INT Finance

1

International Finance

1. the complete definition of each term is available in INCOTERMS 1990. True2. no ratings or guidelines have been prescribed under the liberalized remittance scheme of USD 25000 on the quality of the investment an individual can make. False3. all the receipts whether current or capital are to be channelised through ADs. True4. futures are a form of forward contract.

5. banks appoint custodian in consultation with issuing company to keep custody of all depository property.

6. who issues guidelines for direct investments abroad by any Indian? Exchange control department of RBI7. what is the duty of the AD while booking a forward contract? Verify the suitable documentary evidence, and that the customer is exposed to risk; ensure that a genuine transaction exists8. the soft lending arm of the world bank is: international development association9. what are the main features of GDR?: It is a type of straight equity issues which are issued in offshore markets; it is denominated in US$ and the underlying shares are denominated in local currency of the issuer; it is a negotiable instrument which represents publicly traded local currency equity shares

10. resident individuals in India can acquire foreign bonus shares on the foreign securities already held by them without prior approval of RBI. True11. what is the objective of FEDAI? Laying down terms and conditions of exchange business between customers and bankers; interbank understanding for transacting FOREX business and exchange rates; ensure the profitability of FOREX business to the banks

12. what maxim is followed by the FOREX dealer when indirect method of exchange rate quotation is need? Buy low, sell low13. JV means joint venture and WOS means world of security. False14. a forward purchase contract was booked with an authorized dealer and subsequently cancelled. It: can be booked again with another dealer; can be booked again with the same dealer15. what is an irrevocable letter of credit? That which cannot be cancelled or amended anytime by the issuing bank without notice to beneficiary.16. what was the results of the World War in the 20th century? Unemployment, adverse balance of payment, liberalization17. prior to 1970 the Asian financial market was the worlds most strictly regulated and under- developed market.

18. Spot

=value today

19. maxim buy high sell low=indirect method of rate quotation

20. odd date

=different from spot date

21. fixed date

=1,2,3 months from spot date

22. futures contracts are traded in cycle of four times annually.

23. what do you mean by joint venture? Two entities contributing to the capital of a new entity and sharing profits/losses24. how is single currency swap made? Exchange of major currency against the US dollar25. which type of account can be opened in EEFC? Current Account26. trade is settled in: the currency of exporters country; Nostro, Vostro or Escrow accounts27. why have futures and options come into existence? To avoid business risk28. what is effect of interweaving of national economics? Govt. decisions have stronger international repercussions29. once the application in form ODA is received by the Reserve Bank through an authorised dealer, Identification number for the particular investment is issued for the purpose of future reference.

30. loans and guarantee could be extended to an overseas entity only if there is already an equity participation by the Indian party in such an entity.

31. a company can make an investment beyond the stipulated limit after exhausting the available limit by obtaining a specific permission from reserve bank under a block allocation. True32. the bank of international settlement draws attention to which development? The consequences of the stabilization of the pound; the extent to which the consumers in many industrial countries gained greater access to consumer and mortgage credit; development of flexible exchange rates

33. proposal under non automatic route=RBI

34. proposal under normal route

=special committee

35. investment by partnerships not in core activity= form ODI

36. investment under automatic route=form ODA

37. a borrower from a developing country can borrow from the US market? Only if it has high credit rating and the countrys govt. gives a guarantee for the same38. which publication of ICC is used by the bankers for letters of credit? Uniform customs and practices for documentary credit39. SWIFT is an efficient communication system used in FOREX transactions the world over.

40. the most significant aspect of global imbalance is: growing deficit in current account balance of payments of US; large surpluses in external accounts of other countries41. under automatic route a company does not require any approval from the regulatory authority for setting up a JV/ WOS abroad.

42. which credits are permitted in EEFC account? Earnings in foreign exchange; unutilized foreign exchange earlier withdrawn from EEFC43. ADR level I, is the final step to enter US equity market. False44. the volume of trading of derivatives in the world trade market is growing but it is still only 5% of the total. False45. what are the main features of Export Declaration Form? It contains declaration of the exporter as to the nature and exact value of goods being exported; it is an undertaking of the exporter to realise the full export value decided thereon and repatriate the same; it is an unconditional order signed by maker; it bears distinct serial numbers with a two alphabet prefix followed by a six digit number

46. what do you mean by deferred payment exports? When exports are made but payment is received in installments at periodic intervals47. what are the restrictions on liaison office of a foreign company in India? It is not allowed to undertake any business activity in India

48. in a coupon swap, the receiver is the one who receives fixed rate of interest. True49. Kandla, Santacruz, Madras, Cochin, Noida are known as Special Export Zones areas.

50. credit is given to buyer abroad to enable them to import goods on deferred payment basis is called as: buyers credit51. 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. False52. state the important trends brought out by the 1992 survey. Volume of trading in derivatives is growing; the share of transactions executed through brokers has declined to about a third of the total; Euro is the most actively traded currency in international market followed by US dollar

53. the standard practices for values are: value today; value tomorrow; value two business days after the trading date54. the document required by the commonwealth countries is the: combined certificate of origin and value55. what are the functions of Export Import Bank of India? finance functions and development functions56. a general permission has been granted in circular 45 (APDIR series) for issuing ADRs and GDRs. False57. name the parties involved in launching GDR? Lead managers, depository, participants58. what are the powers of an AD? Deal in foreign currency, open and maintain accounts abroad in such currencies; open accounts of non residents, allow remittance abroad to and from resident Indians

59. resident individuals in India can acquire foreign bonus shares on the foreign securities already held by them without proper approval of RBI. True60. official documents are otherwise called commercial documents. False61. who acts as the trustee in case of import loan through trust receipt? Importer62. an Indian company can issue ADR and GDR with RBIs prior permission if it: is eligible under issue of foreign currency convertible bonds and ordinary shares scheme 1993; is eligible under guidelines issued after 1993, by Govt of India

63. for the final permission for transfer of a share from a resident to a non resident, which documents are needed? Foreign inward remittance certificate from the bank; undertaking that the shares will not be retransferred in favour or a resident; in principle approval for transfer from RBI

64. what is the main purpose of export declaration from? To enable RBI to compile vital foreign trade data of the country and also exercise control over export activities65. operational documents= documents that satisfy the normal commercial requirements of the parties to the transaction

66. regulatory documents= documents that satisfy the statutory requirements of any trade

67. financial documents= documents that perform the function of obtaining finance and collection of payment etc.

68. risk covering documents= documents that represent the provision against physical risks to goods in transit

69. name the rules that governs taking of personal jewellery out of India. Baggage rules70. the second most actively traded currency in the world FOREX market is Euro. True71. a two way quotation for the currency means that the buyer and seller of the currency convey the rate acceptable to each other. True72. a red clause letter of credit is also called anticipatory letter of credit.

73. debts swap and assets swaps linked to bonds are arbitrage.

74. in the syndicated loan arrangement the borrower has to execute: single principle loan agreement75. for technology transfer for Hotel related industry, the basic parameters are: lumpsum fee for technical and consultancy services up to $200,00076. the rate of dividend offered should not exceed: SBI prime lending rate77. the source of raising funds for exports are: suppliers credit, forfeiting, buyers credit78. a type of invoice that is required by some specific countries like Philippines, south America etc, is consular Invoice.

79. the franchising and marketing fee for Hotel and Tourism related Foreign Technology transfer is limited to: 3% on gross room sales80. FRNs in corporate sector are issued for how many years? Five to seven years81. certificate of origin may form a part of invoice itself or may be a separate document. True82. ECGS offers insurance protection to Indian exporters against payment risks. True83. for what purpose does RB permit companies engaged in manufacturing and trading activities abroad to set up branch offices in India? To give professional or consultancy services; to conduct research work in the area in which the parent company is engaged; to undertake export and import trading activities

84. what attributes do the exporter expect from finance? Timely and on liberal terms; adequate and cheap

85. a unit located in SEZ may be allowed to open, hold and maintain which account with an authorized dealer in India? Foreign currency account86. a mis-match FRN means: the FRN issued with half yearly interest fixed on monthly basis87. which of these are included in risk covering documents? Insurance cover note; bill of lading; insurance policy88. a method of payment that is beneficial to the seller as he gets payment much before goods are released from him, is advance payment.

89. exports on deferred payment credits are eligible for finance and refinance from EXIM bank. True90. what is the effect of interweaving of national economics? Govt. decisions have stronger international repercussions91. FII= Foreign or non resident investor

92. RFC= returning NRI

93. EEFC= Foreign currency

94. FCNR= Repatriable

95. what are the facilities extended by Govt. of India to attract foreign currency to India? Deposits scheme for NRIs; Inward remittance facilities; liberalized remittance scheme; RFC schemes96. the American banks are allowed to undertake Euro Dollar operation: Indian Banking Facilities97. while transferring a share from a resident to a non resident, whose permission is needed? RBI98. the instruments used in raising funds through arbitrage are: Debt swaps and asset swaps99. a through bill of lading is one that is issued for the entire voyage covering several modes of transport and trans-shipments. True100. postal receipt can sea mail or an airmail receipt depending upon the mode by which they are sent.

101. the general permission granted regarding shares to non residents etc include permission for: issue of shares under ESOP by Indian Cos. To its employees up to 5% of paid up capital; acquisition of shares by non-residents after merger/amalgamation; to raise funds in India through issue of ADR

102. in the automatic route of foreign investment the company can raise capital through secondary foreign share market also. True103. the main features of GDR are: it is a type of equity issues which are issued in offshore markets; it is dominated in US$ and the underlying shares are dominated in local currency of the issuer; it is a negotiable instrument which represent publicly traded local currency equity shares

104. normally, which risks are covered by ECGC for the exporters? War risk, coup risk, delays in payments; economic risks, BoP risks, non payment risks; non delivery risks, political risks105. name the activities where FDI is not allowed under the automatic route? Activities that require an industrial license106. in import financing through trust receipts, with whom does the ownership of goods remain? Importer107. the rate of interest on rupee finance is not exceeding 50 basis points over LIBOR. False108. under which scheme does EXIM bank give direct credit to importers of capital goods abroad? Buyers credit; export promotion credit

109. the participants of FOREX markets are: speculators, arbitragers, foreign investors110. what are the various sources of inflow of foreign investment: FDI; External commercial borrowings; NRI deposits111. what do you mean by the trust receipts? A documents executed by importer against the bank, releasing the import documents covering the imported goods112. whose permission is required for issue and transfer of securities to non-residents? Reserve bank of India; foreign investment board113. apart from Reuters, the other major real time financial data providers are Bridge and Bloombergs.

114. GDR is a non negotiable instrument. False115. name the types of commercial debt market? Derivatives market; bond market116. the enclosures to the form submitted to RBI, by Co. investing abroad are: board resolution, auditors certificate, and valuation report of existing co.117. the normal methods of ECBs are: floating rates notes; depository receipt, commercial papers118. financial management is a complex process for: companies which have international trade119. AD can release foreign exchange upto US$ 25000 for a business trip to any other country except Nepal and Bhutan.

120. the foreign exchange unspent after return from foreign trip- in what form it should be surrendered within 180 days from return? Travellers cheque121. to make the export more competitive and remunerative, the Indian Govt. extends Cash incentives facility.

122. if exchange rate between US$ and rupees and US$ and pound sterling is given, we can calculate the rate between sterling pound and Indian rupee by: cross rate123. trade is settled in: the currency of the exporters country; the currency of the importers country124. the total financial commitment is permitted upto Indian rupees 150 crores in any one financial year in respect of direct investment in NEPAL or BHUTAN. True125. insurance cover note= it is an undertaking given by the

126. export declaration form= it is a declaration of the exporter

127. insurance policy

= it is a provisional policy to be

128. certificate of origin= it is a document indicating a

129. designated bank means: any bank in India which has been authorised by RBI to act as a banker to FII130. External commercial borrowing means: finance raised by Indian companies from the subsidiaries for foreign companies within the country OR finance raised by Indian companies from foreign lenders in foreign currency131. what are the important characteristics of bill of exchange? It is an instrument in writing; it is made payable to a certain person or to his order or bearer; it is an unconditional order signed by maker

132. Annexure A of schedule of RBI notification FEMA20/2000 means: list of industries wherein foreign investment is permitted only up to certain percentage with locational guidelines OR list of sectors wherein foreign investment is permitted under automatic route

133. to whom is import credit against trust receipt granted? Normally to an importer who holds trustee securities134. which organisation has brought out Uniform Customs and documentary practice for documentary credit? International chamber of commerce Paris OR foreign exchange dealers association of India135. EUROCLEAR, CEDEL are the names of registrars related with the issue of GDR.

136. Exchange control is to manage demand and supply of home currency by the government by using direct controls basically to protect it.

137. post-shipment finance is considered as long term finance. False138. which documents are required for availing post shipment finance? Original letter of credit; bill of lading139. name the schemes under which one can set up a joint venture abroad? Automatic route140. how does ICC access Govt. and influence governmental decisions? Through national committees; through exercise of powers conferred by the chambers of commerces

141. proposal for investment abroad by Indian not falling under automatic route are submitted to Exchange Control Department of RBI. True142. the use of credit cards in India by a person resident outside India shall be deemed as borrowing or lending in rupees. True143. the funds raised through external financing can be broadly grouped into: hedging; fund raising; clean credits144. the standard practices for values are: value today, value tomorrow, value two business days after the trading date145. investment in capital abroad, or subscription to the memorandum of association of a foreign entity is known as: investment in portfolios abroad.

146. NRO accounts can be opened upto maximum period of one year. False147. Grievance should be submitted by a worker to immediate superior.

148. what are the qualities of a conciliator? Independent; impartial; physically and psychologically fit149. industrial relationship means = relationship between

150. industrial relations can be seen in a = more sick units than profit

151. industrial relations means the attitudes and approaches of employers and employees with regard to = strike and lock outs

152. the industrial relation in public sector is narrow due to = in excessive political intervention

153. gratuity is to be paid if a person has completed 4 years and 11 months and 29 days. True154. a worker who has put in at 240 days of work in a calendar year shall be entitled to the following leave with wages: one day for every 20 days worked155. what are the factors that contributed to the success of collective bargaining in India? Statutory provisions; voluntary measures; measures taken by the government156. each worker has to be given rest after working for: 5 hours157. grievances may be = real or false

158. grievances are connected with = wages, promotion, work

159. grievance should be submitted to the = immediate superior

160. grievances are settled = with maximum speed

161. a tribunal shall consists of one person.

162. each factory will keep readily available and accessible a well stocked first aid box during working hours. True163. pension able service and salary is determined by the following: contribution to pension fund; super annuation of 58 years of completion of 20 years; service pension able salary is determined by average salary of 12 months before worker leaves

164. who told the workers that all forms of property and human accomplishment are gifts of nature and as such they belonged not to any one individual but to the society: Gandhiji165. gratuity is not payable if the following events occur: he has not completed 5 year; he has expired before completing 5 years; he has been dismissed for an act of moral turpitude166. provident fund contribution was applicable to employees following how many days in service: 60 days167. top executives in public sector undertakings are experiencing various problems and therefore they are incompetent. What are the problems? Appointment for a limited period; frequent changes in policies; political intervention168. employers can eliminate strikes by providing certain needs of the workers. Name them? Good employer-employee relation; participation by workers in the functions of the industry; establishment of safety precautions169. when was the proposal of need for grievance procedure in any organization, accepted? 1948170. what are the principles applied to settle industrial disputes? Minimum use of legal technicalities; trained personnel to man tribunals and courts; appeals to be reduced171. compensation under the workmens compensation act cannot be assigned, attached or changed. True172. which movement is responsible in coining the term collective bargaining? The second world war173. a factory is a premises where 10 or more persons are working during the last 12 months.

174. a person recruited for work abroad by a company is also considered to be a worker under workmens compensation act.

175. for the purpose of calculating the salary or wage, all the four allowances, viz, ad-hoc, family, house rent and tiffin are excluded. False176. public sector workers are those employees who are working in the companies owned or managed by the government.

177. in retrenchment, the employee has to make the following compliance: a notice to be served on the appropriate government; the last person employed in that category should be retrenched; it should be published in a newspaper178. personnel management mainly deals with executives policies. False179. industrial relations is the science of living together for purposes of production.

180. who constitutes a national tribunal and how many? Only one by the central government.

181. Indian laws need a overhauling to suit the changing trend of market, technology and manpower. False182. sec 31A of the payment of bonus act which provides bonus to productivity in lieu of profit sharing. This section was introduced in 1976.

183. a lockout is prohibited under which of the following circumstances (in public utility services): without giving notice to other parties within 6 weeks of lockout; within 14 days of the date of lockout; before the expiry of the date of the lockout

184. Industrial relations is that part of management, which is concerned with the manpower of the enterprise, whether machine operator, skilled worker or manager. Who wrote this? Allen Franders185. Mr V V Giri was the Union Labour minister in 1953.

186. Employees contribution of 12% includes pension fund at 8.33% and PF at 3.67%. True187. employees have the right to strike but no license to: commit violence.188. which of the following fall under the category of technological factors? Techniques of productions; modernization schemes; rationalization schemes189. in which parts of Maharashtra was a loss of 100 crores recorded during the year 1978? Bombay, Belapur, Pune190. industrial relations means relationship between management and workmen. True191. the responsibility for maintaining employer discipline should be entrusted to each and every manager. True192. for a strike to be legal, the following conditions should apply: six weeks should have passed after giving notice to the other party193. an aggrieved employee should be given the answer within 48 hours from the submission of grievance.

194. what is human relations in industry? To maintain relations between employers and the working class195. newly set up establishments are exempted from the provisions of the payment of bonus act for a period of 5 years during the infancy period.

196. a national commission shall consist of one person only to be appointed by the central government. TrueQuestion

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

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

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

Question Why have futures and options come into existence?Correct Answer To avoid business risk.

Question What is the objective of INCOTERMS?Correct Answer Arrange for transfer of risk from seller to buyer at a convenient place

Question For issuing a Documentary credit The applicant is required to provide to the issuing bank details aboutCorrect 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

Question In case of International trade, the role of a banker in case of a bill for collection is that of :-Correct Answer Routing the documents of transport along with other documents and apply the proceeds as per instructions

Question A Documentary credit issued on the strength of another documentary credit is known as ________.Correct Answer Back to Back credit

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

Question A Bill of exchange payable 45 days from date of shipment, is a means of ________ from seller to the buyer.Correct Answer CreditYour Answer Credit

Select The BlankQuestion The right without the obligation to sell a security is ________.Correct Answer Put OptionYour Answer Put Option

Multiple Choice Multiple AnswerQuestion Internationally only those currencies are in demandCorrect Answer Which are convertible , Which have liquidity confirmed in Euro market operationsYour Answer Which are convertible , Which have liquidity confirmed in Euro market operations

Multiple Choice Single AnswerQuestion Where does the word derivative originate from?Correct Answer MathematicsYour Answer Mathematics

Multiple Choice Multiple AnswerQuestion What facilities are proposed by Sodhani Committee for NRIs?Correct Answer Housing Loan to NRI staff of Indian Companies, , NRIs be permitted to invest in MMMFYour Answer Housing Loan to NRI staff of Indian Companies, , NRIs be permitted to invest in MMMF

True/FalseQuestion There is no difference between CIP and CIF contracts except the mode of transportation.Correct Answer TrueYour Answer True

True/FalseQuestion Cause of increase in cost of public issues Underwriting fees , selling commissionCorrect Answer TrueYour Answer True

Select The BlankQuestion Legalised invoice is also called ________ invoice.Correct Answer VisaedYour Answer Visaed

Match The FollowingQuestion Correct AnswerSwap price = Difference in prices of two legs of buying and sellingEuro Market = Market in Euro currenciesMaking market = Quoting rate for both buying and selling a currencySpread = Price difference between bid and offer Match The FollowingQuestion Correct AnswerTreasury management = Profit makingArbitraging = Rate disparityFutures, Options = Hedging instrumentsExchange Rate volatility = Speculation Multiple Choice Single AnswerQuestion If a dealer of securities is quoting rate as 200-250 then the rate 200 signifies which rate with reference to him?Correct Answer Bid rateYour Answer Bid rate

Multiple Choice Multiple AnswerQuestion Which document is used for transportation by air, rail, road, marine?Correct Answer Multimodal transport document , Combined Transport documentYour Answer Multimodal transport document , Combined Transport document

True/FalseQuestion Multimodal transport document is also known as "IntermobileTransport Document"Correct Answer TrueYour Answer True

Select The BlankQuestion Global capital market can be understood from the study of ________.Correct Answer Yen,Euro Dollar, Swiss Francs, USD market, Govt Borrowings within and outside the countryYour Answer Yen,Euro Dollar, Swiss Francs, USD market, Govt Borrowings within and outside the country

True/FalseQuestion With the advent of futures and Options there is no need for additional instruments of risk hedging.Correct Answer FalseYour Answer False

Select The BlankQuestion Even after liberalisation of exchange controls, the Euro sterling market remained volatile because of uncertainties in UK and gyrations of sterling against major ________ countriesCorrect Answer OECDYour Answer OECD

True/FalseQuestion Country risk analysis is a futile exercise in the background of cost of analysis.Correct Answer TrueYour Answer True

Select The BlankQuestion ________ is the agency of ICC which deals with the maritime crime.Correct Answer International Maritime BureauYour Answer International Maritime Bureau

Multiple Choice Multiple AnswerQuestion Export financeCorrect Answer Preshipment credit , Post shipment credit , Duty Draw backYour Answer Preshipment credit , Post shipment credit , Duty Draw back

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

Multiple Choice Single AnswerQuestion Financial management is complex process forCorrect Answer Companies which have international tradeYour Answer Companies which have international trade

Multiple Choice Multiple AnswerQuestion What are the main causes of fluctuations in Exchange rates?Correct Answer Government regulatios, fiscal policies, political instabilities , Market demand and supply, sentimentsYour Answer Government regulatios, fiscal policies, political instabilities , Market demand and supply, sentiments

True/FalseQuestion In an interest rate swap if the payment schedules are identical, only diffrence between the two payments is delivered.Correct Answer TrueYour Answer True

True/FalseQuestion ECGC offers isurance protection to Indian exporters againt payment risks.Correct Answer TrueYour Answer True

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

Multiple Choice Single AnswerQuestion 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 sale contract any time from May 2005 till Mid Sept 2005, for Euro 25000 or less, for maturity last week of Sept.

Multiple Choice Single AnswerQuestion Which authorities require the documents of International trade?Correct Answer Customs, Excise, Bank,Your Answer Ministry of finance

Multiple Choice Single AnswerQuestion The regulations under FEMA are contained in which manual?Correct Answer Exchange control ManualYour Answer Exchange control Manual

True/FalseQuestion In the forward rate quotations between two currencies, when one currency is at discount the other currency is at premium.Correct Answer TrueYour Answer True

Multiple Choice Single AnswerQuestion What is Risk Syndication facility?Correct Answer Sharing of risk of non payment by supplierYour Answer Sharing of risk of non payment by supplier

True/FalseQuestion Cross currency forward contract is not meaningful if original contract is in Rupees to USDCorrect Answer TrueYour Answer True

Multiple Choice Multiple AnswerQuestion What are the sources of raising funds for exports?Correct Answer Suppliers credit , ForfaitingYour Answer Suppliers credit , Forfaiting

Multiple Choice Single AnswerQuestion To whom is an AD required to report the cancellation of forward contracts?Correct Answer No one at all.Your Answer No one at all.

Select The BlankQuestion A Credit can be a confirmed credit only if it is also ________.Correct Answer An Irrevocable creditYour Answer An Irrevocable credit

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

Multiple Choice Multiple AnswerQuestion Which of these are considered as miscellaneous documents?Correct Answer Packing list , Weight certificateYour Answer Packing list , Weight certificate

Multiple Choice Multiple AnswerQuestion Which general risks are covered by any insurance policy for transit?Correct Answer Theft, loss , Damage, sea perils, non deliveryYour Answer Theft, loss , Damage, sea perils, non delivery

Multiple Choice Multiple AnswerQuestion The crisis in global capital market in 2002-04 was due toCorrect Answer Collapse of Enron , Collapse of Argentina's currency board , The war against terrorismYour Answer Collapse of Enron , Collapse of Argentina's currency board , The war against terrorism

Select The Blank

QuestionThe option which can be exercised on the maturity date and not before it is known as________.

Correct AnswerEuropean Option

Your AnswerEuropean Option

Multiple Choice Multiple Answer

QuestionWhat are the functions of Asian Development Bank?

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


QuestionThe integrated treasury branches of commercial banks handle which type of business?

Correct AnswerForex transactions, Derivatives transactions , Mney market and bond market transactions

Multiple Choice Single Answer

QuestionWhy have futures and options come into existence?

Correct AnswerTo avoid business risk.


QuestionWhat is the objective of INCOTERMS?

Correct AnswerArrange for transfer of risk from seller to buyer at a convenient place


QuestionFor issuing a Documentary credit The applicant is required to provide to the issuing bank details about

Correct AnswerThe purchase-sales contract, the mode of payment, the tenor of payment , The documents required, the names of authorities who would issue the documents


QuestionIn case of International trade, the role of a banker in case of a bill for collection is that of :-

Correct AnswerRouting the documents of transport along with other documents and apply the proceeds as per instructions

Select The Blank

QuestionA Documentary credit issued on the strength of another documentary credit is known as ________.

Correct AnswerBack to Back credit

True/False

QuestionThe Negotiating bank examines the documents submitted by the seller and makes payment if they comply the terms and conditions of the LC.

Correct AnswerTrue

Select The Blank

QuestionA Bill of exchange payable 45 days from date of shipment, is a means of ________ from seller to the buyer.

Correct AnswerCredit

Select The Blank

QuestionThe right without the obligation to sell a security is ________.

Correct AnswerPut Option


QuestionInternationally only those currencies are in demand

Correct AnswerWhich are convertible , Which have liquidity confirmed in Euro market operations


QuestionWhere does the word derivative originate from?

Correct AnswerMathematics


QuestionWhat facilities are proposed by Sodhani Committee for NRIs?

Correct AnswerHousing Loan to NRI staff of Indian Companies, , NRIs be permitted to invest in MMMF

True/False

QuestionThere is no difference between CIP and CIF contracts except the mode of transportation.

Correct AnswerTrue

True/False

QuestionCause of increase in cost of public issues Underwriting fees , selling commission

Correct AnswerTrue

Select The Blank

QuestionLegalised invoice is also called ________ invoice.

Correct AnswerVisaed

Match The Following

Question

Correct Answer

Your Answer

Swap price

Difference in prices of two legs of buying and selling

Difference in prices of two legs of buying and selling

Euro Market

Market in Euro currencies

Market in Euro currencies

Making market

Quoting rate for both buying and selling a currency

Quoting rate for both buying and selling a currency

Spread

Price difference between bid and offer

Price difference between bid and offer

Match The Following

Question

Correct Answer

Your Answer

Treasury management

Profit making

Profit making

Arbitraging

Rate disparity

Rate disparity

Futures, Options

Hedging instruments

Hedging instruments

Exchange Rate volatility

Speculation

Speculation


QuestionIf a dealer of securities is quoting rate as 200-250 then the rate 200 signifies which rate with reference to him?

Correct AnswerBid rate


QuestionWhich document is used for transportation by air, rail, road, marine?

Correct AnswerMultimodal transport document , Combined Transport document

True/False

QuestionMultimodal transport document is also known as "IntermobileTransport Document"

Correct AnswerTrue

Select The Blank

QuestionGlobal capital market can be understood from the study of ________.

Correct AnswerYen,Euro Dollar, Swiss Francs, USD market, Govt Borrowings within and outside the country

True/False

QuestionWith the advent of futures and Options there is no need for additional instruments of risk hedging.

Correct AnswerFalse

Select The Blank

QuestionEven after liberalisation of exchange controls, the Euro sterling market remained volatile because of uncertainties in UK and gyrations of sterling against major ________ countries

Correct AnswerOECD

True/False

QuestionCountry risk analysis is a futile exercise in the background of cost of analysis.

Correct AnswerTrue

Select The Blank

Question________ is the agency of ICC which deals with the maritime crime.

Correct AnswerInternational Maritime Bureau


QuestionExport finance

Correct AnswerPreshipment credit , Post shipment credit , Duty Draw back

Select The Blank

QuestionWhen a credit is made to available to additional beneficiary wholly or partly it is called as ________.

Correct AnswerTransferable credit


QuestionFinancial management is complex process for

Correct AnswerCompanies which have international trade


QuestionWhat are the main causes of fluctuations in Exchange rates?

Correct AnswerGovernment regulatios, fiscal policies, political instabilities , Market demand and supply, sentiments

True/False

QuestionIn an interest rate swap if the payment schedules are identical, only diffrence between the two payments is delivered.

Correct AnswerTrue

True/False

QuestionECGC offers isurance protection to Indian exporters againt payment risks.

Correct AnswerTrue

Select The Blank

QuestionThe credit which does not constitute a legally binding undertaking between the bank and the beneficiary is ________.

Correct AnswerRevocable Credit


QuestionMr 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 AnswerHe 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.


QuestionWhich authorities require the documents of International trade?

Correct AnswerCustoms, Excise, Bank,


QuestionThe regulations under FEMA are contained in which manual?

Correct AnswerExchange control Manual

True/False

QuestionIn the forward rate quotations between two currencies, when one currency is at discount the other currency is at premium.

Correct AnswerTrue


QuestionWhat is Risk Syndication facility?

Correct AnswerSharing of risk of non payment by supplier

True/False

QuestionCross currency forward contract is not meaningful if original contract is in Rupees to USD

Correct AnswerTrue


QuestionWhat are the sources of raising funds for exports?

Correct AnswerSuppliers credit , Forfaiting


QuestionTo whom is an AD required to report the cancellation of forward contracts?

Correct AnswerNo one at all.

Select The Blank

QuestionA Credit can be a confirmed credit only if it is also ________.

Correct AnswerAn Irrevocable credit


QuestionWhich non financial service does EXIM Bank give to an exporter?

Correct AnswerProvide Technical and administrtive support , Planning, promoting and developing export oriented Industries


QuestionWhich of these are considered as miscellaneous documents?

Correct AnswerPacking list , Weight certificate


QuestionWhich general risks are covered by any insurance policy for transit?

Correct AnswerTheft, loss , Damage, sea perils, non delivery


QuestionThe crisis in global capital market in 2002-04 was due to

Correct AnswerCollapse of Enron , Collapse of Argentina's currency board , The war against terrorism

Bottom of Form

MATCH

Intolerable riskDrop the investment project

Country risk analysisCost of evluation does not justify analysis

Stock market analysisBanks are ahead

Weightages %

Factors' values

2

Investment under Automatic routeForm ODA

Proposal under non automatic routerBI

Proposal under Normal route

Special Committee

Investment by partnerships not in core activityform ODI

3

Maturity of future

Time when actual commodity is delivered

Note issuance facilityEuronotes

Bearer security issued in currency other than that of the country of issueEurobonds

Margin on future

Peformance bond or security deposit

4

DepartureEXW

Main carriage paid

CFR

Main carriage unpaid

FAS

Arrival

DES

5

Issues linked with LIBOR,LIBID,LIMEAN

FRNs

Issue of bonds without fixed rate of interest, linked to short term interest rate in the global market

FloatingRate Note

Issue of loans internationally,through arranger, underwriter,co manager, for a large amount for sharing risk of lending

Syndicated Loans

Equity issues in the foreign markets either as direct investments or portfolio investments.American or Global Depository Receipts

6

LastStageForm a single currency

The First stage in the Europeand and Monetary Union (EMU)

Free movement of capital in EC

Stage II in EMU

Establishment of European Monetary Institute

Stage III in EMU

Members to meet the convergence criteria and fix the exchange rates

7

Cancellation of contracts above USD 500000ECD

Forward Purchase contract currency at premiumPresume earliest delivery

Forward purchase contract currency at discountPresume latest delivery

Exchange marginsFED

8

Bond basis to money market basis

Bond basisx 360/365

3 months LIBOR +2 % PA

Floating rate

15% P.A.

Fixed rate

Money market basis to bond basis

Money market basis x 365/360

9

European option

On or after maturity

Out of money

Loss

In the money

Profit

American option

Before maturity

10

Euro as a currency note/coin

2002

IBRD

World Bank

Collapse of IMF administered fixed exchange ratesEarly 1970s

No International control on Exchange ratesMid 80s

11

Swap priceDifference in prices of two legs of buying and selling

Euro MarketMarket in Euro currencies

Making marketQuoting rate for both buying and selling a currency

SpreadPrice difference between bid and offer

12

Treasury managementProfit making

Arbitraging

Rate disparity

Futures, Options

Hedging instruments

Exchange Rate volatility

Speculation

13

Exchange marginsFED

Cancellation of contracts above USD 500000ECD


Forward purchase contract currency at discountPresume latest delivery

14

Certifiate of OriginExport Promotion Council

PP FormExport Declaration form

Health CertificateFumigation certificate

Certificate of InspectionAs per importers requirement

15

NetherlandsGuilder

Germany

Mark

Ireland

Punt

Luxemberg

Franc

Question Tranche' is a managed issue of securities in smaller denominations.

Correct Answer True

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

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

Question The creditworthiness of futures exchange is maintained through imposition of ________.

Correct Answer Margin

Question After the second world war many countries adopted the route of ________ to give facelift to sagging economies.

Correct Answer Devaluation of their currencies

Question FEDAI does not require RBI permission to frame and revise rules of business

Correct Answer False

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

Correct Answer Square

Question Underwriters are more attracted to NIF issue because of :-

Correct Answer Lesser risks , Increased returns , Easy marketability features

Question Import finance is nomally available at rates of interest cheaper than domestic finance rates.


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

Correct Answer Ensure orderly exchange arrangement, promote stable exchange rate

Question Export finance

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

Question ________ enables bankers to extend purchase, negotiation or discount of export bills.

Correct Answer Post shipment credit guarantee

Match the following

Question

Correct Answer

Intolerable risk

Drop the investment project

Country risk analysisCost of evluation does not justify analysis

Stock market analysisBanks are ahead

Weightages %

Factors' values

Question In mid 1992 ________ rejected the ratification of Maastricht treaty

Correct Answer Denmark

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

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

Question What is the volume of the world's total speculative transactions?

Correct Answer Roughly 90 % of the total turnover

Question ECGC offers isurance protection to Indian exporters againt payment risks.

Correct Answer True

Question CFR = FOB plus freight paid by seller + insurance paid by seller.


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

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

Question What is the meaning of right to buy or sell the future contract?

Correct Answer An Option

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

Correct Answer Construction works policy

Question An Indian importing goods from USA pays dollars in India.


Question An Indian exporting goods to New York receives dollars in New York.

Correct Answer True

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

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

Correct Answer JV/WOS

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

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

Correct 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

Question Legalised invoice is also called ________ invoice.

Correct Answer Visaed

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

Question For opening JV/WOS in Nepal, Bhutan, the ceiling for financial commitment per annum is ________.

Correct Answer Rs. 350 crore

Question The price at which a person may purchase or sell the underlying ________.

Correct Answer Exercise or strike price

Question Installment credit is issued for specific quantities of goods to be shipped every week or month.

Correct 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

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

Question Transfer of funds for investment abroad is allowed freely.

Correct Answer True

Question In which currency can the EEFC account be opened?

Correct Answer Any Convertible currency

Question In International trade, Advance payment means :-

Correct Answer Providing up front cash

Question Who books an option forward contract?

Correct Answer Party who is not definite about crystallisation of delivery date

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.

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

Question How does ICC access Govt and influence Governmental decisions?

Correct Answer Through national committees

Match the following:

Question

Correct Answer

Investment under Automatic route

Form ODA

Proposal under non automatic route

RBI

Proposal under Normal route

Special Committee

Investment by partnerships not in core activityform ODI

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

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




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

Correct Answer International Maritime Bureau

Question Which of them are special funding facilities of IMF ?

Correct Answer Buffer Stock Facility

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

Correct Answer True

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

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

Correct Answer US Dollar


Question

Correct Answer

Intolerable risk

Drop the investment project

Country risk analysis

Cost of evluation does not justify analysis

Stock market analysis

Banks are ahead

Weightages %

Factors' values

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

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

Correct Answer Monday

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

Correct Answer Other managed Floating


Question

Correct Answer

Maturity of futureTime when actual commodity is delivered

Note issuance facilityEuronotes

Bearer security issued in currency other than that of the country of issueEurobonds

Margin on futurePeformance bond or security deposit

Question Postal receipt is an acknowledgement of receipt of goods, a quasi negotiable instrument.


Question The Prominent non banking financial institutions participating in the FOREX markets are Pension funds, mutual funds, insurance Cos.

Correct Answer True

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

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

Correct Answer USD 1 trillion

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

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

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

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

Correct Answer American Dollar

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

Correct Answer Economies

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

Correct Answer US Dollar

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

Correct Answer Control by Government'

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

Correct Answer Brussels

Question What is Risk Syndication facility?

Correct Answer Sharing of risk of non payment by supplier

Question If ERD > IRD hen exporter should availa Rupee finance

Correct Answer True

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



Question Funding Options in domestic yen market are Futures, FRAs, Call and put options.

Correct Answer True

Question There is no difference between CIP and CIF contracts except the mode of transportation.

Correct Answer True

Question Financial management is complex process for

Correct Answer Companies which have international trade

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

Question A Credit can be a confirmed credit only if it is also ________.

Correct Answer An Irrevocable credit

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


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

Question Export finance

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

Question Internationally only those currencies are in demand

Correct Answer Which are convertible , Which have liquidity confirmed in Euro market operations

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

Question What does the word '"Tombstone" stand for?

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

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

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

Question Examples of hedge are:

Correct Answer Buy when you are having short position

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

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

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

Correct Answer Discount

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

Question The capital market is said to be volatile when

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

Question JV means Joint venture and WOS means World of Security.


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

Question Integrated branches of Commercial banks handle forex transactions as well as options, swaps, futures, arbitrage operations

Correct Answer True

Question JV means Joint venture and WOS means World of Security.


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

Correct Answer 0.025

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

Question In the syndicated loan arrangement the borrower has to execute :-

Correct Answer Single Principal loan agreement

Question At Least one principal Lender bank is essential for issue of the ADR or GDR.


Question US financial system is the freest system because

Correct 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

Question Till August 1994 India was following the Indirect Methodof Rate quotation.


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

Correct Answer Overseas investment facility

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

Question What are the powers of money changers?

Correct Answer Purchase and sell foreign currency notes and travellers cheques

Question Any company involved in foreign exchange transactions is exposed to ________ risk.

Correct 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

Question What are the activities of ICC?

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

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

Correct Answer True

Question The currency swaps used ________.

Correct Answer To lower the risk of currency exposure

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.


Question Which factors affect the exchange rates in short time period?

Correct Answer Demand and supply, interest rates, inflation, , Sentiment, Speculation

Question

Correct Answer

Departure

EXW

Main carriage paidCFR

Main carriage unpaidFAS

ArrivalDES

DES

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

Question In red clause credit some clauses are printed in Red ink.

Correct Answer True



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

Correct Answer USD 1=Rs 50.5000

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

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

Question Who can issue the Certificate of Inspection?

Correct 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

Question In developed markets, speculators play important role in determining the trend of currency rates.

Correct Answer True

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

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

Correct Answer Fixed date

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

Correct Answer Premium

Question These are the parties to the documentary credit :-

Correct Answer Negotiating Bank, advising bank , Reimbursing bank, Confirming bank

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

Question Fixed, Floating or Limited flexibility are used in the context of

Correct Answer Exchange Rates

Question In mid 1992 ________ rejected the ratification of Maastricht treaty

Correct Answer Denmark

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

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

Correct Answer No one at all.

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

Correct Answer Construction works policy

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



Question What are the sources of raising funds for exports?

Correct Answer Suppliers credit , Forfaiting

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

Correct Answer Discount

Question Name the common forex derivatives :-

Correct Answer Options, futures

Question Country risk analysis is a futile exercise in the background of cost of analysis.

Correct Answer True

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


Question

Correct Answer

Issues linked with LIBOR,LIBID,LIMEAN = FRNsIssue of bonds without fixed rate of interest, linked to short term interest rate in the global market=

FloatingRate NoteIssue of loans internationally,through arranger, underwriter,co manager, for a large amount for sharing risk of lending =

Syndicated LoansEquity issues in the foreign markets either as direct investments or portfolio investments =

American or Global Depository ReceiptsQuestion Proforma Invoice, Commercial Invoice, Consaular Invoice are which type of documents?

Correct Answer Commercial Documents

Question Charter party bills of lading are generally not acceptable to bankers as security because Sea Charters are full of problems.

Correct Answer True

Question Why does a Transaction exposure arise?

Correct Answer Trading flows , Dividend or capital flows

Question If a dealer of securities is quoting rate as 200-250 then the rate 200 signifies which rate with reference to him?

Correct Answer Bid rate

Question A Documentary credit issued on the strength of another documentary credit is known as ________.

Correct Answer Back to Back credit

Question Internationally only those currencies are in demand

Correct Answer Which are convertible , Which have liquidity confirmed in Euro market operations

Question Tranche' is a managed issue of securities in smaller denominations.

Correct Answer True

Question Funding Options in domestic yen market are Futures, FRAs, Call and put options.

Correct Answer True

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

Question Which events can lead to materialisation of country risk?

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

Question What is a 'speculator'?

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

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

Correct Answer USA

Question What does the word '"Tombstone" stand for?

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

Question What do you understand by Commercial Risk?

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

Question Legalised invoice is also called ________ invoice.

Correct Answer Visaed

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

Correct Answer Monday

Question The American Dollar market comprises of the domestic segment of USD the offshore segment of USD.

Correct Answer True


Question

Correct Answer

LastStage

Form a single currency

The First stage in the Europeand and Monetary Union (EMU)

Stage II in EMU

Establishment of European Monetary Institute

Stage III in EMU

Members to meet the convergence criteria and fix the exchange rates

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

Correct Answer Gold

Question An Indian exporting goods to New York receives dollars in New York.

Correct Answer True

Question The factors which affect the performance of an option are:-

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

Question Which contracts are used for transportation by road?

Correct Answer FCA , CPT

Question Bid rate is bidders buying rate and offered rate is bidders selling rate.

Correct Answer True


Question

Correct Answer

Cancellation of contracts above USD 500000

ECD


Forward purchase contract currency at discountPresume latest deliveryPresume latest delivery

Exchange margins

FEDAI

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

Correct Answer Other managed Floating

Question Which two countries were included to convert the group of five into the group of seven?

Correct Answer Italy , Canada

Question Who can open an EEFC account?

Correct Answer Individuals , firms, companies, resident in India

Question Method of advance payment is not disadvantageous to :-

Correct Answer The seller

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

Question What do you mean by a derivative?

Correct Answer One which has been derived from other fundamental instruments

Question "Currency Snake"

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

Question Postal receipt is an acknowledgement of receipt of goods, a quasi negotiable instrument.


Question In which currency can the EEFC account be opened?

Correct Answer Any Convertible currency

Question Criteria for Direct investment abroad under normal route :-

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

Question ________ enables bankers to extend purchase, negotiation or discount of export bills.

Correct Answer Post shipment credit guarantee

Question For setting up a joint venture or WOS abroad, Indian banks operating in India need a clearance :-

Correct Answer Under Banking Regulation Act

Question Financial management is complex process for

Correct Answer Companies which have international trade

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.


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

Correct Answer American Dollar

Question Terms in an Irrevocable credit can not be alterred at all.




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

Question The currency notes and coins of individual countries participating in "Euro" have ceased to be a legal tender from ________.

Correct Answer 2002

Question Partnership firm not eligible for Overseas Direct Investment needs to apply to RBI Approval in form ________.

Correct Answer ODI

Question Where does the word derivative originate from?

Correct Answer Mathematics

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

Correct Answer Cash Incentives

Question The financial system of any country consists of

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

Question Association of several scheduled commercial banks for forex business is ________.

Correct Answer Foreign Exchange Dealers Association of India


Correct Answer True

Question Combined Certificate of Origin and Value are required by ________.

Correct Answer Commonwealth Countries

Question The creditworthiness of the futures seller and the futures buyer is ________ because of the presence of the Futures exchange.

Correct Answer Irrelevant

Question When interest rate changes by 0.05 per cent then it has changed ________ basis points.

Correct Answer 50

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

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

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.

Question Major investors in NIF are :-

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

Question With the advent of futures and Options there is no need for additional instruments of risk hedging.


Question During the fixed rate exchange system prevailing in India, the intervention currency was ________.

Correct Answer Sterling Pound

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

Question What is a bill of lading?

Correct Answer Transport document representing movement of goods by water.

Question Which controls are not permitted by IMF?

Correct Answer Current account controls

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

Question Yankee bond is issued for domestic borrowers.




Question An AD can book a forward contract for a part of the amount of Sale Contract

Correct Answer True

Question Sterling FRNs are issued in Europe, USA ,Asia



Question

Correct Answer

Bond basis to money market basisBond basisx 360/365

3 months LIBOR +2 % PA

Floating rate

15% P.A.

Fixed rate

Money market basis to bond basisMoney market basis x 365/360

Question In Indian interbank market forward rates are generally quoted on the basis of ________.

Correct Answer Calendar month

Question In case of syndication of loans the amount of loan and currency is finalised by :-

Correct Answer Borrower

Question European currency Unit

Correct Answer Basket of Currencies of members of EMS

Question The counter party in option is ________.

Correct Answer The exchange

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

Question EEFC account holder is allowed to have ________ facility.

Correct Answer Cheque book and nomination

Question A Usance bill of exchange may be drawn in 2 ways. Which are they?

Correct Answer Documents against payment , Documents against acceptance

Question Why have futures and options come into existence?

Correct Answer To avoid business risk.

Question In an interest rate swap if the payment schedules are identical, only diffrence between the two payments is delivered.

Correct Answer True

Question What are the main causes of fluctuations in Exchange rates?

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

Question What do you understand by a swap?

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

Question Import finance is nomally available at rates of interest cheaper than domestic finance rates.


Question A weight list, a packing list used in international trade are which type of documents?

Correct Answer Operational Documents

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

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

Question Which Indian Co. is not eligible to make investment abroad under automatic route?

Correct Answer Co which is caution listed by RBI

Question Naked position is when investor does not hedge against market risk.

Correct Answer True

Question In DAF, the frontier means :-

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

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

Correct Answer USD 1 trillion

QuestionCorrect AnswerYour Answer

European optionOn or after maturityOn or after maturity

Out of moneyLossProfit

In the moneyProfitLoss

American optionBefore maturityBefore maturity

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

Correct Answer Brussels

Question PP Form is required when exports are made to any country by post parcel on value payable basis.


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

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

Correct Answer 26

Question Indian Co. intending to make investment under Automatic route needs to submit form ________ to RBI with enclosures.

Correct Answer ODA

Question In International trade, Advance payment means :-

Correct Answer Providing up front cash

Question If ERD > IRD hen exporter should availa Rupee finance

Correct Answer True

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

Correct Answer Short Form

Question ________Bill of lading must specify the name of the ship.

Correct Answer "On Board"


Question

Correct Answer

Euro as a currency note/coin

2002

IBRD

World Bank

Collapse of IMF administered fixed exchange ratesEarly 1970s

No International control on Exchange rates

Mid 80sMid 80s

Question What are the main causes of fluctuations in Exchange rates?

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

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

Question What is the objective of INCOTERMS?

Correct Answer Arrange for transfer of risk from seller to buyer at a convenient place


Question

Correct Answer

Forfaiting

Discounting export receivables

Buyer's Credit

Available to Buyer abroad

Seller's Credit

Available to seller abroad

Usance LC

Seller paid only on maturity date



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

Correct Answer True

Question Which two countries were included to convert the group of five into the group of seven?

Correct 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

Question What do you mean by a derivative?

Correct Answer One which has been derived from other fundamental instruments

Question How does ICC help poor countries?

Correct 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 protectionnism had increased

Question Charter party bills of lading are generally not acceptable to bankers as security because Sea Charters are full of problems.

Correct Answer True



Question What is Sovereign Risk?

Correct Answer Risk of lending to the government of a country

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.



Correct Answer True

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

Question In developed markets, speculators play important role in determining the trend of currency rates.

Correct Answer True



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

Question In a coupon swap the receiver is the one who receives fixed rate of interest.

Correct Answer True

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.

Question With reference to ECB, fund raising activity includes :-

Correct Answer Floating rate notes, bonds, debentures , Syndicate loans, issue of shares

Question A Dealer Buys commodity in Bombay and sells it in Delhi due to