futures contracts the initial margin are ……………… of the underlying commodity’s value?
Ans: 5% or less
Q: 126) The daily resettlement is also known as ……………?
Ans: Market to market
Q: 127) In futures market ……………… of all futures positions are closed out via a reversing trade?
Ans: 99%
Q: 128) ………… order triggers a reversing trade when prices hit a prescribed limit?
Ans: Stop order
Q: 129) Bid asks ……………?
Ans: Spreads
Q: 130) ………… are incurred in case of actual delivery?
Ans: Delivery costs
Q: 131) Brokerage Commission is……………?
Ans: Tax deductible
Q: 132) Traders are conducted through the use of ……………..?
Ans: Sophisticated hand signals
Q: 133) Futures prices might be treated as a …….. By the market regarding future prices for certain commodities?
Ans: Consensus forecast
Q: 134) Speculators are categorized by the …………….. they plan to hold a position?
Ans: Length of time
Q: 135) ………… have longer horizons holding positions overnight and often as long as few months?
Ans: Position traders
Q: 136) When engaging in futures contracts in order to reduce risk in the spot position, the futures a trader is said to establish a……………?
Ans: Hedge
Q; 137) When a trader writes a futures contract on another underlying asset, he is said to establish a ……………………?
Ans: Cross hedge
Q: 138) …………. Is the price of a particular currency for settlement at a specified future date?
Ans: Currency futures
Q:139) …………… are based off an underlying security which is a debt obligation and moves in value as interest rates change?
Ans: Interest Rate factor
Q: 140) The group of assets held by an investor is ……………?
Ans: Portfolio
(Unit-6)Exchange Rate determination and forecasting
Q: 141) Sate the full form of PPP……………..?
Ans: Purchasing Power Parity
Q; 142) The PPP theory focuses on the ………… Relationship?
Ans: Inflation-Exchange rate
Q: 143) …………. Has popularized the PPP in the 1920s?
Ans: A Swedish Economist, Gustav Cassel
Q; 144) The PPP theory become popular against ………….?
Ans: Historical backdrop
Q: 145) ………. Is an alternative version of PPP?Ans: The relative form of PPP theory
Q: 146) If subscript ‘o’ refers to the base period and ‘1’ to a subsequent period than relative PPP theory postulates that…………?
Ans Rab1 =Pai /PaoPbi /Pbo Rabo
Q: 147) The vertical axis measures the ………….?
Ans: Percentage of appreciation or depreciation of the currency
Q: 148)…….. research has been done to test the validity of PPP theory?
Ans: Substantial Empirical Research
Q: 149) Interest rate parity is …………..?
Ans: An economic identity
Q: 150) IRP is expressed as a ………………?
Ans: basic algebraic identity
Q: 151) If interest rate parity is violated, than an ………. Exists?
Ans: Arbitrage opportunity
Q: 152) The types of Interest Rate Parity are …………?
Ans: 1) Covered interest rate parity 2) Uncovered interest rate parity
Q: 153) IFE stands for………………..?
Ans: International fisher effect
Q: 154) IFE is closely related to the………?
Ans: PPP
Q: 155) The nominal interest rate is consists of a ……………..?
Ans: Real rate of return and anticipated inflation
Q: 156) The nominal interest rate would also incorporate the ……………. Of an investment?
Ans: Default risk
Q: 157) IFE uses………….?
Ans: Interest rates
Q: 158) International trade tends to equate the…………?
Ans: Prices of traded goods and services
(Unit-7) Management of translation exposures
Q: 159) accounting exposures are also known as ……………..?
Ans: Translation exposures
Q: 160) MNC face three kinds of risks and they are …………….?
Ans: 1) Translation 2) Transaction 3) Economic
Q: 161) Translation Exposures= …………………….?
Ans: Exposed assets – Exposed liabilities
Q: 162) Assets and liabilities are to be translated at the………………….?
Ans: Current rate
Q: 163) Translation adjustments are to be charged to the …………… reporting company?
Ans: Net income
Q: 164) Items occurring numerous times ……………. For exchange rates can be used?
Ans: Weighted averages
Q: 165) ……………. Exposures refer to the extent to which the future value of firm’s domestic cash flows is affected by exchange rate fluctuations?
Ans: Transaction exposures
Q: 166) The degree of translation exposures depends on the extent to which a firm transaction in…………………..?
Ans: Foreign currency
Q: 167) An entity cannot have ………… in the currency in which its transactions are measured?
Ans: An expense
Q: 168) If the Pound weakens, the company loses it’s ……………..?
Ans: Competitiveness
Q: 169) Under the Indian Exchange Control, cannot be hedged?
Ans: Economic exposures
Q: 170) Futures contracts differ from …………… in 3 important ways?
Ans: Forwards
Q: 171) ………..is one where the customer has the right but not the obligation to contract on maturity date?
Ans: Option contract
Q: 172) The option premium depends on the …………………?
Ans: 1) Strike price 2) Maturity date 3) Current Spot Rate 4) Volatility
Q: 173) CTA account helps in………………?
Ans: Balancing the balance sheet
Q:174) State the full form of CTA………….?
Ans: Cumulative Translation Adjustment
Q: 175) ……………..items are translated at historical rates?
Ans: Non- monetary
Q: 176) Income statements items translated at …………..?
Ans: Average exchange rate
Q: 177) …………. Method is a modified version of the monetary and non- monetary method?
Ans: Temporal method
Q: 178) Inventory is shown in the ………..?
Ans: balance sheet
Q: 179) The cost of goods sold and depreciation are translated at ………..?
Ans: Historical rates
Q: 180) …………… method is perhaps the oldest approach?
Ans: Current/non-current
Q: 181) FASB52 was issued in …………….?
Ans: December 1981
Q: 182) FASB stands for……………?
Ans: Financial accounting standards board statement
Q: 183) The currency of the primary economic environment in which the affiliate operates and in which it generates cash flows is ……………..?Ans: Functional currency
Q: 184) ……………… is the currency in which the parent firm prepares its own financial statements?
Ans: The reporting currency
Q: 185) If the foreign functional currency is deemed to be the parent’s currency, translation of the affiliate’s statements employee the temporal method of ……………..?
Ans: FAS#8
Q: 186) All financial statement items restated in terms of the parent currency are the ……………….. amount multiplied by the appropriate exchange rate?
Ans: Functional currency
(Unit-8) management of transaction exposures
Q: 187) …………… deals with changes in cash flows that result from existing contractual obligations?
Ans: Transaction exposures
Q: 188) Transaction exposures measures gain or losses that arise from the settlement of ………………..?
Ans: Existing financial obligation
Q: 189) MNC have their own method for developing exchange rate…………………?
Ans: Projections
Q: 190) If a company is a short in a foreign currency will ……………….. the currency forward?
Ans: Buy
Q: 191) Funds on hand or to be received are matched by ………………?
Ans: Funds to be paid
Q: 192) The simultaneously borrowing and lending activities enable a company to create a……………..?
Ans: Home- made forward contract
Q: 193) If the funds to repay the loan are generated from business operation than the ………… is covered?Ans: Money market
Q: 194) Call option is the ……………, but not the obligation?
Ans: Right
Q: 195) ………… of the firm should manage exchange exposures?
Ans: Management
Q: 196) For individual shareholders, the transaction costs can be ………..?
Ans: Substantial
Q: 197) In a corporate hedging, probability of ……………… is significant lower?
Ans: Default cost
Q: 198) ………… is a measure of the change in price over a given time period?
Ans: The volatility of a currency
Q: 199)…………….. involves offsetting exposures in one currency with exposures in the same or another currency?
Ans: Exposure netting
(Unit-9) Management of Economic and operational exposures
Q: 200) Product sourcing, Input mix, plant location, raising productivity is………….. ?
Ans: Production initiatives
Q: 201) Every forex trader should have a …………….?
Ans: Forex trading strategy
Q; 202) Major strategy considerations for an exporter are the market in which to sell is………………..?
Ans: Market selection
Q: 203) Promotional Strategy should take into account…………….?
Ans: Anticipated exchange rate changes
Q: 204) A key issue in any marketing programme is the size of the ………….?
Ans: Promotional budget
Q: 205) …………….. & ……………. Are the principle variables that companies manipulate to manage competitive risks?
Ans: Product sourcing and plant location
Q: 206) outright additions to facilitates overseas accomplish a ………………?
Ans: Manufacturing shift
Q: 207) A strategy of production shifting ……………that a company has already created a portfolio of plants worldwide?
Ans: Presupposes
Q: 208) ……….. can also be used to heighten productivity and improve product quality?
Ans: Employee motivation
Q: 209) Economic exposures can be managed by a combination of ………… & ………………?
Ans: marketing & Production initiatives
Q: 210) Outright additions to facilities overseas accomplish a manufacturing shift is……………….?
Ans: Input mix
(Unit-10)Management of economic and operational exposures
Q: 211) Exposures to exchange rate fluctuation could lead to a ……………..?
Ans: Higher cost of capital
Q: 212) CAPM stands for……………..?
Ans: Capital Asset pricing model
Q: 213) Political risk impacts the cost of capital of MNC by moving it …………… as compared to a domestic firm?
Ans: Upward
Q: 214) “A subsidiary with a capital structure similar to its parent may out on profitable opportunities to lower its cost of funds.” Is it true or false?
Ans: True
Q: 215) The differential tax advantage to debt across markets for foreign affiliates is a function of the ………………?
Ans: International tax system
Q: 216) If foreign tax rates are below home rates, dividends will generally lead to………………?
Ans: Increased taxes
Q: 217) The objective of capital structure management is to mix the ……………?
Ans: Permanent sources of funds
Q: 218) …………. Is the required rate of return needed to motivate the investors to buy the firm’s stock?
Ans: The cost of capital
Q: 219) The dividend growth model is also known as ……………..?
Ans: Gorden model
Q: 220) The formula of CAPM for calculating cost of equity is:-
E(Rj) = …………………..?
Ans: Rf+βj (E (Rm – Rf)
Q: 221) When a firm has both debt and equity in its capital structure its financing cost can be represented by the …………….?
Ans: Weighted average cost of capital
Q: 222) ………….. Is a function of supply and demand any factors affecting the supply and demand will affect?
Ans: Risk free rate
Q: 223) …………. May affect the interest rates in a country?
Ans: Demographics
Q: 224) ……………. Affects interest rates through the supply of loanable funds?
Ans: Monetary policy
Q: 225) Stable economic conditions results in a …………..?
Ans: Low risk of recession
Q: 226) Pecking order of financing was first discovered by ………………?
Ans: Donaldson
Q: 227) ……………. Is the most efficient way to finance a firm as they incur the minimum cost compared to debt or equity?
Ans: Retained earnings
Q: 228) Each firm has an …………….. , ……………. & ……………………. Competitive strategy?
Ans: Efficient, unique and powerful
Q: 229) Risk arises due to changes in exchange rate is …………….?
Ans: Foreign exchange rate
(Unit-11) Multinational capital budgeting
Q: 230) ………………cash flows are different from project cash flows?
Ans: Parents
Q: 231) Multinational firms investing abroad are exposed to …………….?
Ans: Foreign exchange risk
Q: 232) Project cash flows consist of ……………. & ……………….. Charges?
Ans: Profits & Depreciation
Q: 233) Accounting for ………. In the capital budgeting process depends on the opportunity cost of blocked funds?
Ans: Blocked funds
Q:234) ……………… can exist between the project and parent cash flows because of tax regulations and exchange control?
Ans: Substantial differences
Q: 235) Evaluating a project on the basis of its …………………. Services some useful purposes?
Ans: own cash flows
Q: 236) ……….. and …………. Have suggested a three stage of financial analysis of foreign projects?
Ans: Stonehill and Nathanson
Q: 237) Royalties and other license fees are normally calculated of projects…………………..?
Ans: Sales revenue or volume
Q: 238) DCF stands for………………?
Ans: Discounted cash flow
Q: 239) The two most criteria of DCF techniques are ………………….?
Ans: 1) Net Present Value 2) Internal rate of Return
Q: 240) …………. Is the present value of all cash inflows?
Ans: The NPV of a project
Q: 241) APV stands for……………….?
Ans: Adjusted Present Value
Q: 242) The APV model is a value additivity approach to …………..?
Ans: capital budgeting
Q: 243) DCF techniques involve the use of the …………….. principle to project evaluation?
Ans: Time value of money
Q: 244) The APV approach uses different …………….. for different segments of the total cash flows?
Ans: Discount rates
(Unit-12)Country risk analysis
Q: 245) ……….. is an indispensable tool for asset management as it requires the assessment of economic opportunity against political odds?
Ans: Country risk
Q: 246) The list of factors to be analyzed in a country risk analysis study varies from ………………?
Ans: Forecaster to forecaster
Q: 247) Political risk is 50% of the exercise but inseparable from economic risks.” This line was said by……………….?
Ans: Hans Belesak
Q: 248) “A subsidiary will not necessarily be affected changing Govt, if the attitude towards the subsidiary remains the same.” True or false?
Ans: True
Q: 249) Along with political factors ……………… should also considered when assessing country risk?
Ans: Economic risk factors
Q: 250) …………. Is used as a measure of economic instability, description and govt. mismanagement?
Ans: The Inflation Rate
Q: 251) A MNC that exports to a country or develops a subsidiary in a country is highly concerned with ………………. For its product?Ans: Country’s demand
Q: 252) The resource base of a country consists of its …………. , ……………… & ……………..?
Ans: National, human and financial resources
Q: 253) …………. Related factors are the quickest and commonest variables employed to test the possibility of a country defaulting?
Ans: Debt
Q: 254) Difficulties in debt service could be a result of short- term…………?
Ans: Liquidity problems
Q: 255) The balance of payment management is a function of …………. &……………..?
Ans: Internal goals & Changing external circumstances
Q: 256) A very useful indicator of country risk analysis is the ……………?
Ans: Current account balance
Q: 257) ………. Indicates the rate at which a country is building foreign assets or accumulating foreign liabilities?
Ans: Current account balance
Q: 258) Countries with large current account deficits are …………….?
Ans: Less creditworthy
Q: 259) ………….. provide a short- term safeguard against fluctuation in foreign receipts?
Ans: Reserves
Q: 260) The inflation rate can be regarded as a ………. For the quality of economic management?
Ans: Proxy
Q: 261) ………. Can be measured by a set of ratio’s that focus on the long-term growth prospects and any economic imbalances of the economy?
Ans: The economic performance
Q: 262) …………. Ratio is called the propensity to invest ratio and capture’s a country’s prospects for future?
Ans: Gross Investment/Gross domestic product
Q: 263) rating of a country’s credit worthiness is mainly compiled by…………. & ……………?
Ans: Institutional Investor and Euro money
Q: 264) Euro money the ratings are available since…………….?
Ans: 1982
Q: 265) ………….. refers to the degree or level of risk and is a device used to denote the degree of country risk by a figure?
Ans: Country risk rating
Q: 266) …………. Means taxation of same income of a person in more than one country?
Ans: Double taxation
Q: 267) The two main rules of income taxation are ……………..?
Ans: 1) Source of income rule 2) Residence rule
Q: 268) “The income earner may be taxed on the basis of his residual status in that country.” Is it true or false?
Ans: True
Q: 269) …………. May be in the form of credit for tax payable in another country or by charging tax at lower rate?
Ans: Relief
Q: 270) Relief from double taxation is provided by…………….?
Ans: Abatement
Q: 271) State the full form of OECD……………….?
Ans: Organisation of Economic Co- operation and development
Q: 272) Limited agreements are generally entered into to avoid double taxation relating to income derived from operation of …………….?
Ans: Aircraft, ships, carriage of cargo and freight
Q: 273) India has agreements for avoidance of double taxation with over…………….?
Ans: 60 countries
Q: 274) …………….. means the tax payable on total income divided by the total income?
Ans: Average rate of tax
Q: 275) Any income arising from an international transaction shall be computed having regard to the………………..?
Ans: Arm’s length price
Q: 276) …………….. means a transaction between two or more enterprise, either or both of whom are non-resident?
Ans: International transaction
Q: 277) …….includes a number of closely lined transactions?
Ans: Transaction
Q: 278) ……………….. is the total market value of all final goods and services produced in a given year?
Ans: Gross Domestic Product (GDP)
(Unit-13)International Banking
Q: 279) The debt crisis of the …………… affected all the countries?
Ans: 1980s
Q: 280) As countries trade with each other, economics are …………?
Ans: Integrated
Q: 281) LCD stands for………………………?
Ans: Less Developed Countries
Q;282) In August 1982,……………..announced that is was unable to pay its debt to international creditors?
Ans: Mexico
Q: 283) March, 1989, saw new international debt strategy in the form of …………………?
Ans: Brady Plan
Q: 284) The major problem with the Brady Plan was that it required………………?
Ans: Commercial banks
Q: 285) Money banks, used the Brandy Plan as an opportunity to exist from the ………………..?
Ans: LDC debt market
Q: 286) The South Asian countries experienced only……………………….?
Ans: Mild impact
Q: 287) IMF stands for ………………..?
Ans: International Monetary Fund
Q: 288) ………. Is the practice of extending credit to borrowers with certain credit characteristics?
Ans: Subprime lending
Q: 289) Sub-prime lending is a common first step towards………………?
Ans: Credit repair
Q: 290) ………….. seemed an unstoppable trend from the mid- 1990s through to today?
Ans: Home Price Appreciation
Q: 291) ………… became extremely popular in the U.S.?
Ans: Adjustable Rate mortgages
Q: 292) FFR stands for………….?
Ans: Federal Funds Rate
Q: 293) International organization is placing a lot of emphasis on the development and implementation of …………….?
Ans: International Standards and principles
Q: 294) ………. Was launched in 1988 became a global standard by which the financial soundness of the bank is assessed?
Ans: The Basel Capital Accord
Q: 295) State the full form of CAR …………………..?
Ans: capital Adequacy Ratio
Q: 296) The OECD has developed a set of principles of ……………… which were endorsed in May 1999?
Ans: Corporate Governance
Q: 297) The MPI stands for …………………..?
Ans: Macro prudential indicators
Q: 298) ……….. is the risk of adverse changes in a currency rate or in an interest rate?
Ans: Market risk
Q: 299) ……………… is inherent in foreign exchange trading?
Ans: Exchange Rate Risk
Q: 300) ……………. Refers to the risk of not getting back the payment on time?
Ans: Credit risk
Q: 301) When an institution provides credit, it expects to be…………….?
Ans: Repaid
Q: 302) ………….. is a variation of credit risk which is very important and relevant in foreign exchange trading?
Ans: Sovereign Risk
Q: 303) The growth in International banking has also significantly increased……………..?
Ans: The risk of international banking
(Unit-14) Interest rates and currency swaps
Q: 304) The concepts of the Swap has broad ………… & ……….. in finance?
Ans: Implications & Applications
Q:305) The five basic components of financing are ……………….?
Ans: 1) Credit 2) Funding 3) Tenor 4) Currency 5) Interest rate
Q:306) …… means of financing investment abroad in the face of exchange control regulations and are regarded as the forerunners of swap?
Ans: parallel loans
Q: 307) Parallel loans involve at least … (1)……. And usually the parties consist of … (2)……….. of affiliated companies?
Ans: 1) Four parties 2) two pairs
Q: 308) ………….. resemble to parallel loans?
Ans: back- to- back loans
Q: 309) Swaps are ………………. Among the swap parties?
Ans: Mutual obligations
Q: 310) The swap of facilitators are known as ………………….?
Ans: swap banks or simply
Q: 311) Swap broker is ……………?
Ans: An economic agent
Q: 312) A Swap broker is also called a …………….?
Ans: market maker
Q: 313) …………. Is the principal amount on which the interest calculation is made?
Ans: Notional principal
Q: 314) ………………refers to the fixed rate of interest on the Swap?
Ans: Swap coupon
Q:315) A Swap in which a stream of floating interest rates are exchanged for another stream of interest rates is known as ……………..?
Ans: Basis Swap
Q: 316) If the interest rate rise, Rate payer will terminate the swap?
Ans: The floating
Q: 317) An interest rate swap, which incorporates the cap feature, is called a ………….?
Ans: Rate capped swap
Q: 318) A benchmark rate plays an important role in the growth and development of the ………………..?
Ans: Interest rate swap market
Q: 319) ………….. is a contract to exchange interest payments in one currency for those denominated in another currency?
Ans: A currency swap
Q: 320) MIBOR stands for…………..?
Ans: Mumbai Inter- Bank offered rate
Q:321) ……………… entails the exchange of debt denominated in one currency for debt denominated in another currency?
Ans: A standard currency swap
Q: 322) ……………. Are very popular for lease based transaction where the principal reduces annually or even more frequently?
Ans: Amortizing swaps
Q: 323) A variation on the amortizing swap is the …………..?
Ans: Roller- coaster swap
Q: 324) LIBOR is normally set …… (1)…….. & …… (2)……….. before a payment date?
Ans: 1) 6 months 2) 2 days
Q: 325) The ………………. & ………………. Of the cap and swap are also identically matched?
Ans: Term & Periodicity
Q: 326) There is no up-front premium payable in …………………..?
Ans: Participation swaps
Q; 327) The ultimate fixed payment is a …………. Based on the compounding of the immediate cash flows at the swap rate?
Ans: Single forward rate
Q: 328) In an ………….. the fixed rate payer gets the right to extend the swap maturity date?
Ans: Extendible swaps
Q: 329) “Currency swaps may or may not involve initial exchange of principal.” Is it true or False?
Ans: true
(Unit-15) Global vs. American Depository receiptsQ: 330) State the full form of:-
A) ADR……………….?
Ans: American Depository Receipt
B) SEC…………..?
Ans: Securities Exchange Commission
C) NYSE…………….?D) Ans: New York Stock Exchange
Q: 331) Non-U.S. companies have a choice of ……………… types of ADR facilities?
Ans: Five
Q: 332) ………………. Is the world’s largest and most liquid capital market?
Ans: The U.S.
Q: 333) To set up a successful ADR Programme the issuing company must be a significant player in the ………………..?
Ans: Global arena
Q: 334) Normally …………… grants the approval of the registration statement within a short period of time?
Ans: SEC (Security Exchange Commission)
Q: 335) An unsponsored ADR programs are ……1……..From full compliance with the SEC’s reporting requirement, they can only be traded on the………2………………?
Ans: 1) Exempt 2) OTC market
Q: 336) QIB stands for…………………?
Ans: Qualified institutional buyers
Q: 337) n………………… are as liquid as their underlying securities because they are interchangeable?
Ans: Depository receipts
Q: 338) Depository receipts are ………………. U.S. Securities?
Ans: Negotiable
Q: 339) Dividends and other cash distributions are converted into dollars at competitive……………….?
Ans: Foreign exchange rates
Q: 340) The ESOP stands for ………………?
Ans: Employee Stock Options
Q: 341) India entered the international arena in …………..?
Ans: May 1992
Q: 342) GDR stands for…………..?
Ans: Global Depository Receipts
Q: 343) The types of depository receipts are ……………… & ………….?
Ans: 1) GDRs and 2) ADRs
