True/False: List of Attempted Questions and Answers

LIST OF ATTEMPTED QUESTIONS AND ANSWERS
True/False
Question 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 Answer

Question What is the duty of the AD while booking a forward contract?
Correct Answer Verify the suitable documentary evidence, and that the customer
is exposed to risk , Ensure that a genuine transaction exists
Your Answer Verify the suitable documentary evidence, and that the customer
is exposed to risk , Ensure that a genuine transaction exists ,
Protect the customer fully from exchange risk

Question What is the effect of cross currency option on the customer?
Correct Answer He gets the flexibility to exposure , He is exposed to additional

risk of movement of rates between 3 currencies
Your Answer He gets the flexibility to exposure , He is exposed to additional
risk of movement of rates between 3 currencies , His profit
increases

Question Internationally only those currencies are in demand
Correct Answer Which are convertible , Which have liquidity confirmed in Euro
market operations
Your Answer Which are convertible , Which have liquidity confirmed in Euro
market operations , Which have greater intrinsic value
Match The Following

Question Correct Answer Your Answer
PP Form Export Declaration form Export Declaration form
Health Certificate Fumigation certificate As per importers

requirement
Certificate of Inspection As per importers Fumigation certificate
requirement
Certifiate of Origin Export Promotion Council Export Promotion Council
Multiple Choice Single Answer
By- AL_UNREAL@YAHOO.COM & NISH4U6474@YAHOO.COM

Question For a spot transaction carried out on Thursday, currencies will be
exchanged on :-
Correct Answer Monday
Your Answer Friday
True/False
Question Resident Individuals in India can acquire foreign bonus shares
on the foreign securities already held by them without prior
approval of RBI
Correct Answer True
Your Answer True
Select The Blank

Question A Dealer bought USD at 47.5000, in morning and the USD is
quoted in the noon at 1 USD =48.2000/49.7000, then he has the
opportunity for ________.
Correct Answer Arbitrage
Your Answer Swap
Select The Blank

Question Profitability of a project in China to an Indian may be enhanced
by ________.
Correct Answer Concessionary finance available in China
Your Answer Subsidiaries and Tax concessions in India
True/False
Question Head office of ICC is in Paris because of its First President
Eliance Clementel.
Correct Answer True
Your Answer True

Question What is the cause of Volatility in the exchange market?
Correct Answer Interest rates are changing, Interest rates affect and are affected
by exchange rates
Your Answer Interest rates are changing, Interest rates affect and are affected
by exchange rates
True/False
Question Normally the forward contracts are booked for making huge
profits.

Correct Answer False
Your Answer True
Select The Blank

Question An option on a future is ________.
Correct Answer Derivative on a derivative
Your Answer Derivative on a derivative

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

Question What is the effect of interweaving of national economies?
Correct Answer Govt decisions have stronger international repurcussions
Your Answer Economic growth and job creations is increased

Question What are the functions of International Finance Corporation?
Correct Answer Help private enterprise by financing projects , Provide technical

assistance to private enterprise
Your Answer Insist upon Government Guarantee for loans , Help private
enterprise by financing projects , Provide technical assistance to
private enterprise

Question What options does the merchant have while booking a forward
contract?
Correct Answer Delivery on a Fixed date, within six months , Delivery on a date
between two days separated by a period of maximum one month
Your Answer Delivery on a date between two days separated by a period of
maximum one month , A day within next 1 year , Currency, or
amount may be different from the one where he is exposed
Select The Blank

Question When an Indian Company earns at least 50% of its average
turnover from a particular activity then that activity is considered
as ________.
Correct Answer Core activity

Your Answer Core activity
True/False
Question Bridge Loans are granted for construction of large size bridges,
and flyovers.
Your Answer False
True/False
Question An Indian importing goods from USA pays dollars in India.
Your Answer False

Question What are the powers of restricted money changers?
Correct Answer Purchase foreign currencies
Your Answer Purchase and sell foreign currency notes and travellers cheques
Match The Following

Swap price Difference in prices of two Price difference between

legs of buying and selling bid and offer
Euro Market Market in Euro currencies Market in Euro currencies
Making market Quoting rate for both Quoting rate for both
buying and selling a buying and selling a
currency currency
Spread Price difference between Market of currency outside
bid and offer home country

Question A bill of exchange issued by a bank which pays specified sum of
money to the holder on a specific date is called :-
Correct Answer Bankers' Acceptance Bond
Your Answer Usance Bill of Exchange

Question The regulations under FEMA are contained in which manual?

Correct Answer Exchange control Manual
Your Answer Exchange control Manual

Question Which is the largest financial market in the world?
Correct Answer US Financial market
Your Answer US Financial market
Select The Blank

Question EEFC account holder is allowed to have ________ facility.
Correct Answer Cheque book and nomination
Your Answer Cheque book and nomination

Question World Bank gives loans for
Correct Answer Structural Adjustments , Infrastructure projects , BOP problems
Your Answer Infrastructure projects , BOP problems
Select The Blank

Question The major industrial power whose economy was not affected
after the II world war was ________.
Correct Answer USA
Your Answer USA

Question The integrated treasury branches of commercial banks handle
which type of business?
Correct Answer Forex transactions, Derivatives transactions , Mney market and
bond market transactions
Your Answer Forex transactions, Derivatives transactions , Mney market and
bond market transactions , Refinance of loans
Select The Blank

Question ________ is the acid test for events to be included in country
risk.
Correct Answer Control by Government'
Your Answer Past record

Select The Blank
Question Partnership firm not eligible for Overseas Direct Investment
needs to apply to RBI Approval in form ________.
Correct Answer ODI
Your Answer ODC

Question A Forward purchase contract was booked with an authorised
dealer and subsequently cancelled .It :-
Correct Answer Can be booked again with another dealer , Can be booked again
with the same dealer
Your Answer Can be booked again with another dealer

Question Which general risks are covered by any insurance policy for
transit?
Correct Answer Theft, loss , Damage, sea perils, non delivery
Your Answer Damage, sea perils, non delivery , Loss of concentration of

chemicals , Loss of flavours, fragrance etc

Question What is the primary concern of the seller in the International
Trade?
Correct Answer To be sure to get the pay ment for goods, in time and in the
required currency.
Your Answer To be sure to get the pay ment for goods, in time and in the
required currency.

Question Which type of finance is available for the full value of the asset,
in international trade?
Correct Answer International Leasing
Your Answer Preshipment finance
Select The Blank

Question India is a founder member of ________.
Correct Answer IMF
Your Answer FOREX Market Association
True/False
Question Import finance is nomally available at rates of interest cheaper
than domestic finance rates.

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

Question What do you understand by a swap?
Correct Answer 2 counter parties agree to exchange streams of payments over a

period of time
Your Answer 2 counter parties agree to exchange streams of payments over a
period of time
True/False
Question Bid rate is bidders buying rate and offered rate is bidders selling
rate.
Correct Answer True
Your Answer True

Question Who issues guidelines for Direct Investments abroad by any
Indian?
Correct Answer Exchange Control Department of RBI
Your Answer Exchange Control Department of RBI

Question Which document is used for transportation by air, rail, road,
marine?
Correct Answer Multimodal transport document , Combined Transport document
Your Answer Multimodal transport document , Straight Bill of lading , Through

Bill of lading

Question European currency Unit
Correct Answer Basket of Currencies of members of EMS
Your Answer Basket of Currencies of members of EMS
Select The Blank

Question The right without the obligation to sell a security is ________.
Correct Answer Put Option
Your Answer Futures
True/False
Question 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
Select The Blank

Question Hotels and Airline companies are allowed to receive payments in
Indian rupees from foreign tourist without insisiting on ________.
Correct Answer Encashment certificate
Your Answer Foreign currency

Question The characteristics of an International documentary credit are :-
Correct Answer It is an undertaking given by the openers bank to pay certain

sum of money , It is an undertaking given on behalf of a certain
person to another person in different country
Your Answer It is an undertaking given by the openers bank to pay certain
person to another person in different country , It is a stamped
agreement and is not valid unless it is signed by the issuer

Select The Blank

Question The international liquidity problem was tackled effectively by a
reserve asset known as ________.
Correct Answer Special drawing right
Your Answer Special drawing right

Question Which of these are not considered as good securities by the
banker?
Correct Answer House Airway bill , Postal Receipt
Your Answer House Airway bill , On board bill of exchange , Multimodal

transporta documents
Select The Blank

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

Question What is the meaning of a country risk?
Correct Answer Risk of events in a particular country which may cause loss to a
person dealing with that country
Your Answer Risk of events in a particular country which may cause loss to a
person dealing with that country

Question As per article IV of IMF for fixed exchange rates member
countries agreed to
Correct Answer Change exchange rates only for correcting fundamental
disequilibrium in external payments with IMF approval
Your Answer Change exchange rates only for correcting fundamental
disequilibrium in external payments with IMF approval
Select The Blank

Question The large flow of money internationally was caused primarily by
the oil price hikes engineered by ________.
Correct Answer OPEC countries
Your Answer OPEC countries

Question In case of shortfall in the participation by lenders, in the pre-
decided "syndicated Loan amount, such portion is taken up by :-
Correct Answer The lead Manager
Your Answer The lead Manager
Select The Blank

Question For opening JV/WOS in Nepal, Bhutan, the ceiling for financial
commitment per annum is ________.
Correct Answer Rs. 350 crore
Your Answer USD 100 Million

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

Question Bank with lowest Bid for fees etc and which undertakes the
responsibility of loan syndication is called :-
Correct Answer The lead bank- leadmanager- arranger
Your Answer Participator
Select The Blank

Question A Documentary credit issued on the strength of another
documentary credit is known as ________.
Correct Answer Back to Back credit
Your Answer Green clause credit
Select The Blank

Question The credit which does not constitute a legally binding
undertaking between the bank and the beneficiary is ________.
Correct Answer Revocable Credit
Your Answer Revocable Credit

Question For issuing a Documentary credit The applicant is required to
provide to the issuing bank details about
Correct Answer The purchase-sales contract, the mode of payment, the tenor of
pay ment , The documents required, the names of authorities
who would issue the documents

Your Answer The purchase-sales contract, the mode of payment, the tenor of
who would issue the documents , Authority who will issue the
documents

Question The major cost components of NIF are :-
Correct Answer Underwriters fees , Margins of notes
Your Answer Underwriters fees , Margins of notes , Documentation charges

Question 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
Your Answer USD 1 =52.5050

Question Which details about forward contracts do the Exchange Controls
verify ?
Correct Answer Particulars of cancellation of forward cover for the equivalent of
USD 500,000
Your Answer Particulars of cancellation of forward cover for the equivalent of
USD 500,000
True/False
Question Installment credit is issued for specific quantities of goods to be
shipped every week or month.
Correct Answer True
Your Answer True

Question Mr P has exported goods in May 2005 and is expecting pay ment
of Euro 25000 by the last week of Sept 2005. Give details of the
forward contract he can book :-
Correct Answer He can book a sale contract any time from May 2005 till Mid
Sept 2005, for Euro 25000 or less, for maturity last week of Sept.
Your Answer He can book a contract for Forward Purchase, any time from
May 2005 till Mid Sept 2005, for Euro 25000 or less, for maturity
last week of Sept.
True/False
Question The Prominent non banking financial institutions participating in
the FOREX markets are Pension funds, mutual funds, insurance
Cos.
Correct Answer True

Your Answer True

Question How does a company use swap to restructure debt, in its
balance sheet?
Correct Answer By resorting to floating rate from fixed rate , By resorting to fixed
rate from floating rate
Your Answer Prepayment of existing debts , Raising new loans , By resorting
to floating rate from fixed rate
True/False
Question The Euro Commercial paper is supported by a team-syndicated
credit with both sides of the transaction combined into one
operation.
Correct Answer True
Your Answer True

Question 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
standards
Your Answer Because of different tax systems , Because of different credit
standards , Because of protectionism
True/False
Question Long in futures means a commitment to sell futures at a future
date.
Your Answer True
Select The Blank

Question When interest rate changes by 0.05 per cent then it has changed
________ basis points.
Correct Answer 50
Your Answer 5
Match The Following

LastStage Form a single currency Meet in Maastricht in

Netherland

The First stage in the Free movement of capital Free movement of capital
Europeand and Monetary in EC in EC
Union (EMU)
Stage II in EMU Establishment of Establishment of European
European Monetary Monetary Institute
Institute
Stage III in EMU Members to meet the Members to meet the
convergence criteria and convergence criteria and
fix the exchange rates fix the exchange rates

Question A Bank quotes interest rate of 9.50/10.00 for six months dollar
deposit, here the bid rate is :-
Correct Answer 9.50% P.A.
Your Answer 9.50% P.A.

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

Question What is a coupon swap?
Correct Answer Swap contract exchange of fixed rate payment system for a
floating rate system
Your Answer Swap contract exchange of fixed rate payment system for a

Question Underwriters are more attracted to NIF issue because of :-
Correct Answer Lesser risks , Increased returns , Easy marketability features
Your Answer Lesser risks , Increased returns , High underwriting fees

Question In which cases can a Resident Individual in India acquire foreign
securities without prior approval?
Correct Answer Gift from a person outside India, or Inheritance from a person
resident in or outside India , Security issued under Cashless
employees stock option scheme
Your Answer Gift from a person outside India, or Inheritance from a person
resident in or outside India , Security issued under Cashless
employees stock option scheme

True/False
Question JV means Joint venture and WOS means World of Security.
Your Answer False
True/False
Question Both futures and options are traded on a public exchange.
Your Answer True

Question Mr A an Indian exporter is expecting to receive payment for
exports in Hong kong dollar, after one month; How can he cover
the exchange rate fluctuation risk?
Correct Answer By booking a A forward contract in HKD itself , By booking a
Cross currency option between USD and HKD and / or USD and
Rs
Your Answer By booking a A forward contract in HKD itself , By booking a
Rs , Insisting on advance payment
True/False
Question Multimodal transport document is also known as
"IntermobileTransport Document"
Correct Answer True
Your Answer True

Question What was the purpose of reviewing FERA 1973 in the year
1993?
Correct Answer Economic Liberalisation relating to Foreign trade and Foreign
investments
Your Answer Economic Liberalisation relating to Foreign trade and Foreign
investments
Select The Blank

Question Exim acts as ________ for Government, RBI and IDBI .
Correct Answer An agent
Your Answer An agent
Select The Blank

Question In ________ transaction the delivery is postponed from the
agreed date.
Correct Answer Rollover
Your Answer Future

Question Name the services provided by 'Reuter 3000' in forex market:-
Correct Answer Quotation of forex rates, interest rates , Electronic broking by

matching the rates
Your Answer Electronic broking by matching the rates , Calculate and quote
rates for transactions
Select The Blank

Question Under the ________ standard the Country's Central Bank
promised to buy back the currency at certain rate of Gold.
Correct Answer Gold
Your Answer Premium

Question 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 ,
The Performance of the Exchange handling the option
True/False
Question In an already booked forward contract, a person may seek early
delivery, extension in period, or cancellation.
Correct Answer True
Your Answer True
Select The Blank

Question The stock of foreign reserves in India, is now around ________
% of the GDP and exceeds money circulation.
Correct Answer 15
Your Answer 12.5
True/False
Question Cross currency forward contract is not meaningful if original
contract is in Rupees to USD
Correct Answer True

Your Answer True

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 terrorism
Your Answer Collapse of Enron , Collapse of Argentina's currency board , The
True/False
Question Proposal for Investment abroa by Indian not falling under
automatic route are submitted to Exchange Control Department
of RBI.
Correct Answer True
Your Answer False

Question "Currency Snake"
Correct Answer Plus or minus movement of exchange rate around the parity rate
Your Answer Plus or minus movement of exchange rate around the parity rate
Match The Following

Merchant banking Portfolio management Portfolio management
Securitization Issue of debt in the form Venture capital

of tradeable security
Prime borrower Highest credit rating Issue of debt in the form of
tradeable security
Traditional banking Loans and cash credit Loans and cash credit
service against security against security


Question The various arms of World Bank are:
Correct Answer International Development Agency , Multinational Investment

Guarantee Agency
Your Answer International Monetary Fund , International Development Agency
, Multinational Investment Guarantee Agency
True/False
Question An AD can book a forward contract for a part of the amount of
Sale Contract
Correct Answer True
Your Answer True

Question Which currency is traded in one leg of about 70% of the world's
transactions?
Correct Answer US Dollar
Your Answer US Dollar

Question Value date means the date on which :-
Correct Answer Delivery of both the currencies will be made
Your Answer Delivery of both the currencies will be made

Question Under the liberalisation through FEMA, what can an AD offer to
the clients, without the prior permission of RBI or Government?
Correct Answer Hedges, interest rate swaps, currency swaps. , Caps and collars,
and forward rate agreements
Your Answer Hedges, interest rate swaps, currency swaps. , Caps and collars,
and forward rate agreements , Forward contracts
True/False
Question Corporates are allowed to raise funds abroad up to $ 15 million
as short term finance if they have EPCG license.
Correct Answer True
Your Answer True
True/False

Question The credit rating of World Bank is high in the world Capital
market because it operates at the debt equity ratio of 1:2
Your Answer True
Select The Blank

Question Indian Co. intending to make investment under Automatic route
needs to submit form ________ to RBI with enclosures.
Correct Answer ODA
Your Answer ODI
Select The Blank

Question In ________ contract, though seller pays the freight, seller's risk
is not extended till destination.
Correct Answer CIF
Your Answer CIF
True/False
Question Transfer of funds for investment abroad is allowed freely.
Correct Answer True
Your Answer False

Question Financial management is complex process for
Correct Answer Companies which have international trade
Your Answer Public Limited companies without international presence

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

Question What is the Indian Govt's obligation of becoming member of
IMF?

Correct Answer Ensure orderly exchange arrangement, promote stable
exchange rate
Your Answer Ensure orderly exchange arrangement, promote stable
exchange rate

Question 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 maxi mum $ 100 million or equivalent
Your Answer Activity proposed need to be core activity , Financial commitment
in JV/WOS maxi mum $ 100 million or equivalent , Entity abroad
is a holding co

Question What is a 'speculator'?
Correct Answer Trader who is neither hedger nor arbitragor , He takes risks for
profit
Your Answer Trader who is neither hedger nor arbitragor , He takes risks for
profit , He buys or sells to hedge his risk
True/False
Question Tranche' is a managed issue of securities in smaller
denominations.
Correct Answer True
Your Answer True

Question What Preshipment facility is granted by EXIM Bank to an
exporter?
Correct Answer Preshipment credit beyond six months for construction and
turnkey projects abroad
Your Answer Preshipment credit beyond six months for construction and

Question 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 , Given by
buyer or seller as commission

Question What non funded facilities are granted by Export Import Bank of
India?
Correct Answer Guarantee for Bid bond, execution of export project, for
borrowings abroad, for retention of money , Advance payment

Guarantee, performance guarantee
Your Answer Guarantee for Bid bond, execution of export project, for
Guarantee, performance guarantee , Letter of credits
Select The Blank

Question In Overseas market the forward rate is generally quoted on the
basis of ________.
Correct Answer Fixed date
Your Answer First 10, second 10, third 10 days of month

Question Which common details will be available in any bill of Lading?
Correct Answer Names of consigner, consignee , The port of loading and

unloading, contract of shipment
Your Answer Names of consigner, consignee , The port of loading and
unloading, contract of shipment , The name of the vessel

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

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 ,

Frontier of the intermediate country where goods are off loaded
True/False
Question There is no difference between CIP and CIF contracts except the
mode of transportation.
Correct Answer True
Your Answer True

Question How did the Govt of India put the war time exchange controls in
to a statutory frame work?
Correct Answer Enacting FERA 1947
Your Answer Enacting FERA 1947

Question What is the objective of FEDAI?
Correct Answer Laying down terms and conditions of exchange business

between Customers and Bankers , Interbank understanding for
transacting forex business and exchange rates
Your Answer Laying down terms and conditions of exchange business
between Customers and Bankers , Interbank understanding for
transacting forex business and exchange rates , Growth of
Indian Exports
Select The Blank

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

16 principles for good Business Charter of Marrakesh

environmental conduct sustainable development
World Chambers World Federation of World Federation of
Congress Chambers Chambers
ICC Conference in 2004 Marrakesh Doha
13 types of trade contracts INCOTERM Business Charter of

sustainable development
Select The Blank

Question An exchange rate for $ was48.2050, it is now 48.2075, then one
says that it has moved ________ basis points
Correct Answer 25
Your Answer 0.0025
True/False
Question FEDAI does not require RBI permission to frame and revise
rules of business
Your Answer True

Question How does ICC help poor countries?

Correct Answer Attract Foreign Direct investments togeather with UNCTAD
Your Answer Arrange to give loans and subsidies to the projects in poor
countries
True/False
Question Terms in an Irrevocable credit can not be alterred at all.
Your Answer False
Select The Blank

Question Combined Certificate of Origin and Value are required by
________.
Correct Answer Commonwealth Countries
Your Answer Commonwealth Countries

Question How many terms are there under the class " main carriage
unpaid"?
Correct Answer Three
Your Answer Three
Select The Blank

Question The creditworthiness of futures exchange is maintained through
imposition of ________.
Correct Answer Margin
Your Answer Penalty

Question For cancellation of an already booked forward contract, whose
permission is required by the customer?
Correct Answer Nobody other than he himself
Your Answer Nobody other than he himself

Question A Dealer Buys commodity in Bombay and sells it in Delhi due to
price differentials. He is said to be resorting to which practice?
Your Answer Swapping commodities

Question What was the reason for launching swap as an risk hedging
instrument?
Correct Answer To avoid the effects of currency control imposed in UK
Your Answer To avoid the effects of currency control imposed in UK
True/False
Question In a coupon swap the receiver is the one who receives fixed rate
of interest.
Correct Answer True
Your Answer True
True/False
Question The working of the IBRD and IMF in recent has blurred the
difference between the two
Correct Answer True
Your Answer True
Select The Blank

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

Question 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 ADRs
Match The Following

European option On or after maturity Buy the contract
Out of money Loss Loss
In the money Profit On or after maturity
American option Before maturity Before maturity

Select The Blank
Question ________Bill of lading must specify the name of the ship.
Correct Answer "On Board"
Your Answer "On Board"

Question Why is Bill of Exchange a Quasi Negotiable Instrument?
Correct Answer It represents title to goods , It is issued under Sale of Goods act
Your Answer It represents title to goods , It is issued under Sale of Goods act ,
It is issued under Transportation act

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

Question 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 countries
Your Answer Bring down the external value of US Dollar , Bring some stability

Select The Blank

Question A ________ Bill of lading does not specify the terms and
conditions of carriage.
Correct Answer Short Form
Your Answer Short Form
Select The Blank

Match The Following

Euro as a currency 2002 2002

note/coin
IBRD World Bank World Bank
Collapse of IMF Early 1970s Early 1970s

administered fixed
exchange rates
No International control on Mid 80s Mid 80s
Exchange rates

Question What are the main causes of fluctuations in Exchange rates?
Correct Answer Government regulatios, fiscal policies, political instabilities ,

Market demand and supply, sentiments
Your Answer Government regulatios, fiscal policies, political instabilities ,

Question The maximum period for which a forward contract can be
granted by the AD depends upon which RBI directives?
Correct Answer Maximum Period of repatriation of export proceeds , Maximum
Period of payment for Imports
Your Answer Maximum Period of repatriation of export proceeds , Maximum
Period of payment for Imports

Question What is the objective of INCOTERMS?

Correct Answer Arrange for transfer of risk from seller to buyer at a convenient
place
Your Answer Arrange for transfer of risk from seller to buyer at a convenient
place
Match The Following

Forfaiting Discounting export Discounting export

receivables receivables
Buyer's Credit Available to Buyer abroad Import finance
Seller's Credit Available to seller abroad Export Finance
Usance LC Seller paid only on Seller paid only on maturity

maturity date date

Question Which debits are permitted to EEFC accounts?
Correct Answer Payment of hotel bills abroad, payment for expenses on Heart
operation abroad , Payment to EOUs in India for services
rendered by them
Your Answer Payment of hotel bills abroad, payment for expenses on Heart
rendered by them
True/False
Question Cause of increase in cost of public issues Underwriting fees ,
selling commission
Correct Answer True
Your Answer True

Question Which two countries were included to convert the group of five
into the group of seven?
Correct Answer Canada , Italy
Your Answer Canada , Italy

Question Revolving underwriting facility, short term note issuance facilty,
transferabla revolving undertaking facility are the names of :-
Correct Answer Note issuance facility
Your Answer Note issuance facility

Question What do you mean by a derivative?
Correct Answer One which has been derived from other fundamental instruments
Your Answer One which has been derived from other fundamental instruments

Your Answer Attract Foreign Direct investments togeather with UNCTAD

Question What were the immediate causes of converting the group of 5
into group of 7 and convene their meeting in late 1985?
Correct Answer Many Industries in USA had become uncompetitive with imports
, In USA the Trade protectionnis m had increased
Your Answer Many Industries in USA had become uncompetitive with imports
, In USA the Trade protectionnis m had increased
True/False
Correct Answer True
Your Answer True
Select The Blank

Question Position in a currency is said to be ________, when sales equal
purchases.
Correct Answer Square
Your Answer Square

Question What is Sovereign Risk?
Correct Answer Risk of lending to the government of a country
Your Answer Risk of lending to the government of a country
True/False
Question The Option period in the forward contract is at the option of the
Banker, hence the bank has to be very conservative in quoting
rates.

Your Answer True
True/False
Correct Answer True
Your Answer True


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


contract?
Your Answer Delivery on a Fixed date, within six months , Delivery on a date
True/False
of interest.
Correct Answer True
Your Answer False

Question What is a "Received for shipment" bill of lading ?
Correct Answer It is not considered by the banks as a good security for financing.
Your Answer It is not considered by the banks as a good security for financing.

Question With reference to ECB, fund raising activity includes :-
Correct Answer Floating rate notes, bonds, debentures , Syndicate loans, issue
of shares
Your Answer Floating rate notes, bonds, debentures , Syndicate loans, issue
of shares

Your Answer Swapping commodities


matching the rates
Your Answer Quotation of forex rates, interest rates , Electronic broking by
matching the rates
Select The Blank

basis of ________.
Your Answer Fixed date

Question 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 By underwriting bank to support funding for a certain period,
True/False
Question PP Form is required when exports are made to any country by
post parcel on value payable basis.

Your Answer False

Question Which is the most actively traded currency in the international
market today?
Select The Blank

Question 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

Question At the request of M/s Universal Traders Calcutta, State Bank of
India opened a documentary credit in Favour of M/s Star Trading
Co Dubai, for USD 25000/-.Here State Bank of India Calcutta is
known as
Correct Answer Issuing Bank , Opening Bank
Your Answer Issuing Bank , Confirming Bank
True/False
Question Postal receipt is an acknowledgement of receipt of goods, a
quasi negotiable instrument.
Your Answer False
Select The Blank


Question "A bill of exchange is drawn payable after 90 days after sight",
then it will be considered as:-
Correct Answer Usance Bill
Your Answer Usance Bill

Question What is the volume of the world's average daily transactions in
foreign exchange?
Correct Answer USD 1 trillion
Your Answer USD 1 trillion

Your Answer It represents title to goods , It is issued under Sale of Goods act
Select The Blank

Question Mostly, countries in the Middle east require ________ invoice,
for facilitating import duties .
Correct Answer Legalised
Your Answer Customs
True/False
Correct Answer True
Your Answer True
Select The Blank

Question When a credit is made to available to additional beneficiary
wholly or partly it is called as ________.
Correct Answer Transferable credit
Your Answer Transferable credit

Question In the syndicated loan arrangement the borrower has to execute
:-
Correct Answer Single Principal loan agreement
Your Answer Single Principal loan agreement
Select The Blank

Correct Answer 50

Your Answer 50

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

Question Who issues guidelines for Direct Investments abroad by any
Indian?
Correct Answer Exchange Control Department of RBI
Your Answer Exchange Control Department of RBI
Select The Blank

Your Answer Revocable Credit
Result for this Assignment

Assignment Date 11/12/2005
Number of Correct Questions 40
Number of Skipped Questions 2

Number of Wrong Questions 7
Total Questions attempted 49
86 Out of
Total Marks obtained
100.
Result Pass


Question "Currency Snake"
Correct Answer Plus or minus movement of exchange rate around the parity rate
Your Answer Plus or minus movement of exchange rate around the parity rate

Question Export finance
Correct Answer Preshipment credit , Post shipment credit , Duty Draw back
Your Answer Post shipment credit , Duty Draw back , Preshipment credit
True/False
Question Bridge Loans are granted for construction of large size bridges,
and flyovers.
Your Answer False
Select The Blank

Your Answer Arbitrage

Question Samuraibonds are
Correct Answer Foreign yen bonds issued to non resident entities in Japanese
Market
Your Answer Foreign yen bonds issued to non resident entities in Japanese
Market
Select The Blank

Question As a result of the world wars in the 20th century the ________ of
most of the countries suffered heavily.
Correct Answer Economies
Your Answer Economies

True/False
Question Terms in an Irrevocable credit can not be alterred at all.
Your Answer False
Match The Following

Swap price Difference in prices of two Difference in prices of two

legs of buying and selling legs of buying and selling
currency currency
Spread Price difference between Price difference between
bid and offer bid and offer

Question Various exchange rate mechanisms are basically used for
Correct Answer Correcting currency disequilibrium
Your Answer Correcting currency disequilibrium
True/False
rate.
Correct Answer True
Your Answer True
Select The Blank

risk.
Your Answer Control by Government'
Select The Blank

Correct Answer USA
Your Answer USA

Question Which non financial service does EXIM Bank give to an
exporter?
Correct Answer Provide Technical and administrtive support , Planning,
promoting and developing export oriented Industries
Your Answer Provide Technical and administrtive support , Planning,

Question Under whose administration does ECGC work?
Correct Answer Ministry of Commerce
Your Answer Ministry of Commerce

Your Answer Can be booked again with another dealer , Can be booked again
True/False
Question An Indian party which has made direct investment abroad has to
submit a annual performance report in form ARP-1 to RBI.
Your Answer False
Select The Blank

Question ________ is drawn by taking mean of the bid and offered rates.
Correct Answer Middle rate
Your Answer Average rate

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

Question The Direct Investment abroad through share swap arrangement
under normal route is permitted in a :-

Correct Answer JV/WOS
Your Answer JV/WOS

Question In International trade, Advance pay ment means :-
Correct Answer Providing up front cash
Your Answer Providing up front cash
Select The Blank

Your Answer Cheque book and nomination

Question Mr P has exported goods in May 2005 and is expecting pay ment
of Euro 25000 by the last week of Sept 2005. Give details of the
forward contract he can book :-
Correct Answer He can book a sale contract any time from May 2005 till Mid
Your Answer He can book a sale contract any time from May 2005 till Mid
Match The Following

Treasury management Profit making Banks and multinationals
Arbitraging Rate disparity Rate disparity
Futures, Options Hedging instruments Speculation
Exchange Rate volatility Speculation Profit making

Question The 'On Board' bill of lading means bill of lading evidencing that
:-
Correct Answer The goods are put on board a ship for shipment
Your Answer The goods are put on board a ship for shipment
True/False

Question ECGC offers isurance protection to Indian exporters againt
pay ment risks.
Correct Answer True
Your Answer True
Select The Blank

Question After the second world war many countries adopted the route of
________ to give facelift to sagging economies.
Correct Answer Devaluation of their currencies
Your Answer Devaluation of their currencies

Question 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 option
can sell silver to Mr A at 8000/- per Kg, in next 6 months, even if
the price goes down.
Your 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 option
can sell silver to Mr A at 8000/- per Kg, in next 6 months, even if
the price goes down.

Question Mr A an Indian exporter is expecting to receive payment for
exports in Hong kong dollar, after one month; How can he cover
the exchange rate fluctuation risk?
Correct Answer By booking a A forward contract in HKD itself , By booking a
Rs
Your Answer By booking a A forward contract in HKD itself , By booking a
Rs
True/False
Question Normally the forward contracts are booked for making huge
profits.
Your Answer False


Select The Blank
Question Fixed interest rate Eurobond without the option to convert to
equity is known as ________.
Correct Answer Straight Debt
Your Answer Straight Debt

Question What criteria of lending is adopted by The International
Development agency while giving loans to a country?
Correct Answer The per capita income of the borrwoing country , The population
of the borrwoing country
Your Answer The per capita income of the borrwoing country , The population

Question A country needs external commercial borrowings to :-
Correct Answer Meet the adverse balance of payments position
Your Answer Get cheaper funds or aid from abroad

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

balance sheet?
Your Answer By resorting to floating rate from fixed rate , By resorting to fixed
True/False
Question Yankee bond is issued for domestic borrowers.
Your Answer False

Question Which general risks are covered by any insurance policy for
transit?

Correct Answer Theft, loss , Damage, sea perils, non delivery
Your Answer Theft, loss , Damage, sea perils, non delivery
Select The Blank

Question The ________is a Floating rate index for swaps.
Correct Answer US Commercial paper rate
Your Answer US Commercial paper rate

Question What maxim is followed by the forex dealer when indirect
method of exchange rate quotation is used?
Correct Answer Buy Low, sell High
Your Answer Buy High, Sell Low
True/False
Your Answer False
Select The Blank

Question Value of USDollar is ________ in the world market but RBI is
trying to match the Rupee value with it.
Correct Answer Depreciating
Your Answer Fluctuating
Select The Blank

Question The option which can be exercised on the maturity date and not
before it is known as________.
Correct Answer European Option
Your Answer European Option

Question As regards the due date of an Option exercise which methods
are in vogue?
Correct Answer American option , European Option
Your Answer American option , European Option

True/False
Question Services of a Paying bank are taken when currencies of
exporters country or the importers country is not involved in the
transaction.
Your Answer False

Question Which invoice gives accurate record of the type of merchandise
shipped for the purpose of fixing duties in the country of
importer?
Correct Answer Consular Invoice
Your Answer Consular Invoice
True/False
Question ADR Level I, is the final step to enter US erquity market.
Your Answer False

Question What are the categories of exposures, a person faces in
International trade?
Correct Answer Transaction exposure , Translation exposure
Your Answer Transaction exposure , Translation exposure

True/False
Question Corporates are allowed to raise funds abroad up to $ 15 million
as short term finance if they have EPCG license.
Correct Answer True
Your Answer True

Question Name the method of payment where the seller neither gets the
guarantee of payment from the bank, nor the possibility of
negotiation of documents :-
Correct Answer Bills for Collection
Your Answer Revolving leter of credit

Question The investor is in the money when :-
Correct Answer The exercise price is below the spot price for a call option , The
exercise price is above the spot price for a put option
Your Answer The exercise price is below the spot price for a call option , The
True/False
Question In an already booked forward contract, a person may seek early
delivery, extension in period, or cancellation.
Correct Answer True
Your Answer True

Question What is a 'speculator'?
Correct Answer Trader who is neither hedger nor arbitragor , He takes risks for
profit
Your Answer Trader who is neither hedger nor arbitragor , He takes risks for
profit
True/False
Your Answer False

Select The Blank
Your Answer Back to Back credit

Question Who can open an EEFC account?
Correct Answer Individuals , firms, companies, resident in India
Your Answer Individuals , firms, companies, resident in India
Select The Blank

Question In mid 1992 ________ rejected the ratification of Maastricht
treaty
Correct Answer Denmark
Your Answer Denmark

Question 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
standards
Your Answer Because of different tax systems , Because of different credit
standards
Select The Blank

Select The Blank

Select The Blank

basis of ________.

Your Answer Calendar month

Question 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

Question Who introduced the worlds first exchange traded currency
futures?
Correct Answer Chicago Mercantile Exchange
Your Answer Chicago Mercantile Exchange

Your Answer The per capita income of the borrwoing country , The population
True/False
Question Country risk analysis is a futile exercise in the background of
cost of analysis.
Correct Answer True
Your Answer True
Match The Following

Exchange margins FEDAI FEDAI
Cancellation of contracts ECD ECD

above USD 500000
Forward Purchase Presume earliest delivery Presume earliest delivery
contract currency at
premium
Forward purchase Presume latest delivery Presume latest delivery
contract currency at
discount




Your Answer Help private enterprise by financing projects , Provide technical
Select The Blank

Question Indian Co. intending to make investment under Automatic route
needs to submit form ________ to RBI with enclosures.
Correct Answer ODA
Your Answer ODI

Question A Spot Transaction between Japanese Yen and Sterling carried
out on Friday in Singapore, the settlement day will be
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 Blank

Your Answer Straight Debt

Question What are the categories of exposures, a person faces in
International trade?
Correct Answer Transaction exposure , Translation exposure
Your Answer Transaction exposure , Translation exposure

Question How does RBI control Exports?
Correct Answer Through Rule like "Full value of Export bills must be realised in
180 days," , Through Rule like " Export must be denominated In
a currency of the Importing country or a freely convertible

currency"
Your Answer Through Rule like "Full value of Export bills must be realised in
180 days," , By Issuing a Export Code Number, and monitoring
his exports through returns and statements filed by him

Question Name the members of Exchange Banks association :-
Correct Answer Foreign Banks at Bombay, Calcutta, Delhi, Madras, Amritsar,
Your Answer Foreign Banks at Bombay, Calcutta, Delhi, Madras, Amritsar,
True/False
Question The Option period in the forward contract is at the option of the
Banker, hence the bank has to be very conservative in quoting
rates.
Your Answer True
Select The Blank

Correct Answer 50
Your Answer 50
Select The Blank

Question 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
Match The Following

Swap price Difference in prices of two Difference in prices of two

legs of buying and selling legs of buying and selling
Euro Market Market in Euro currencies Market of currency outside
home country
currency currency
Spread Price difference between Price difference between
bid and offer bid and offer

True/False
selling commission
Correct Answer True
Your Answer True

Question With whom can an exporter or importer book the forward
contract?
Correct Answer Authorised dealer/Authorised person
Your Answer Authorised dealer/Authorised person

Question 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/False
of interest.
Correct Answer True
Your Answer True

Question Which document is used for transportation by air, rail, road,
marine?
Correct Answer Multimodal transport document , Combined Transport document
Your Answer Multimodal transport document , Combined Transport document
True/False
Question PP Form is required when exports are made to any country by
post parcel on value payable basis.
Your Answer True


Your Answer It represents title to goods , It is issued under Sale of Goods act
Select The Blank

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

Question A country needs external commercial borrowings to :-
Correct Answer Meet the adverse balance of payments position
Your Answer Meet the adverse balance of payments position
True/False
Question Sterling FRNs are issued in Europe, USA ,Asia
Your Answer True

Question What is the meaning of right to buy or sell the future contract?
Correct Answer An Option
Your Answer An Option

Question Which events can lead to materialisation of country risk?
Correct Answer Change in Government policies , Change in Government rules

and laws
Your Answer Change in Government policies , Change in Government rules
and laws

Question What are the powers of restricted money changers?
Correct Answer Purchase foreign currencies
Your Answer Purchase and sell foreign currency notes and travellers cheques
True/False

Question Both futures and options are traded on a public exchange.
Your Answer False

Question What do you mean by a derivative?
Correct Answer One which has been derived from other fundamental instruments
Your Answer One which has been derived from other fundamental instruments
Select The Blank

Question ________ is the price at which the market maker is prepared to
borrow the money.
Correct Answer Bid rate
Your Answer Bid rate

Your Answer Arbitrage


Question 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 monitor
developments in Forex Market
Your Answer Clearing house for settlement and clearance for the operations
of Ads , Make additional foreign currency available to ADs at
cheaper rates
Select The Blank

Question ________ is the agency of ICC which deals with the maritime
crime.
Correct Answer International Maritime Bureau
Your Answer International Maritime Bureau

Question Which of them are special funding facilities of IMF ?
Correct Answer Buffer Stock Facility
Your Answer Buffer Stock Facility
True/False
Correct Answer True
Your Answer True

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

market today?

Match The Following

Intolerable risk Drop the investment Drop the investment

project project
Country risk analysis Cost of evluation does not Cost of evluation does not
justify analysis justify analysis
Stock market analysis Banks are ahead Factors' values
Weightages % Factors' values 100% of total
Select The Blank

Question 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 country
Your Answer Yen,Euro Dollar, Swiss Francs, USD market, Govt Borrowings

Question For a spot transaction carried out on Thursday, currencies will be
exchanged on :-
Your Answer Monday

Question 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
Match The Following

Maturity of future Time when actual Last date of exercising

commodity is delivered option
Note issuance facility Euronotes Euronotes
Bearer security issued in Eurobonds Eurobonds

currency other than that of
the country of issue

Margin on future Peformance bond or Peformance bond or
security deposit security deposit
True/False
Your Answer False
True/False
Cos.
Correct Answer True
Your Answer True


foreign exchange?


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


Question What Preshipment facility is granted by EXIM Bank to an
exporter?
Your Answer Preshipment credit up to six months for construction and turnkey
projects abroad
Select The Blank

Question Over the years ________has been the most widely accepted
currency in international capital market.
Correct Answer American Dollar
Your Answer American Dollar
Select The Blank

Your Answer Currencies

transactions?
Select The Blank

risk.
Your Answer Recurrence
Select The Blank

Question The Trans European Automated Real Time Gross Settlement
Express Transfer is popular in ________.
Correct Answer Brussels
Your Answer Brussels

Question What is Risk Syndication facility?
Correct Answer Sharing of risk of non payment by supplier

Your Answer Sharing risk of Non pay ment by the Syndicate of Banks giving
loans
True/False
Question If ERD > IRD hen exporter should availa Rupee finance
Correct Answer True
Your Answer True



rendered by them
rendered by them
True/False
Question Funding Options in domestic yen market are Futures, FRAs, Call
and put options.
Correct Answer True
Your Answer True
True/False
Correct Answer True
Your Answer True


Your Answer Companies which have international trade
Select The Blank

as ________.
Your Answer Primary activity
Select The Blank

Question A Credit can be a confirmed credit only if it is also ________.
Correct Answer An Irrevocable credit
Your Answer An Irrevocable credit
True/False
Question The volume of trading of Derivatives in the world trade market is
growing but still only 5% of the total.
Your Answer False

Your Answer USD 1=Rs 50.5000

Your Answer Preshipment credit , Post shipment credit , Buyers credit

market operations


Question What does the word '"Tombstone" stand for?
Correct Answer Advertisement which lists the managers, underwriters, , List of

Providers of recently floated issue
Your Answer Advertisement which lists the managers, underwriters, , List of
Select The Blank

________.
Your Answer Euro Commercial Papers


Question Examples of hedge are:
Correct Answer Buy when you are having short position
Your Answer Buy when you are having short position


Select The Blank

at ________.


Question 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 profit
Your Answer Unfavourable fluctuations in exchange rate can wipe out the

Question The capital market is said to be volatile when
Correct Answer Prices of capital market instruments change and are expected to
change drastically
Your Answer Prices of capital market instruments change and are expected to
change drastically
True/False
Your Answer False

abroad?
Correct Answer Activity proposed need to be core activity , Financial commitment
in JV/WOS maxi mum $ 100 million or equivalent
Your Answer Activity proposed need to be core activity , Financial commitment
in JV/WOS maxi mum $ 100 million or equivalent , Indian co
should not have been black listed

Question 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 monitor developments in Forex Market
Your Answer Clearing house for settlement and clearance for the operations of Ads , Make
additional foreign currency available to ADs at cheaper rates
Select The Blank

Question ________ is the agency of ICC which deals with the maritime crime.

True/False
Question Cross currency forward contract is not meaningful if original contract is in Rupees to
USD
Correct Answer True
Your Answer True

Correct Answer The exercise or strike price, the amount , The expiration date and time, the method
of payment
Your Answer The exercise or strike price, the amount , The expiration date and time, the method
of payment , The Market report of the exchange which trades the option

Question Which is the most actively traded currency in the international market today?
Match The Following

Intolerable risk Drop the investment project Drop the investment project
Country risk analysis Cost of evluation does not justify Cost of evluation does not justify
analysis analysis

Select The Blank

Question 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
country
Your Answer Yen,Euro Dollar, Swiss Francs, USD market, Govt Borrowings within and outside the
country

Question For a spot transaction carried out on Thursday, currencies will be exchanged on :-
Your Answer Monday

Question Under which category of exchange rate did the Indian Rupee came from June 92?
Match The Following

Maturity of future Time when actual commodity is Last date of exercising option
delivered

currency other than that of the
country of issue
Margin on future Peformance bond or security Peformance bond or security
deposit deposit
True/False
Question Postal receipt is an acknowledgement of receipt of goods, a quasi negotiable
instrument.
Your Answer False
True/False
Question The Prominent non banking financial institutions participating in the FOREX markets
are Pension funds, mutual funds, insurance Cos.
Correct Answer True
Your Answer True

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

Question What is the volume of the world's average daily transactions in foreign exchange?

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 secondary market

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

Question What Preshipment facility is granted by EXIM Bank to an exporter?
Correct Answer Preshipment credit beyond six months for construction and turnkey projects abroad
Your Answer Preshipment credit up to six months for construction and turnkey projects abroad
Select The Blank

Question Over the years ________has been the most widely accepted currency in
international capital market.
Select The Blank

Question As a result of the world wars in the 20th century the ________ of most of the
countries suffered heavily.

Question Which currency is traded in one leg of about 70% of the world's transactions?

Select The Blank

Question ________ is the acid test for events to be included in country risk.
Select The Blank

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

Your Answer Sharing risk of Non payment by the Syndicate of Banks giving loans
True/False
Correct Answer True
Your Answer True

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

Correct Answer Payment of hotel bills abroad, payment for expenses on Heart operation abroad ,
Payment to EOUs in India for services rendered by them
Your Answer Payment of hotel bills abroad, payment for expenses on Heart operation abroad ,
True/False
Question Funding Options in domestic yen market are Futures, FRAs, Call and put options.

Correct Answer True
Your Answer True
True/False
Question There is no difference between CIP and CIF contracts except the mode of
transportation.
Correct Answer True
Your Answer True

Select The Blank

Question When an Indian Company earns at least 50% of its average turnover from a
particular activity then that activity is considered as ________.
Select The Blank

True/False
Question The volume of trading of Derivatives in the world trade market is growing but still
only 5% of the total.
Your Answer False

Question Punjab National Bank Mumbai Branch quoted USD 1= Rs 50.5000/52.5050. Which is
the offered rate for Rs?


Correct Answer Which are convertible , Which have liquidity confirmed in Euro market operations
Your Answer Which are convertible , Which have liquidity confirmed in Euro market operations ,
Which have greater intrinsic value

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

Correct Answer Advertisement which lists the managers, underwriters, , List of Providers of recently
floated issue
Your Answer Advertisement which lists the managers, underwriters, , List of Providers of recently
floated issue
Select The Blank

Question Short term instruments normally issued by corporate borrowers, forhigh values, at a
discount to face value are known as ________.

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


Correct Answer He gets the flexibility to exposure , He is exposed to additional risk of movement of
rates between 3 currencies
Your Answer He gets the flexibility to exposure , He is exposed to additional risk of movement of
Select The Blank

Question Forward margin makes a currency cheaper then the currency is at ________.

Question 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 profit
Your Answer Unfavourable fluctuations in exchange rate can wipe out the normal business profit

Correct Answer Prices of capital market instruments change and are expected to change drastically
Your Answer Prices of capital market instruments change and are expected to change drastically
True/False
Your Answer False

Question 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 equivalent
Your 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
1
5 – 10
13 – 14
15 – 17
18 – 19
20 – 23
24 – 27
31 – 35
36 – 39
40 – 41
43 – 46
47 – 49
50 – 53
55 – 57
61 – 66
67 – 69
70 – 71
73 – 74
75 -76
79 – 83
84 – 88

89 - 92
95 – 99
100 – 102
105 – 106
109 – 114
117 – 123
124 – 127
128 – 129
131 – 137
138 – 141
143- 147
148 – 152
155 – 157
158 – 161
163 – 166
169 – 173
174 – 177
179 – 180
183 – 183
189 – 190
191
195
199
203 – 204
207- 212
215 – 217
218 -219
220 – 221
Chapter – 1 – Introduction to international capital markets 1

Ero currency market ; Domestic market ; US, Japan Switzerland ; uk,
australia canada ; european conters in ECU ; Euro ; Asian doller market
; forex marker 1
SDR ; ECU ; US dollar ; German ; Swiss ; Japanees ; France ; Canada ;
Australia; 2
Chaper - 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 6
The Sterling Market ; 20th 19th century 1979 ; OECD Organization for
economic co-operation & development EMS Exchange rate Mechanism;
FRN ; Bulldog; 7
the EURO Market has been discussed in the nex chapter Recent
development in international financial markets ; septer 11 enron 7
LtCN (Long term capital Management Brazil china and mexico; 8
1990 ; 1980 ; severe tests financial system; securitization forces banks ;
attractive to browwerw; legal issues flexibility ; financial market
development segement of ; 9
swaps cash flow ; roject related; gain access to international ;
marketability ; new financing techniques; 10
Chapter – 3 – International Monetary and Financial System 13
1945 ; 1944 ; intenrational world Bank for reconstruciton and
development; second world war was european ; IMF International 13

Monetary Fund; Gold standard first world war
The country's Central Bank agreed to buy back their currency at a

certain rate of gold; 13
melting down of gold was freely allowed 13
There was unrestricted movement of gold (I.e. import and / export 14
The total money supply in the country was determined by the quantum
of gold reserves in the country 14
1870 ; 1914 ; 1821 ; 1834 ; 1870 ; European countries gold standard
in 1933 ; 1930 International Monetary Co-operation ; IBRD ; IMF ; 14
popularly known as world bank IMF ; the international monetary fund
1945 ; 1971 ; 25 years ; aims 15
SDR ((special drawing rights ) 25% 1960 ; 1963 ; Gross domestic
product; 5 years ; SDR 146 bn to SDR 212 ; 45% ; 1998 ; Two parts 16
Funding Facilities ; Regular Facilities ; Special facilities ; restore tranche
credit tranche ; compensatory and contingency financing facility (CCFF)
; 16
Extended arrangement (Extended Fund Facility EEF) ; Buffer stock
Financing Facility ; 16
Standard Arrangement (Enlarged Arrears Policy ) ; Supplemental
Reserve Policy (Supplemental Reserve Policy (SRP 17
Reserve Tranche ; Credit Tranches ; Stand - By Arrangement 17
Extended arrangement or extended fund facilities (EFF) 18
Special Facilities ; CCFF ; Buffer Stock Financing Facility ; BSFF ;
Supplemental Resource Facility (SRF) ; 1997 18
Enhance Structural Adjustment Facility (ESAF) ; The fixed exchange rate
system US dollars 35 ounce of gold 19
Problem faced by the fixed exchange rate system ; 1960 ; value
apprehension ; delay in adjustment 20
failure of fixed rate system ; the european monetary system (EMS)
European Community 20
Currency Snake ; 1973 ; EMS EC ECU European Currency Unit ; SDR ;
ERM ; DM ; matrix german bundesbank 21
EM ; PST ; ERM ; Economic and monetary Union ;
Top of Form

True/False
Question Integrated branches of Commercial banks handle forex transactions as well as
options, swaps, futures, arbitrage operations
Correct Answer True
Your Answer True
True/False
Your Answer False
Select The Blank

Question The rate of interest on rupee finance for exports is not exceeding ________ less than
PLR.
Correct Answer 0.025

Your Answer 50 basis points over LIBOR

Correct Answer The exercise or strike price, the amount , The expiration date and time, the method
of payment
Your Answer The exercise or strike price, the amount , The expiration date and time, the method
of payment

Question In the syndicated loan arrangement the borrower has to execute :-
Correct Answer Single Principal loan agreement
Your Answer Single Principal loan agreement
True/False
Question At Least one principal Lender bank is essential for issue of the ADR or GDR.
Your Answer True

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

Question In a coupon swap who is called the buyer?
Correct Answer One who pays the fixed rate of interest
Your Answer One who pays the fixed rate of in terest
True/False
Question Till August 1994 India was following the Indirect Methodof Rate quotation.
Your Answer False
Select The Blank

Question For setting up joint ventures abroad or equity participation abroad, EXIM bank
provides funds under ________ Scheme.
Correct Answer Overseas investment facility
Your Answer Overseas investment facility
10

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

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

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

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

Question What are the activities of ICC?
Correct Answer Aribtration and dispute resolving , Canvass for open trade combat commercial crime
Your Answer Aribtration and dispute resolving , Canvass for open trade combat commercial crime ,
Increased Govt regulation of Business
True/False
Question Cause of increase in cost of public issues Underwriting fees , selling commission
Correct Answer True
Your Answer False
Select The Blank

Question The currency swaps used ________.
Correct Answer To lower the risk of currency exposure
Your Answer To lower the risk of currency exposure
True/False
Question The Option period in the forward contract is at the option of the Banker, hence the
bank has to be very conservative in quoting rates.
11

Your Answer True

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

Departure EXW EXW
Main carriage paid CFR CFR
Main carriage unpaid FAS FAS
Arrival DES DES

Correct Answer Gilts offer higher attractive margin , Choice of issuing medium term and long term
bonds
Your Answer Gilts offer higher attractive margin , Choice of issuing medium term and long term
bonds , Linking of issues to currency swaps
True/False
Question In red clause credit some clauses are printed in Red ink.
Correct Answer True
Your Answer False


the bid rate for USD?
12

project ?

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

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

Question Large number of exporters from which country are enjoying the privilege of receiving
up front cash from importers in Russia?
Correct Answer United Kingdom
Your Answer United Kingdom
True/False
Question In developed markets, speculators play important role in determining the trend of
currency rates.
Correct Answer True
Your Answer True
Select The Blank

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

Question In Overseas market the forward rate is generally quoted on the basis of ________.
Select The Blank

Question Forward Margin makes a currency costlier then the currency is at ________.
13

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

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

Question Fixed, Floating or Limited flexibility are used in the context of
Correct Answer Exchange Rates
Your Answer Exchange Rates
Select The Blank

Question In mid 1992 ________ rejected the ratification of Maastricht treaty
Your Answer UK

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

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

Question ECGC provides cover to an Indian contractor for construction work abroad under
________.
14

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


Question What are the sources of raising funds for exports?
Correct Answer Suppliers credit , Forfaiting
Your Answer Suppliers credit , Forfaiting
Select The Blank


Question Name the common forex derivatives :-
Correct Answer Options, futures
Your Answer Options, futures
True/False
Question Country risk analysis is a futile exercise in the background of cost of analysis.
Correct Answer True
Your Answer False
Select The Blank

Question Even after liberalisation of exchange controls, the Euro sterling market remained
volatile because of uncertainties in UK and gyrations of sterling against major
________ countries
Correct Answer OECD
Your Answer OECD
15

Match The Following
Issues linked with FRNs FRNs

LIBOR,LIBID,LIMEAN
Issue of bonds without fixed rate FloatingRate Note FloatingRate Note
of interest, linked to short term
interest rate in the global market
Issue of loans Syndicated Loans Syndicated Loans
internationally,through arranger,
underwriter,co manager, for a
large amount for sharing risk of
lending
Equity issues in the foreign American or Global Depository American or Global Depository
markets either as direct Receipts Receipts
investments or portfolio
investments.
Bottom of Form
16

Correct Answer Clearing house for settlement and clearance for the operations of Ads , Set up a market
intelligence cell to study and monitor developments in Forex Market
Your Answer Clearing house for settlement and clearance for the operations of Ads , Make additional
foreign currency available to ADs at cheaper rates
Select The Blank


True/False
USD
Correct Answer True
Your Answer True

Correct Answer The exercise or strike price, the amount , The expiration date and time, the method of
payment
Your Answer The exercise or strike price, the amount , The expiration date and time, the method of
payment , The Market report of the exchange which trades the option

Match The Following

analysis analysis

Select The Blank

country
country

Your Answer Monday

Match The Following

delivered
Bearer security issued in currency Eurobonds Eurobonds

other than that of the country of
issue
deposit deposit
True/False
instrument.
Your Answer False
True/False
Question The Prominent non banking financial institutions participating in the FOREX markets are
Pension funds, mutual funds, insurance Cos.
Correct Answer True
Your Answer True



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


Select The Blank

Question Over the years ________has been the most widely accepted currency in international
capital market.
Select The Blank

Question As a result of the world wars in the 20th century the ________ of most of the countries
suffered heavily.


Select The Blank

Select The Blank


True/False
Correct Answer True
Your Answer True

undertaking given on behalf of a certain person to another person in different country

True/False
Correct Answer True
Your Answer True

True/False
transportation.
Correct Answer True
Your Answer True

Select The Blank

Question When an Indian Company earns at least 50% of its average turnover from a particular
activity then that activity is considered as ________.
Select The Blank

True/False
Question The volume of trading of Derivatives in the world trade market is growing but still only
5% of the total.
Your Answer False

the offered rate for Rs?




Correct Answer Give Softloans to poorer countries in Asia , Give project finance from resources raised
Your Answer Give Softloans to poorer countries in Asia , Give project finance from resources raised

floated issue
floated issue
Select The Blank


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


Select The Blank




True/False
Your Answer False

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

floated issue
floated issue
True/False
Question Out of 15 member countries in European Union 12 countries commiteed themselves for
a single currency.
Your Answer False
True/False
5% of the total.
Your Answer False
Select The Blank

Match The Following

analysis analysis
Stock market analysis Banks are ahead Banks are ahead
Weightages % Factors' values Factors' values
Select The Blank

capital market.

Question What is the meaning of a country risk?
Correct Answer Risk of events in a particular country which may cause loss to a person dealing with
that country
Your Answer Risk of events in a particular country which may cause loss to a person dealing with
that country

Correct Answer Names of consigner, consignee , The port of loading and unloading, contract of
shipment
Your Answer Names of consigner, consignee , The port of loading and unloading, contract of
shipment

Question 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
Your Answer Funds are provided under deferred payment terms to Indian exporter for credit to
foreign buyer
Match The Following


Health Certificate Fumigation certificate Fumigation certificate
Certificate of Inspection As per importers requirement As per importers requirement
Certifiate of Origin Export Promotion Council Export Promotion Council
Select The Blank

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

Question How many INCOTERMS are there in "Departure" Group?
Correct Answer One
Your Answer Two

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.
True/False
Question The American Dollar market comprises of the domestic segment of USD the offshore
segment of USD.
Correct Answer True
Your Answer True
Select The Blank

Question 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

Question What was the collective assessment of International financial market about the country
risk of many cnuntries in the last decade?
Correct Answer Whatever it was, was disastrously wrong.
Your Answer Whatever it was, was disastrously wrong.

Question 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 standards
Your Answer Because of different tax systems , Because of different credit standards
True/False
Your Answer True
Select The Blank

Question 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, and on current account in 1994.
Correct Answer Trade
Your Answer Trade

Your Answer Other managed Floating

Question Which of these are considered as miscellaneous documents?
Correct Answer Packing list , Weight certificate
Your Answer Packing list , Weight certificate
True/False
Correct Answer True
Your Answer True
Select The Blank

Question ECGC provides cover to an Indian contractor for construction work abroad under
________.
Your Answer Construction works policy
10

Your Answer Fund raising, underwriting, hedging , arbitration operations

Question How many Countries participated in the third survey on Foreign Exchange, coordinated
by BIS in 1992?
Correct Answer 26
Your Answer 26
True/False
Correct Answer True
Your Answer True
True/False
Question Prior approval of RBI is needed for payment of all imports.
Your Answer True

Question 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

Question 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 Blank

Question For setting up joint ventures abroad or equity participation abroad, EXIM bank provides
funds under ________ Scheme.
Select The Blank

Question To make the export more competitive and remunerative, the Indian Govt extends
________ facility.
11

Correct Answer Cash Incentives
Your Answer Advance against cash incentives


Question External Commercial Debt market :-
Correct Answer Prevails in Domestic market of foreign country , Prevails in offshore markets
Your Answer Prevails in Domestic market of foreign country , Prevails in offshore markets


Question What do you understand by 'Foreign Exchange Risk'?
Correct Answer The change in value of currency alters the home currency value of an asset , liability, ,
The change in value of currency alters the home currency value of profit, loss, or future
cash flows
Your Answer The change in value of currency alters the home currency value of an asset , liability, ,
The change in value of currency alters the home currency value of profit, loss, or future
cash flows , Certainty of an event which would happen in favour of the importer/
exporter

Question For a spot transaction carried out on Tuesday, where both centers have holiday on
Wednesday, currencies will be exchanged on :-
Correct Answer Thursday if it is a working day at both the centers
Your Answer Friday

Question Which details about forward contracts do the Exchange Controls verify ?
Correct Answer Particulars of cancellation of forward cover for the equivalent of USD 500,000
Your Answer Particulars of cancellation of forward cover for the equivalent of USD 500,000
True/False
Question In the forward rate quotations between two currencies, when one currency is at
discount the other currency is at premium.
12

Correct Answer True
Your Answer True

Your Answer Which are convertible , Which have liquidity confirmed in Euro market operations
Select The Blank

Question 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

Correct Answer Preshipment credit beyond six months for constructi on and turnkey projects abroad
Your Answer Preshipment credit beyond six months for construction and turnkey projects abroad
Select The Blank

country
country
True/False
Question Import finance is nomally available at rates of interest cheaper than domestic finance
rates.
Your Answer False

Correct Answer Commercial Banks , Non banking Finance companies , Insurance Companies
Your Answer Commercial Banks , Non banking Finance companies
Select The Blank

Question In mid 1992 ________ rejected the ratification of Maastricht treaty
Your Answer Denmark
13

True/False
Question Indian companies are now allowed to freely invest abroad up to $1.5 million, raised
through GDE or EEFC without prior permission from RBI.
Your Answer True

Correct Answer Clearing house for settlement and clearance for the operations of Ads , Set up a
market intelligence cell to study and monitor developments in Forex Market
Your Answer Clearing house for settlement and clearance for the operations of Ads , Make
additional foreign currency available to ADs at cheaper rates
Select The Blank


True/False
Question Cross currency forward contract is not meaningful if original contract is in Rupees
to USD
Correct Answer True
Your Answer True

Correct Answer The exercise or strike price, the amount , The expiration date and time, the
method of payment
Your Answer The exercise or strike price, the amount , The expiration date and time, the
method of payment , The Market report of the exchange which trades the option

Match The Following
14

analysis analysis
Select The Blank

Correct Answer Yen,Euro Dollar, Swiss Francs, USD market, Govt Borrowings within and outside
the country
Your Answer Yen,Euro Dollar, Swiss Francs, USD market, Govt Borrowings within and outside
the country

Your Answer Monday

Match The Following

delivered

issue
deposit deposit
True/False
instrument.
Your Answer False
15

True/False
Question The Prominent non banking financial institutions participating in the FOREX
markets are Pension funds, mutual funds, insurance Cos.
Correct Answer True
Your Answer True



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


Correct Answer Preshipment credit beyond six months for construction and turnkey projects
abroad
Select The Blank

Question Over the years ________has been the most widely accepted currency in
international capital market.
Select The Blank

Question As a result of the world wars in the 20th century the ________ of most of the
countries suffered heavily.
16


Select The Blank

Select The Blank


True/False
Correct Answer True
Your Answer True

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

17

True/False
Correct Answer True
Your Answer True
True/False
transportation.
Correct Answer True
Your Answer True

Select The Blank

Question When an Indian Company earns at least 50% of its average turnover from a
particular activity then that activity is considered as ________.
Select The Blank

True/False
Question The volume of trading of Derivatives in the world trade market is growing but still
only 5% of the total.
Your Answer False

Question Punjab National Bank Mumbai Branch quoted USD 1= Rs 50.5000/52.5050. Which
is the offered rate for Rs?
18



Correct Answer Give Softloans to poorer countries in Asia , Give project finance from resources
Your Answer Give Softloans to poorer countries in Asia , Give project finance from resources

Correct Answer Advertisement which lists the managers, underwriters, , List of Providers of
recently floated issue
Your Answer Advertisement which lists the managers, underwriters, , List of Providers of
recently floated issue
Select The Blank

Question Short term instruments normally issued by corporate borrowers, forhigh values, at
a discount to face value are known as ________.

project ?


19

Correct Answer He gets the flexibility to exposure , He is exposed to additional risk of movement
of rates between 3 currencies
Your Answer He gets the flexibility to exposure , He is exposed to additional risk of movement
of rates between 3 currencies
Select The Blank


Question 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
profit
Your Answer Unfavourable fluctuations in exchange rate can wipe out the normal business
profit

Correct Answer Prices of capital market instruments change and are expected to change
drastically
Your Answer Prices of capital market instruments change and are expected to change
drastically
True/False
Your Answer False

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

Question Which functions does the Bill of Lading serve?
Correct Answer It is a document of title to goods., It is receipt of goods
Your Answer It is a document of title to goods. ,It is receipt of goods

Question A Bank quotes interest rate of 9.50/10.00for six months dollar deposit, here the
bid rate is :-
20

Correct Answer Risk of lending to the governmentof a country
Your Answer Risk of lending to the government of acountry

Your Answer Attract Foreign Direct investments togeather with UNCTAD

Question As per BIS, recovery from the recent crisis in global capital market was mainly
due to
Correct Answer Rapid and appropriate policy response in US and other countries , Increase
in
Foreign Direct Investments , free flow of credit
Your Answer Rapid and appropriate policy response in US and other countries , Increase in
Foreign DirectInvestments , free flow of credit
True/False
Question Out of 15 member countries in European Union 12 countries commiteed
themselves for a single currency.
Your Answer True
True/False
Correct Answer True
Your Answer True
True/False
Correct Answer True
Your Answer False
Select The Blank

Your Answer Credit card, safe custody, safe deposit locker without any fee
Select The Blank

Question Fixed interest rate Eurobond without the option to convert to equity is known as
________.
Your Answer Interest rate swap
True/False
Your Answer True
Match The Following


Health Certificate Fumigation certificate Export Declaration form
Certificate of Inspection As per importers requirement Export Declaration form
Certifiate of Origin Export Promotion Council Export Declaration form
21

Question For issuing a Documentary credit The applicant is required to provide to the
issuing bank
details about
Correct Answer The purchase-sales contract, the mode of payment, the tenor of payment ,
The documents required, the names of authorities who would issue the documents
Your Answer The purchase-sales contract, the mode of payment, the tenor of payment ,
The track record of the buyer and seller

Correct Answer It is an undertaking given by the openers bank to pay certain sum of
money , It is an
Your Answer It is an undertaking given on behalf of a certain person to another person in
different
country , It is a stamped agreement and is not valid unless it is signed by the issuer
True/False
Question CFR = FOB plus freight paid by seller + insurance paid by seller.
Your Answer True
Select The Blank

Question Even after liberalization of exchange controls, the Euro sterling market remained
volatile
because of uncertainties in UK and gyrations of sterling against major ________ countries
Correct Answer OECD
Your Answer OPEC
True/False
Question Integrated branches of Commercial banks handle forex transactions as well as
options, swaps,
futures, arbitrage operations
Correct Answer True
Your Answer True

Your Answer Supplemental Reserve Policy

Question What are the sources of raising funds for exports?
Your Answer Suppliers credit , Forfaiting , Buyers credit , Foreign currency or Rupee
finance
True/False
Question Normally the forward contracts are booked for making huge profits.
Your Answer False
True/False
Question Head office of ICC is in Paris because of its First President Eliance Clementel.
Correct Answer True
Your Answer False
Select The Blank

Question A ________ Bill of lading does not specify the terms and conditions of carriage.
22


Question What is the volume of the world's total speculative transactions?
Correct Answer Roughly 90 % of the total turnover
Your Answer 70% of the total turnover
True/False
Your Answer False
Select The Blank

Question For setting up joint ventures abroad or equity participation abroad, EXIM bank
provides funds
under ________ Scheme.

Question Mr P has exported goods in May 2005 and is expecting payment of Euro 25000 by
the last week of Sept 2005. Give details of the forward contract he can
book :-
Correct Answer He can book a sale contract any time from May 2005 till Mid Sept 2005, for
Euro 25000
or less, for maturity last week of Sept.
Your Answer He can book a contract for Forward Purchase, any time from May 2005 till Mid
Sept 2005,
for Euro 25000 or less, for maturity last week of Sept.
Select The Blank

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

Correct Answer Names of consigner, consignee , The port of loading and unloading,
contract of shipment
Your Answer Names of consigner, consignee , The port of loading and unloading, contract
of shipment ,
The name of the vessel , The date of transportation and contract of transportation
Select The Blank

Question Under the ________ standard the Country's Central Bank promised to buy back
the currency at certain rate of Gold.
Correct Answer Gold
Your Answer Interest
Select The Blank

Question Short term instruments normally issued by corporate borrowers, forhigh values,
at a discount to face value are known as ________.
Your Answer ADRs
Select The Blank

Question The type of trade where a country sells orange juice in return for cars is known as
23

________.
Correct Answer Counter Trade
Your Answer Non money trade

Correct Answer Payment of hotel bills abroad, payment for expenses on Heart operation
abroad ,
Your Answer Payment to EOUs in India for services rendered by them , Payment of Gifts of
GBP 5000 per year per donor

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

Correct Answer Gilts offer higher attractive margin , Choice of issuing medium term and long
term
bonds
Your Answer Choice of issuing medium term and long term bonds , Less controls and less
formalities to be completed , Linking of issues to currency swaps

Question Under which contracts the seller pays the import duty for the buyer?
Correct Answer DDP
Your Answer DDP
True/False
Question PP Form is required when exports are made to any country by post parcel on value
payable basis.
Your Answer True

Question What were the immediate causes of converting the group of 5 into group of 7 and
convene
their meeting in late 1985?
Correct Answer Many Industries in USA had become uncompetitive with imports , In USA
the Trade
protectionnism had increased
Your Answer Many Industries in USA had become uncompetitive with imports , In USA the
Trade
protectionnism had increased , The heads of G5 insisted to have a meeting , Failure of IMF to
control
the exchange rates

Correct Answer Purchase and sell foreign currency notes and travellers cheques
Your Answer Purchase and sell foreign currency notes and travellers cheques, give import
and export
24

finance


Question What is the role of ICC towards WTO?
Correct Answer To provide world business recommendations to WTO
Your Answer To further the cause of WTO
Match The Following

-Swap price Difference in prices of two legs of buying and selling Quoting rate for both buying
and selling a currency
-Euro Market Market in Euro currencies Market in Euro currencies
-Making market Quoting rate for both buying and sellinga currency Difference in prices of two
legs of buying and selling
-Spread Price difference between bid and offer Maket of 'Euro'
Select The Blank

Question Position in a currency is said to be ________, when sales equal purchases.
Your Answer Awkward
Select The Blank

Question Hotels and Airline companies are allowed to receive payments in Indian rupees
from foreign
tourist without insisiting on ________.
Your Answer Encashment certificate

Your Answer It represents title to goods , It is issued under Transportation act , It is issued
under
Bill of exchange act

Question Which details about forward contracts do the Exchange Controls verify ?
Correct Answer Particulars of cancellation of forward cover for the equivalent of USD
500,000
Your Answer Details of all contracts booked and cancelled beyond a specified limit

Question In the context of International economy ,the period between 1920s and 1930s is
known as
Correct Answer Great Depression
Your Answer Great Depression

Question 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
25

Correct Answer Clearing house for settlement and clearance for the operations of Ads , Set up a market
intelligence cell to study and monitor developments in Forex Market
Your Answer Clearing house for settlement and clearance for the operations of Ads , Make additional
foreign currency available to ADs at cheaper rates
Select The Blank


True/False
USD
Correct Answer True
Your Answer True

Correct Answer The exercise or strike price, the amount , The expiration date and time, the method of
payment
Your Answer The exercise or strike price, the amount , The expiration date and time, the method of
payment , The Market report of the exchange which trades the option

Match The Following

analysis analysis
26

Select The Blank

country
country

Question For a spot transaction carried out on Thursday, currencies will be exchanged on : -
Your Answer Monday

Match The Following

delivered

issue
deposit deposit
True/False
Question Postal receipt is an acknowledgement of receipt of goods, a quasi negotiable instrument.
Your Answer False
True/False
Question The Prominent non banking financial institutions participating in the FOREX markets are
Pension funds, mutual funds, insurance Cos.
Correct Answer True
Your Answer True
27

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


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

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

Select The Blank

capital market.
Select The Blank

Question As a result of the world wars in the 20th century the ________ of most of the countries
suffered heavily.

28

Select The Blank

Select The Blank

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

True/False
Correct Answer True
Your Answer True


True/False
Correct Answer True
Your Answer True
29

True/False
Question There is no difference between CIP and CIF contracts except the mode of transportation.
Correct Answer True
Your Answer True

Select The Blank

Question When an Indian Company earns at least 50% of its average turnover from a particular
activity then that activity is considered as ________.
Select The Blank

True/False
5% of the total.
Your Answer False

Question Punjab National Bank Mumbai Branch quoted USD 1= Rs 50.5000/52.5050. Which is the
offered rate for Rs?


30


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

floated issue
floated issue
Select The Blank


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


Select The Blank

31



True/False
Your Answer False

$ 100 million or equivalent , Indian co should not have been black listed
32

True/False
transaction.
Your Answer False
Select The Blank

Question To make the export more competitive and remunerative, the
Indian Govt extends ________ facility.
Correct Answer Cash Incentives
Your Answer Line of credit

Question For issuing a Documentary credit The applicant is required to
provide to the issuing bank details about
Correct Answer The purchase-sales contract, the mode of payment, the tenor of
who would issue the documents
Your Answer The purchase-sales contract, the mode of payment, the tenor of
who would issue the documents , The track record of the buyer
and seller

Question Which of these are not considered as good securities by the
banker?
Correct Answer House Airway bill , Postal Receipt
Your Answer House Airway bill , Postal Receipt , On board bill of exchange

Question What is the statutory requirement about receivables of exports
from India?
Correct Answer The export receivables must be repatriated within six months of
the date of shipment.
Your Answer The export receivables must be repatriated within six months of

Question What do firms face while evaluating risks in cross border
investment?

Correct Answer The issues are different, unique to each project, and solutions
are varied
Your Answer The issues are different, unique to each project, and solutions
are varied
True/False
Your Answer True


matching the rates
matching the rates , Calculate and quote rates for transactions
Match The Following

16 principles for good Business Charter of Business Charter of

environmental conduct sustainable development sustainable development
World Chambers World Federation of Doha
Congress Chambers
ICC Conference in 2004 Marrakesh Marrakesh
13 types of trade INCOTERM World Federation of

contracts Chambers

Question What is the cause of Volatility in the exchange market?
Correct Answer Interest rates are changing, Interest rates affect and are affected
by exchange rates
Your Answer Interest rates are changing, Interest rates affect and are affected
by exchange rates

Question How many Countries participated in the third survey on Foreign
Exchange, coordinated by BIS in 1992?
Correct Answer 26
Your Answer 26
True/False

Question Cash flows generated from aforeign project may replace
revenue-producing imports to the host country
Your Answer True

market operations
market operations , which have greater gold parity
True/False
Question Out of 15 member countries in European Union 12 countries
commiteed themselves for a single currency.
Your Answer False


Insurance Companies
Your Answer Non banking Finance companies , Commercial Banks
Select The Blank

Correct Answer USA
Your Answer Germany


Market demand and supply, sentiments , The purchasing power
of currency changes every second

Question The severemost problem faced by the Fixed exchange rate
system was
Correct Answer Inability of US to change gold for dollars

Your Answer Measurement of world liquidity

bank transactions?
developments in Forex Market , Purchase excess foreign
curency from Ads at higher rates
Select The Blank

Your Answer Euro Do llar
Match The Following

Departure EXW EXW
Main carriage paid CFR FAS
Main carriage unpaid FAS FAS
Arrival DES DES
True/False
Question The American Dollar market comprises of the domestic segment
of USD the offshore segment of USD.
Correct Answer True
Your Answer True
True/False
denominations.
Correct Answer True
Your Answer True

market today?
Your Answer EURO
True/False
Question Prior approval of RBI is needed for payment of all imports.
Your Answer True
Select The Blank

Question Mostly, countries in the Middle east require ________ invoice,
for facilitating import duties .
Correct Answer Legalised
Your Answer Customs
Select The Blank

Question A ________ Bill of lading does not specify the terms and
conditions of carriage.
True/False
selling commission
Correct Answer True
Your Answer True

Question How many types of documents are required in the International
trade?
Correct Answer Six
Your Answer Six

Question If Investment is out of EEFC accounts then :-
Correct Answer Exemption is granted from the criteria of Core activity stipulation
under automatic route

Your Answer Exemption is granted from the criteria of Core activity stipulation
under automatic route
Select The Blank

Question When a credit is made to available to additional beneficiary
wholly or partly it is called as ________.
Correct Answer Transferable credit
Select The Blank

Question India is a founder member of ________.
Correct Answer IMF
Your Answer IMF
True/False
rate.
Correct Answer True
Your Answer True
Select The Blank

Question When interest rate changes by 0.05 per cent then it has
changed ________ basis points.
Correct Answer 50
Your Answer 5
Select The Blank

Question Partnership firm not eligible for Overseas Direct Investment
needs to apply to RBI Approval in form ________.
Correct Answer ODI
Your Answer ODA

of shares
of shares
Select The Blank

Question Rupee was liberalised on ________ account in 1993, and on
current account in 1994.
Correct Answer Trade
Your Answer Capital
Select The Blank

Question FRNs are issued for a maturity period of ________ and are
normally redeemed i n one shot.
Correct Answer 5-7 years
Your Answer Up to 1 year

Question What are the objectives of International Chamber of
Commerce?
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

Question Which contracts are used for transportation by road?
Correct Answer FCA , CPT
Your Answer FCA , CPT

True/False
Your Answer True



assistance to private enterprise , Help to maintain the e xchange
rate stability

Correct Answer The exerci se or strike price, the amount , The expiration date
Select The Blank

Question The ________is a Floating rate index for swaps.
Correct Answer US Commercial paper rate
Your Answer US Commercial paper rate

Correct Answer To provide world business recommendations to WTO
Your Answer To provide world business recommendations to WTO


Question Which functions does the Bill of Lading
serve?
Correct Answer It is a document of title to goods.
, It is receipt of goods
Your Answer It is a document of title to goods. ,
It is receipt of goods

Question A Bank quotes interest rate of 9.50/10.00
for six months dollar deposit, here the bid rate is :-


Correct Answer Risk of lending to the government
of a country
Your Answer Risk of lending to the government of a
country

Correct Answer Attract Foreign Direct investments
togeather with UNCTAD
Your Answer Attract Foreign Direct investments
togeather with UNCTAD

Question As per BIS, recovery from the recent
crisis in global capital market was mainly due to
Correct Answer Rapid and appropriate policy
response in US and other countries , Increase in
Foreign Direct Investments , free flow of credit

Your Answer Rapid and appropriate policy r esponse
in US and other countries , Increase in Foreign Direct
Investments , free flow of credit
True/False
Question Out of 15 member countries in European
Union 12 countries commiteed themselves for a single
currency.
Your Answer True
True/False
Question In red clause credit some clauses are
printed in Red ink.
Correct Answer True
Your Answer True
True/False
Question Transfer of funds for investment abroad
is allowed freely.
Correct Answer True
Your Answer False
Select The Blank

Question EEFC account holder is allowed to have
________ facility.
Your Answer Credit card, safe custody, safe
deposit locker without any fee
Select The Blank

Question Fixed interest rate Eurobond without the
option to convert to equity is known as ________.
Your Answer Interest rate swap
True/False

Question An Indian importing goods from USA pays
dollars in India.
Your Answer True
Match The Following

PP Form Export Declaration form Export Declaration

form
Health Certificate Fumigation certificate Export

Declaration form
Certificate of Inspection As per importers requirement

Export Declaration form
Certifiate of Origin Export Promotion Council Export

Declaration form

Question For issuing a Documentary credit The
applicant is required to provide to the issuing bank
details about
Correct Answer The purchase-sales contract, the
mode of payment, the tenor of payment , The documents
required, the names of authorities who would issue the
documents
Your Answer T he purchase-sales contract, the mode
of payment, the tenor of payment , The track record of
the buyer and seller

Question The characteristics of an International
documentary credit are :-
Correct Answer It is an undertaking given by the
openers bank to pay certain sum of money , It is an

undertaking given on behalf of a certain person to
another person in different country
Your Answer It is an undertaking given on behalf
of a certain person to another person in different
country , It is a stamped agreement and is not valid
unless it is signed by the issuer
True/False
Question CFR = FOB plus freight paid by seller +
insurance paid by seller.
Your Answer True
Select The Blank

Question Even after liberalisation of exchange
controls, the Euro sterling market remained volatile
because of uncertainties in UK and gyrations of
sterling against major ________ countries
Correct Answer OECD
Your Answer OPEC
True/False
Question Integrated branches of Commercial banks
handle forex transactions as well as options, swaps,
futures, arbitrage operations
Correct Answer True
Your Answer True

Question Which of them are special funding
facilities of IMF ?
Your Answer Supplemental Reserve Policy

Question What are the sources of raising funds for
exports?

Your Answer Suppliers credit , Forfaiting , Buyers
credit , Foreign currency or Rupee finance
True/False
Question Normally the forward contracts are booked
for making huge profits.
Your Answer False
True/False
Question Head office of ICC is in Paris because of
its First President Eliance Clementel.
Correct Answer True
Your Answer False
Select The Blank

Question A ________ Bill of lading does not
specify the terms and conditions of carriage.

Question What is the volume of the world's total
speculative transactions?
Your Answer 70% of the total turnover
True/False
Question Till August 1994 India was following the
Indirect Methodof Rate quotation.
Your Answer False
Select The Blank

Question For setting up joint ventures abroad or
equity participation abroad, EXIM bank provides funds

under ________ Scheme.

Question Mr P has exported goods in May 2005 and
is expecting payment of Euro 25000 by the last week of
Sept 2005. Give details of the forward contract he can
book :-
Correct Answer He can book a sale contract any
time from May 2005 till Mid Sept 2005, for Euro 25000
or less, for maturity last week of Sept.
Your Answer He can book a contract for Forward
Purchase, any time from May 2005 till Mid Sept 2005,
for Euro 25000 or less, for maturity last week of
Sept.
Select The Blank

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

Question Which common details will be available in
any bill of Lading?
Correct Answer Names of consigner, consignee , The
port of loading and unloading, contract of shipment
Your Answer Names of consigner, consignee , The
port of loading and unloading, contract of shipment ,
The name of the vessel , The date of transportation
and contract of transportation
Select The Blank

Question Under the ________ standard the Country's
Central Bank promised to buy back the currency at

certain rate of Gold.
Correct Answer Gold
Your Answer Interest
Select The Blank

Question Short term instruments normally issued by
corporate borrowers, forhigh values, at a discount to
face value are known as ________.
Your Answer ADRs
Select The Blank

Question The type of trade where a country sells
orange juice in return for cars is known as ________.
Correct Answer Counter Trade
Your Answer Non money trade

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

rendered by them , Payment of Gifts of GBP 5000 per
year per donor

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

cross currency rates

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

Question Under which contracts the seller pays the
import duty for the buyer?
Correct Answer DDP
Your Answer DDP
True/False
Question PP Form is required when exports are made
to any country by post parcel on value payable basis.
Your Answer True

Question What were the immediate causes of
converting the group of 5 into group of 7 and convene
their meeting in late 1985?
Correct Answer Many Industries in USA had become
uncompetitive with imports , In USA the Trade
protectionnism had increased
Your Answer Many Industries in USA had become
uncompetitive with imports , In USA the Trade
protectionnism had increased , The heads of G5
insisted to have a meeting , Failure of IMF to control
the exchange rates

Correct Answer Purchase and sell foreign currency
notes and travellers cheques
Your Answer Purchase and sell foreign currency
notes and travellers cheques, give import and export
finance

Correct Answer Individuals , firms, companies,
resident in India
Your Answer Individuals , firms, companies,
resident in India

Correct Answer To provide world business
recommendations to WTO
Your Answer To further the cause of WTO
Match The Following

Swap price Difference in prices of two legs of buying

and selling Quoting rate for both buying and selling a
currency
Euro Market Market in Euro currencies Market in Euro

currencies
Making market Quoting rate for both buying and selling

a currency Difference in prices of two legs of buying
and selling
Spread Price difference between bid and offer Maket of

'Euro'

Select The Blank
Question Position in a currency is said to be
________, when sales equal purchases.
Your Answer Awkward
Select The Blank

Question Hotels and Airline companies are allowed
to receive payments in Indian rupees from foreign
tourist without insisiting on ________.
Your Answer Encashment certificate

Question Why is Bill of Exchange a Quasi
Negotiable Instrument?
Correct Answer It represents title to goods , It
is issued under Sale of Goods act
Your Answer It represents title to goods , It is
issued under Transportation act , It is issued under
Bill of exchange act

Question Which details about forward contracts do
the Exchange Controls verify ?
Correct Answer Particulars of cancellation of
forward cover for the equivalent of USD 500,000
Your Answer Details of all contracts booked and
cancelled beyond a specified limit

Question In the context of International economy
,the period between 1920s and 1930s is known as
Correct Answer Great Depression
Your Answer Great Depression

Question 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


bank transactions?
of Ads , Make additional foreign currency available to ADs at
cheaper rates
Select The Blank

Question ________ is the agency of ICC which deals with the maritime
crime.

True/False
Correct Answer True
Your Answer True


market today?

Match The Following

Intolerable risk Drop the investment Drop the investment

project project
Country risk analysis Cost of evluation does not Cost of evluation does not
justify analysis justify analysis
Select The Blank

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

Question For a spot transaction carried out on Thursday, currencies will
be exchanged on :-
Your Answer Monday

Question Under which category of exchange rate did the Indian Rupee
came from June 92?
Match The Following

Maturity of future Time when actual Last date of exercising

commodity is delivered option

currency other than that of
the country of issue

Margin on future Peformance bond or Peformance bond or
security deposit security deposit
True/False
Your Answer False
True/False
Cos.
Correct Answer True
Your Answer True


foreign exchange?

Question NIF is basically an agreement : -

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


Question What Preshipment facili ty is granted by EXIM Bank to an
exporter?
Your Answer Preshipment credit up to six months for construction and turnkey
projects abroad
Select The Blank

Select The Blank

Question As a result of the world wars in the 20th century the ________
of most of the countries suffered heavily.

transactions?
Select The Blank

risk.
Select The Blank

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


loans
True/False
Correct Answer True
Your Answer True

Question The characteristics of an International documentary credit are : -


operation abroad , Pay ment to EOUs in India for services
rendered by them
operation abroad , Pay ment to EOUs in India for services
rendered by them
True/False
Question Funding Options in domestic yen market are Futures, FRAs,
Call and put options.
Correct Answer True
Your Answer True
True/False
Question There is no difference between CIP and CIF contracts except
the mode of transportation.
Correct Answer True
Your Answer True


Select The Blank

as ________.
Select The Blank

True/False
Your Answer False



market operations


Question What does the word '"Tombsto ne" stand for?
Correct Answer Advertisement which lists the managers, underwriters, , List of

Your Answer Advertisement which lists the managers, underwriters, , List of
Select The Blank

________.




Select The Blank

at ________.


Question Why does a person need protection from unfavourable
movement of exchange rate?
Correct Answer Unfavourable fluctuations in exchange rate can wipe out the
Your Answer Unfavourable fluctuations in exchange rate can wipe out the

Question The capital market is sai d to be volatile when
change drastically
change drastically
True/False
Your Answer False

abroad?
Correct Answer Activity proposed need to be core activity , Financial
commitment in JV/WOS maximu m $ 100 million or equivalent
Your 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

True/False
denominations.
Correct Answer True
Your Answer True

rendered by them
rendered by them , Payment of Gifts of GBP 5000 per year per
donor

bank transactions?
Select The Blank

Question The creditworthiness of futures exchange is maintained through
imposition of ________.
Correct Answer Margin
Your Answer Penalty
Select The Blank

Question After the second world war many countries adopted the route of
________ to give facelift to sagging economies.
Correct Answer Devaluation of their currencies
Your Answer Change of governments
True/False
rules of business

Your Answer True
Select The Blank

purchases.
Your Answer Deficit

Your Answer Lesser risks , Increased returns , Easy marketability features
True/False
Question Import finance is nomally available at rates of interest cheaper
than domestic finance rates.
Your Answer True

Question What is the Indian Govt's obligation of becoming member of
IMF?
Correct Answer Ensure orderly exchange arrangement, promote stable
exchange rate
Your Answer Introduce gold standard in exchange rate

Your Answer Preshipment credit , Post shipment credit
Select The Blank

Question ________ enables bankers to extend purchase, negotiation or
discount of export bills.
Correct Answer Post shipment credit guarantee
Your Answer Specific shipment policy

Match The Following
Intolerable risk Drop the investment Cost of evluation does not

project justify analysis
Country risk analysis Cost of evluation does not Banks are ahead
justify analysis
Weightages % Factors' values Drop the investment

project
Select The Blank

Question In mid 1992 ________ rejected the ratification of Maastricht
treaty
Your Answer Austria


matching the rates
matching the rates , Demat securities

contract?
Your Answer Delivery on a Fixed date, within six months , Delivery on a date

Question What is the volume of the world's total speculative transactions?
Your Answer Roughly 90 % of the total turnover
True/False
Question ECGC offers isurance protection to Indian exporters againt
pay ment risks.
Correct Answer True
Your Answer True

True/False
Your Answer False

Correct Answer Gilts offer higher attractive margin , Choice of issuing medium
Your Answer Gilts offer higher attractive margin , Choice of issuing medium

Question In a documentary credit the word document means :-
Correct Answer Specified documents of title, transportation, insurance , Specified

certificates, and other papers required as per the regulations in
the buyers country
Your Answer Specified documents of title, transportation, insurance

Question What is the meaning of right to buy or sell the future contract?
Correct Answer An Option
Your Answer A future
Select The Blank

Your Answer Maturity Factoring
True/False
Your Answer True
True/False
Question An Indian exporting goods to New York receives dollars in New
York.

Correct Answer True
Your Answer True
Select The Blank

Your Answer Swap

Question The Direct Investment abroad through share swap arrangement
under normal route is permitted in a :-
Correct Answer JV/WOS
Your Answer JV/WOS
Select The Blank

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

Question How many Countries participated in the third survey on Foreign
Exchange, coordinated by BIS in 1992?
Correct Answer 26
Your Answer 26

Question A Spot Transaction between Japanese Yen and Sterling carried
out on Friday in Singapore, the settlement day will be
Correct Answer Following Tuesday if it is a working day in all the three centers
Your Answer Following Thursday if it is a working day in all the three centers
Select The Blank

Question Legalised invoice is also called ________ invoice.
Correct Answer Visaed
Your Answer Proforma

Question Who are the members of the Special committee on Indian Direct
Investments abroad, for normal route?
Correct Answer Representatives of Ministry of finance, Ministry of Economic
affairs, Ministry of Commerce and RBI
Your Answer Representatives of Ministry of finance, Ministry of Economic
affairs, Ministry of Commerce and RBI
Select The Blank

Question For opening JV/WOS in Nepal, Bhutan, the ceiling for financial
commitment per annum is ________.
Correct Answer Rs. 350 crore
Your Answer Rs. 350 crore
Select The Blank

Question The price at which a person may purchase or sell the underlying
________.
Correct Answer Exercise or strike price
Your Answer Market price
True/False
Correct Answer True
Your Answer True

Question The participants in the Forex Markets are :-
Correct Answer Non banking entities wishing to exchange currencies, , Banks

and their clients , Speculators, arbitragers
Your Answer Non banking entities wishing to exchange currencies, , Banks
and their clients , Speculators, arbitragers

Question What were the primary objectives of the group of seven
countries?
Correct Answer Bring down the external value of US Dollar , Bring some stability
Your Answer Bring down the external value of US Dollar , Bring some stability
True/False

Correct Answer True
Your Answer False

Question In which currency can the EEFC account be opened?
Correct Answer Any Convertible currency
Your Answer Any Convertible currency

Your Answer Providing up front cash

Question Who books an option forward contract?
Correct Answer Party who is not definite about crystallisation of delivery date
Your Answer Party who is speculator

Question What is a "Received for shipment" bill of lading ?
Correct Answer It is not considered by the banks as a good security for financing.
Your Answer It is considered a very safe document

Margin ensures solvency for honouring contracts , Given by
buyer or seller as commission

Question How does ICC access Govt and influence Governmental
decisions?
Correct Answer Through national committees
Your Answer Through national committees

Match The Following
Investment under Form ODA Form ODA

Automatic route
Proposal under non RBI Form NAR
automatic route
Proposal under Normal Special Committee Special Committee
route
Investment by form ODI form ODI
partnerships not in core
activity


sum of money , It is an unconditional undertaking
True/False
transaction.
Your Answer True


Question Fixed, Floating or Limited flexibility are used in the context of
Correct Answer Exchange Rates
Your Answer Exchange Rates
Select The Blank

Question Exim acts as ________ for Government, RBI and IDBI .
Correct Answer An agent
Your Answer Authorised dealer

Your Answer Public Limited companies without international presence
Select The Blank

Your Answer Anticipatory Credit

Question Which of these are considered as miscellaneous documents?
Correct Answer Packing list , Weight certificate
Your Answer Packing list , Insurance cover note , PP Form
Select The Blank

Question In ________ transaction the delivery is postponed from the
agreed date.
Correct Answer Rollover
Your Answer Forward
True/False
Question Integrated branches of Commercial banks handle forex
transactions as well as options, swaps, futures, arbitrage
operations

Correct Answer True
Your Answer False

Question World Bank gives loans for
Correct Answer Structural Adjustments , Infrastructure projects , BOP problems
Your Answer Structural Adjustments , BOP problems , Long term Working

capital
Select The Blank


Question What non funded facilities are granted by Export Import Bank of
India?
Correct Answer Guarantee for Bid bond, execution of export project, for
Guarantee, performance guarantee
Your Answer Advance payment Guarantee, performance guarantee , Letter of
credits
True/False
Correct Answer True
Your Answer False

Question What is a coupon swap?
Correct Answer Swap contract exchange of fixed rate payment system for a
Your Answer Exchange of fixed deposits to equity
True/False
York.
Correct Answer True
Your Answer True

True/False
Your Answer True
Match The Following

Certifiate of Origin Export Promotion Council Risk covering Document
Health Certificate Fumigation certificate Finance document
Certificate of Inspection As per importers As per importers

requirement requirement
True/False
Correct Answer True
Your Answer True


Question The 'On Board' bill of lading means bill of lading evidencing that
:-
Correct Answer The goods are put on board a ship for shipment
Your Answer A bill of lading evidencing terms and conditions of carriage

printed on it
Match The Following

Netherlands Guilder Franc
Germany Mark Peseta

Ireland Punt Dollar
Luxemberg Franc Guilder

Question The World Bank Group Consists of
Correct Answer International Development Association , International finance

Corporation , Multinational Investment Guarantee Agency
Your Answer Multinational Investment Guarantee Agency , Multinational
Insurance Guarantee Agency
Select The Blank

Question Any company involved in foreign exchange transactions is
exposed to ________ risk.
Correct Answer Currency
Your Answer Currency
True/False
Correct Answer True
Your Answer False
True/False
Question Floating rate notes are traded in secondary market also.
Correct Answer True
Your Answer True

market operations

Question The investor is in the money when :-
Correct Answer The exercise price is below the spot price for a call option , The
Your Answer The exercise price is below the spot price for a call option , The
exercise price is above the spot price for a put option , The

exercise price is above the spot price for a call option
True/False
Question The working of the IBRD and IMF in recent has blurred the
difference between the two
Correct Answer True
Your Answer True
Select The Blank

Question For importing goods in India RBI insists on ________ value.
Correct Answer CIF
Your Answer FOB
Select The Blank

purchases.
Your Answer Surplus
Select The Blank

Question FRNs are issued for a maturity period of ________ and are
normally redeemed in one shot.
Correct Answer 5-7 years
Your Answer Up to 1 year



loans
Select The Blank

Your Answer Green clause credit

Question Value date means the date on which :-
Correct Answer Delivery of both the currencies will be made
Your Answer Value of currency will be paid in terms of goods or commodities
True/False
rules of business
Your Answer True
Select The Blank

Correct Answer USA
Your Answer UK


Insurance Companies
Your Answer Non banking Finance companies , Insurance Companies ,
Individual investors abroad

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

Your Answer Collapse of Argentina's currency board , The war against
terrorism

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

Your Answer Activity for investment is core activity of Indian Company. , Credit
Rating of the CO to be A++

balance sheet?
Your Answer By resorting to floating rate from fixed rate , By resorting to fixed
rate from floating rate , Prepayment of existing debts
Select The Blank

borrow the money.
Your Answer Selling price

Question Which type of Convertibility of Rupee launched in March 1992 ?
Correct Answer Limited convertibility
Your Answer Limited convertibility

Your Answer Can be booked again with another dealer , Can be booked only
for un booked portion of the contract.

Question Name the members of Exchange Banks association :-
Correct Answer Foreign Banks at Bombay, Calcutta, Delhi, Madras, Amritsar,
Your Answer Foreign Banks at Bombay, Calcutta, Delhi, Madras, Amritsar,

Question If a dealer of securities is quoting rate as 200-250 then the rate
200 signifies which rate with reference to hi m?
Your Answer Bid rate

Question What do you call a 'decreasing principal swap'?
Correct Answer Amortizing swap
Your Answer Amortizing swap

Question When does a bank have an absolute advantage, in respect of
interest rate swaps?
Correct Answer When it has advantage under fixed interest system as well as
floating interest rate system
Your Answer When it has advantage under fixed interest system as well as
floating interest rate system


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

True/False
York.
Correct Answer True
Your Answer False

Question At the request of M/s Universal Traders Calcutta, State Bank of
India opened a documentary credit in Favour of M/s Star Trading
Co Dubai, for USD 25000/-.Here State Bank of India Calcutta is
known as
Correct Answer Issuing Bank , Opening Bank
Your Answer Issuing Bank
Select The Blank

Question 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
True/False
Your Answer True

Question External Commercial Debt market :-
Correct Answer Prevails in Domestic market of foreign country , Prevails in

offshore markets
Your Answer Prevails in Domestic market of foreign country , Prevails in
offshore markets , Prevails in local stock market
True/False
Question Sandby credis are introduced by US Banks because they were
not permitted to issue on demand guarantees.
Correct Answer True
Your Answer True

True/False
Question In a coupon swap the principal amount is identical in the same
currency.
Correct Answer True
Your Answer True

Question Which method of payment is getting popular in Europe because
of high costs in other methods?
Correct Answer Bills for collection
Your Answer Letter of credit
True/False
Question Dealing room is a place where the actual exchange of currencies
takes place phsically at predetermined rates.
Your Answer True

of shares
of shares , Forward contracts and options

Your Answer Margin ensures solvency for honouring contracts , Given by
buyer or seller as commission , Given to brokers by exchange,
buyer, seller

Question What is the main purpose of a commercial invoice?
Correct Answer To establish the contract of sale between the two parties.
Your Answer Contains summary of all other documents enclosed

bank transactions?

Correct Answer Set up a market intelligence cell to study and monitor
developments in Forex Market , Clearing house for settlement
and clearance for the operations of Ads
Your Answer Make additional foreign currency available to ADs at cheaper
rates , Purchase excess foreign curency from Ads at higher rates
Select The Blank

borrow the money.
Your Answer Offer rate

Question How does ECGC protect exporters against risks for export
finance
Correct Answer Issuing various insurance policies covering different risks
connected with exports at nominal premium
Your Answer Issuing various insurance policies covering different risks
connected with exports at nominal premium

Question The World Bank Group Consists of
Correct Answer International Development Association , International finance

Your Answer International Development Association , International finance
Select The Blank

Your Answer Economies

Question What maxim is followed by the forex dealer when direct method
of exchange rate quotation is used?
Correct Answer Buy High, Sell Low
Your Answer Buy Low, sell High

change drastically

change drastically
Select The Blank

Question After the second world war, International settlements were done
through ________.
Correct Answer Gold
Your Answer Gold

Your Answer The per capita income of the borrwoing country , The repayment
capacity. , The Security offerred.
True/False
Question An AD can book a forward contract for a part of the amount of
Sale Contract
Correct Answer True
Your Answer True
Match The Following

Health Certificate Fumigation certificate As per importers

requirement
Certificate of Inspection As per importers Risk covering Document
requirement
Certifiate of Origin Export Promotion Council Finance document
Select The Blank

Question The counter party in option is ________.
Correct Answer The exchange
Your Answer Trustworthy corporation, who hedges the risks of market

uncertainty

Question Which controls are not permitted by IMF?

Correct Answer Current account controls
Your Answer Domestic Trade proection controls

Question What is the effect of interweaving of national economies?
Correct Answer Govt decisions have stronger international repurcussions
Your Answer Economic growth and job creations is increased

balance sheet?
Your Answer By resorting to floating rate from fixed rate , Prepayment of
existing debts , Raising new loans
Select The Blank

Question In Indian interbank market forward rates are generally quoted on
the basis of ________.
Correct Answer Calendar month
Your Answer First 10, second 10, third 10 days of month

Your Answer Sending documentary credits
Select The Blank

Question An exchange rate for $ was48.2050, it is now 48.2075, then one
says that it has moved ________ basis points
Correct Answer 25
Your Answer 0.0025

Your Answer Lesser risks , Increased returns , Easy marketability features

Your Answer Fund raising, underwriting, hedging , arbitration operations
Match The Following

Swap price Difference in prices of two Price difference between

legs of buying and selling bid and offer
Making market Quoting rate for both Market of currency outside

buying and selling a home country
currency
Spread Price difference between Difference in prices of two
bid and offer legs of buying and selling
Select The Blank

Question The currency swaps used ________.
Correct Answer To lower the risk of currency exposure
Your Answer To lower the risk of currency exposure
True/False
Your Answer False

Question Which non financial service does EXIM Bank give to an
exporter?
Correct Answer Provide Technical and administrtive support , Planning,
Your Answer Provide Technical and administrtive support , Planning,
Select The Blank


Your Answer Tombstone

Question Under which method of pay ments is the buyer not required to
pay till he gets the possession of the documents?
Correct Answer Documents against payment terms specified in the bill of
exchange
Your Answer Documents against payment terms specified in the bill of
exchange
Select The Blank

________.
Your Answer IMF, World Bank and local markets
True/False
Your Answer True

Question What is the statutory requirement about receivables of exports
from India?
Correct Answer The export receivables must be repatriated within six months of
Your Answer The export receivables must be repatriated within six months of
Select The Blank


Question Which events can lead to materialisation of country risk?
Correct Answer Change in Government policies , Change in Government rules

and laws
Your Answer Change in Government rules and laws , Religious riots ,
Unpredicted Earthquake, Tsunami waves

Question The integrated treasury branches of commercial banks handle
which type of business?
Correct Answer Forex transactions, Derivatives transactions , Mney market and
bond market transactions
Your Answer Forex transactions, Derivatives transactions , Mney market and
bond market transactions , Refinance of loans

Question Method of advance payment is not disadvantageous to :-
Correct Answer The seller
Your Answer The buyer
True/False
Question Integrated branches of Commercial banks handle forex
transactions as well as options, swaps, futures, arbitrage
operations
Correct Answer True
Your Answer True
True/False
Correct Answer True
Your Answer True

True/False: List of Attempted Questions and Answers

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Your Answer True

Multiple Choice Multiple Answer

Multiple Choice Multiple Answer

Correct Answer He gets the flexibility to exposure , He is exposed to additional

Multiple Choice Multiple Answer

Match The Following

PP Form Export Declaration form Export Declaration form

Health Certificate Fumigation certificate As per importers

Multiple Choice Single Answer

By- AL_UNREAL@YAHOO.COM & NISH4U6474@YAHOO.COM

Your Answer Friday

Your Answer True

Select The Blank

Your Answer Swap

Select The Blank

Your Answer Subsidiaries and Tax concessions in India

Your Answer True

Multiple Choice Single Answer

By- AL_UNREAL@YAHOO.COM & NISH4U6474@YAHOO.COM

Your Answer True

Select The Blank

Correct Answer Derivative on a derivative

Your Answer Derivative on a derivative

Multiple Choice Multiple Answer

Correct Answer Export Inspection Council , Person authorised by Importer.

Your Answer Export Inspection Council

Multiple Choice Single Answer

Correct Answer Govt decisions have stronger international repurcussions

Your Answer Economic growth and job creations is increased

Multiple Choice Multiple Answer

Correct Answer Help private enterprise by financing projects , Provide technical

Multiple Choice Multiple Answer

Select The Blank

By- AL_UNREAL@YAHOO.COM & NISH4U6474@YAHOO.COM

Your Answer False

Correct Answer False

Your Answer False

Multiple Choice Single Answer

Correct Answer Purchase foreign currencies

Match The Following

Swap price Difference in prices of two Price difference between

Multiple Choice Single Answer

Your Answer Usance Bill of Exchange

Multiple Choice Single Answer

By- AL_UNREAL@YAHOO.COM & NISH4U6474@YAHOO.COM

Your Answer Exchange control Manual

Multiple Choice Single Answer

Correct Answer US Financial market

Your Answer US Financial market

Select The Blank

Correct Answer Cheque book and nomination

Your Answer Cheque book and nomination

Multiple Choice Multiple Answer

Correct Answer Structural Adjustments , Infrastructure projects , BOP problems

Your Answer Infrastructure projects , BOP problems

Select The Blank

Your Answer USA

Multiple Choice Multiple Answer

Select The Blank

Your Answer Past record

By- AL_UNREAL@YAHOO.COM & NISH4U6474@YAHOO.COM