MCQs on Foreign Exchange Management - 7

1. Difference between buying and selling rates in an exchange rate or interest rate quotation is known as 

(A) Strike price 
(B) Spread 
(C) Swap points 
(D) Spot rate


2. The price which one subsidiary or one unit of business charges from another for selling goods or providing services is 

(A) Transfer price 
(B) Strike price 
(C) Spot price 
(D) Forward rate



3. The bond that does not pay any interest and issued at a price lower than its reimbursement value is called as

(A) Zero coupon bond 
(B) Coupon bond 
(C) Euro bond 
(D) Domestic bond



4. International Development Association established in 

(A) 1970 
(B) 1962 
(C) 1960 
(D) 1958



5. International Finance Corporation established in 

(A) 1956 
(B) 1960 
(C) 1966 
(D) 1970



6. ____________ means using short-term forward contracts to offset “paper” gains and losses on the long-term assets and liabilities of foreign subsidiaries. 

(A) Hedging transaction exposure 
(B) Hedging balance-sheet exposure 
(C) Hedging economic exposure 
(D) Hedging cost exposure


7. Which exchange rate theory focuses on the inflation – exchange rate relationship? 

(A) Interest rate parity 
(B) International Fisher Effect 
(C) Purchasing power parity 
(D) Traditional Model



8. The exchange rate prevailing at a financial reporting date 

(A) Closing exchange rate 
(B) Opening exchange rate 
(C) Fixed exchange rate 
(D) Fluctuating exchange rate



9. The bank account of a non-resident of a country, where the amount of currency in the account cannot be transferred to another country is called as 

(A) Nostro account 
(B) Blocked Account 
(C) Foreign account 
(D) Capital account


10. Funds that cannot be remitted from the subsidiary to the parent due to host government restrictions is known as 

(A) Close – ended funds 
(B) Open – ended funds 
(C) Restricted funds
(D) Blocked funds  




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