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Advanced Financial Management 2 MCQ Questions & Answers

Advanced Financial Management 2 MCQs : This section focuses on the "Advanced Financial Management 2". These Multiple Choice Questions (MCQs) should be practiced to improve the Advanced Financial Management 2 skills required for various interviews (campus interview, walk-in interview, company interview), placement, entrance exam and other competitive examinations.




Question 1

Capital Market deals with __________

A. Short Term Funds
B. Medium and Long Term Funds
C. Both a and b
D. None of the Above

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Question 2

In Secondary segment of Capital Market ____________

A. Fresh Capital is raised
B. Trading of outstanding securities is done
C. Both a & b
D. None of the above

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Question 3

Which of the following is a role of Capital Market?

A. Capital Formation
B. Promotion of Industrial Growth
C. Development of backward areas of the country
D. All of the Above

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Question 4

Funds can be raised in Primary Market through

A. Public Issue by Prospectus
B. Private Placements
C. Rights Issues
D. All of the Above

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Question 5

Primary Market is a market for :

A. New Issues
B. Outstanding Securities
C. Land Records
D. None of the above

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Question 6

When an organization opts to convert private capital in to public capital, it is called_____________

A. Going Out
B. Being Open
C. Being Listed
D. Going Public

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Question 7

Bonus Shares enable the company to restructure its capital.

A. TRUE
B. FALSE
C. none
D. none

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Question 8

Which of the following enables issuers to reap benefits arising from price and demanddiscovery?

A. Public Issue by Prospectus
B. Book Building
C. Listing
D. None of the above

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Question 9

Which one of the following is not a feature of a Stock Exchange?

A. Organised Market
B. Dealing only Through Authorised Members
C. Necessary to remain present physically for dealing
D. Necessary to obey Rules and Bye-laws

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Question 10

SENSEX is an Index of which Stock Exchange?.

A. NSE
B. OTCEI
C. MCX
D. None of the above

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Question 11

Inclusion of a security in the official list of a stock exchange is called _________ and forthat the company has to apply with ___________

A. Listing, Managing Committee of Stock Exchange
B. Enrollment, Managing Committee of Stock Exchange
C. Listing, Board of Directors of Stock Exchange
D. Registration, ROC

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Question 12

____________ was set up, as a strong need was felt to protect the interest of investorsand to have a systematic and organized working of the securities market in India.

A. Bombay Stock Exchange
B. National Stock Exchange
C. Over the Counter Exchange of India
D. Securities and Exchange Board of India

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Question 13

Collateral value of eligible Listed Securities is considered on __

A. Average market price
B. Marked to market basis
C. Reputation of the promoters
D. None of the above

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Question 14

SBTS stands for

A. Securities Buying and Trading Society
B. Software Based Trading Services
C. Selling and buying through screen
D. Screen Based Trading System

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Question 15

Which is a mean to reduce the floating equity stock in the market?

A. Sell off
B. Negotiate
C. Buy Back
D. All of the above

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Question 16

Which Stock Exchange of India was the first to grant permission to brokers for internettrading?

A. National Stock Exchange
B. Bombay Stock Exchange
C. Ahmedabad Stock Exchange
D. Kolkata Stock Exchange

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Question 17

Which Stock Exchange of India is based on the model of NASDAQ?

A. BSE
B. NSE
C. ASE
D. OTCEI

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Question 18

At present securities are issued in which form?

A. Rematerialised
B. Dematerialized
C. Bank Credit
D. None of the Above

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Question 19

One of the features of Capital Market is ‘Ready and Continuous market’ which provides_____________ to the investors.

A. Safety
B. Long term Guarantee
C. Liquidity
D. None of the above

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Question 20

In ____________ market fresh capital is raised.

A. Primary
B. Secondary
C. Intermediary
D. National

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Question 21

Which is the market for financial assets that are close substitutes for money?

A. Monetary Market
B. Money Market
C. Capital Market
D. Currency Market

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Question 22

Return on Treasury Bills is ___________

A. Coupon Rate
B. Difference between Issue Price and Par Value
C. Negotiated
D. All of the above

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Question 23

Commercial Paper is generally issued by:

A. Reputed Corporates
B. Reputed and highly rated Corporates
C. RBI on behalf of the Central Government
D. None of the above

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Question 24

Which Money Market instrument is a time deposit of specific maturity and issued inbearer form?

A. Commercial Paper
B. Commercial Bill
C. Certificate of Deposit
D. Call Money

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Question 25

In which Money Market instrument default risk is absent?

A. Commercial Paper
B. Certificate of Deposit
C. Treasury Bills
D. Inter Corporate Deposits.

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Question 26

Which of the following is considered to be the key segment of Indian Money Market?

A. Call Money
B. Commercial Bill
C. Inter-Corporate Deposit
D. Inter-Bank Participations

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Question 27

Which of the following is an important tool to finance credit sales?

A. Commercial Bill
B. Treasury Bill
C. Commercial Paper
D. Certificate of Deposit

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Question 28

Credit Rating performs the function of credit risk evaluation reflecting the borrower’sexpected capability to repay the debt as per terms of issue.

A. TRUE
B. FALSE
C. none
D. none

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Question 29

Credit Rating is beneficial to :

A. Subscribers
B. Regulators
C. Issuers
D. All of the above

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Question 30

First Credit Rating Agency of India is ____________

A. CRISIL
B. CARE
C. CARE
D. Moody’s Investor Service

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Question 31

CARE stands for :

A. Credit Appraisal and Research Enterprise
B. Credit Analysis and Research Enterprise
C. Credit Analysis and Research Limited
D. Credit and Rating Enterprise.

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Question 32

Which of the following is not a part of rating methodology?

A. Business Analysis
B. Financial Analysis
C. Management Evaluation
D. Subscriber Evaluation

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Question 33

ICRA was promoted by _____________ jointly with other leading investmentinstitutions, commercial banks and financial service companies.

A. ICICI
B. IFCI
C. IDBI
D. LIC

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Question 34

CRISIL was set up in which year?

A. 1988
B. 1987
C. 1986
D. 1985

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Question 35

A statement demonstrating the movement of funds into and out of the business duringthe course of accounting period is known as ___________

A. Cash Flow Statement
B. Fund Flow Statement
C. Adjusted Profit & Loss Statement
D. Statement of changes in Working Capital

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Question 36

Analysis of funds is rightly called an Analysis of __________

A. Working Capital
B. Current Assets
C. Current Liabilities
D. None of the above

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Question 37

Which of the following rules stands true while preparation of Schedule of changes in workingcapital? 1) An increase in current assets increases working capital. 2) An increase in current assets decreases working capital. 3) An increase in current liabilities decreases working capital. 4) An increase in current liabilities increases working capital

A. 1 and 3
B. 1 and 4
C. 2 and 4
D. 1, 2,3 and 4

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Question 38

Among the following items, which represents the source of fund?

A. Increase in Capital
B. Borrowing / Loan
C. Profit from Business Operations
D. All of the above

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Question 39

Fund Flow Statement is also known as:

A. Statement of Funds Flow
B. Statement of Sources and Application of Funds
C. Statement of Sources and uses of Funds
D. All of the above

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Question 40

Which of the following are sources of funds? 1.Issue of Bonus Shares 2.Issue of Shares against the purchase of Fixed Assets 3. Conversion of Debentures into Shares 4.Conversion of Loans into Shares

A. A and C
B. A and D
C. All of the above
D. None of the above

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Question 41

Which of the following statements is true? 1. If the amount of good will increases during current year, the difference is treated as purchase of goodwill. 2. If the amount of good will decreases during current year, It will treated as written off.

A. Only 1
B. Only 2
C. Both 1 and 2
D. None of the above

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Question 42

Which of the following are treated as long term investments?

A. Non-current Investments
B. Trade Investments
C. Sinking Fund Investments
D. All of the above

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Question 43

The balance of fixed assets of Breej Ltd. at the end of 2018 and 2019 were Rs 5,70,800 and Rs 6,15,300. During the year 2019 a machinery costing Rs 60,000 was sold. Determine the purchase of fixed assets.

A. Rs. 1,04,500
B. Rs. 1,40,500
C. Rs. 1,64,500
D. Rs. 44,500

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Question 44

For Ram Industries, the balance of property has beenRs 20,000 and Rs 17,000 in 2018 and 2019 respectively. The profit on sale of property of Rs 2000 is credited to Capital Reserves Account. New property costing Rs 5000 bought in 2019. Determine sale proceeds forproperty.

A. Rs. 3,000
B. Rs. 10,000
C. Rs. 7,000
D. Rs. 15,000

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Question 45

For Meghal Industries Ltd. opening balance for Provision for Taxation is Rs. 18,000 and closing balance is Rs. 15,000. During the year Taxed paid wereRs. 10,000. What is the current year’s Provision for Taxation made from the profit?

A. Rs. 3,000
B. Rs. 13,000
C. Rs. 7,000
D. Rs. 23,000

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Question 46

Which of the following are Non-current Assets?

A. Land, Building and Plant
B. Bills Receivable
C. Debtors
D. Pre-paid Expenses

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Question 47

Which of the following are Current Liabilities?

A. Sundry Creditors
B. Bank Overdraft
C. Outstanding Salaries
D. All of the Above

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Question 48

When a part of the Fixed Assets is sold during the year, the Profit on sale is shown onthe credit side of which Account?

A. Adjusted Profit and Loss Account
B. Profit and Loss Account
C. Fixed Assets Accounts
D. Liabilities Accounts

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Question 49

The Funds Flow and Cash Flow statements fail to give a clear idea about profitability ofthe company.

A. TRUE
B. FALSE
C. none
D. none

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Question 50

Among the following items which item is shown on the debit side of Adjusted Profit andLoss Account?

A. Depreciation and other Non-cash Adjustments
B. Appropriation of Profit
C. Provision for Taxation
D. All of the Above

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Question 51

Among the following items which does NOT represent the Application of Funds?

A. Payment of Interim Dividend
B. Payment of Supervisor’s Salary
C. Issue of Share Capital
D. Payment of Taxes

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Question 52

Until February 1973, which one of the following was prevalent in World MonetarySystem?

A. Free Floating Exchange Rate System
B. Adjustable Peg Exchange Rate System
C. Bench marking Exchange Rate System
D. None of the above

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Question 53

Which one of the following is NOT referred to as ‘Major’ or ‘Hard’ Currency?

A. US Dollar
B. French Frank
C. Euro
D. India Rupee

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Question 54

Rs. 75.17/USD is which type of quotation?

A. Indirect Quote
B. Direct Quote
C. Bilateral Quote
D. Cross Quote

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Question 55

In a two way foreign exchange quotation, the difference between ask and bid prices iscalled ____________

A. Difference
B. Margin
C. Spread
D. None of the above

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Question 56

Below data is available: Spot Exchange Rate 6 Month’s Forward Rate Rs./USD 75.17 Rs. 75.00 So, the forward rate is at ___________________

A. Premium
B. Discount
C. At Par
D. None of the above

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Question 57

From the data given below which option is true?Spot 1 month’s Forward Rs./GBP 94.85 94.95

A. 1 month’s forward is at 1.27% premium
B. 1 month’s forward is at 0.11% premium
C. 1 month’s forward is at 1.27% discount
D. 1 month’s forward is at 0.11% discount

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Question 58

The rate of exchange of two currencies on the basis of exchange quotes of other pairs of currencies are derived when a quote of home currency (or desired currency) to any other currency is not available in the Foreign Exchange market is called ____________

A. Direct Quote
B. Exchange Rate
C. Cross Rate
D. Dependent Rate

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Question 59

Which of the below mentioned contract is a standardized contract?

A. Futures Contract
B. Forward Contract
C. Both a and b
D. None of the above

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Question 60

An Option which can be exercised only on the maturity date is known as __________

A. Put Option
B. American Option
C. European Option
D. Call Option

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Question 61

There is a close link between the interest rates in two countries and the forward ratepremium or discount. The theory about this is :

A. Purchasing Power Parity
B. Expectations Theory
C. Covered Interest Arbitrage and interest Rate Parity
D. None of the above.

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Question 62

According to Fisher effect, the nominal rate is equal to the real interest rate plus anadjustment for ______________

A. FD Rate
B. Spot Rate
C. Inflation
D. Premium

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Question 63

The acquisition of existing firms or plants as a means of FDI is called ___________

A. Green Field Investments
B. Dark Zone Investments
C. Growing Zone Investments
D. Brown Field Investments

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Question 64

McDonald’s purchasing farms in India to grow potatoes is which type of FDI?

A. Green Field
B. Agriculture
C. Vertical
D. Horizontal

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Question 65

When an American Company acquires a division or unit of Indian company, the US issaid to be a ______________ Country.

A. Sending
B. Receiving
C. Promoting
D. None of the above

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Question 66

An act of buying currency in one market at a lower price and selling it in another at higher price resulting in equilibrium in exchange rates of different currencies is called _________________

A. Hedging
B. Speculation
C. Trading
D. Arbitrage

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Question 67

Which of these are considered as nerve centres of foreign exchange activity.

A. London, New York and Tokyo
B. London, New Jersey and Mumbai
C. London, New York and Moscow
D. London, New York and Delhi

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Question 68

Who are key participants of Foreign Exchange Market?

A. Importers & Exporters
B. Traders and Foreign Exchange Brokers
C. Speculators
D. All of the above

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Question 69

When the exposed position in a foreign currency is covered through borrowing orlending in the money market, it is called ______________

A. Borrowing-Lending technique
B. Futures Contract
C. Currency Swap
D. Money Market Hedge

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Question 70

An efficient Capital Market provides operational efficiency through__

A. Simplified transaction procedure
B. Lowering settlement timings
C. Lowering transaction costs
D. All of the above

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Question 71

Full form of WDM segment is ______

A. Wholesale Debt Market
B. Wholesale Debenture Market
C. Wholesale Demand Management
D. Wholesale Deposit Market

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Question 72

A facility of carrying forward the transaction from one settlement to another in BSE wascalled _______

A. Carry forward
B. Badla
C. Vayda
D. Forward

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Question 73

For Book Building Process a merchant banker is appointed as a __________

A. Book Keeper
B. Book Writer
C. Book Runner
D. None of the Above

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Question 74

Which one of the below is NOT a category of participant in the Primary Capital Market?

A. Issuers of securities
B. Investors in securities.
C. Traders of securities
D. Intermediaries

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Question 75

Which of the below financial product / instrument cab be traded in the secondarymarket?

A. Equity Shares
B. Commercial Paper
C. Bonds
D. All of the above

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Question 76

__________________ is a benchmark Indian Stock Market Index that represents the weighted average of 50 of the largest Indian Companies listed on the National Stock Exchange.

A. SENSEX
B. NIFTY
C. SIFTY
D. INDEX

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Question 77

What is the full form of ECB?

A. External Commercial Borrowings
B. External Commercial Bonds
C. Equity Capital Balance
D. None of the Above

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Question 78

For listed companies the prices are publically arrived at on the basis of demand and supply and hence stock exchange quotations reflect the real value of the security.

A. TRUE
B. FALSE
C. none
D. none

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Question 79

SEBI started its actual functioning when__

A. It was set up in 1988
B. RBI gave it a permission in 1989
C. SEBI Act was passed in 1992
D. It was registered

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Question 80

Full Form of NEAT is

A. National Exchange for Automated Trading
B. National Equity Automated Trading
C. National Exchange for Analysis and Trading
D. None of the Above

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Question 81

What is the full form of NSDL

A. National Stock Dealing Ltd.
B. National Securities Dealers Ltd.
C. National Securities Depository Ltd.
D. National Stock and Debt Ltd.

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Question 82

Market making is a unique concept of which stock exchange of India?

A. NSE
B. BSE
C. ISE
D. OTCEI

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Question 83

Capital Market in India plays a role in developing integration among:

A. Real Sector and Financial Sector
B. Long-term and Short-term interest costs
C. Equity and Debt Instruments
D. All of the above

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Question 84

Sentence A – Through Rights issue fresh capital can be raised andSentence B – Through a Bonus Issue Fresh capital can be raised.

A. Only Sentence A is true
B. Both Sentences A and B are true
C. Only Sentence of B is true
D. Both Sentences A and B are False

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Question 85

Book Building is basically ____________ of shares.

A. An auction
B. A process of listing
C. Credit rating
D. None of the Above

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Question 86

In the process of Book Building if the public portion gets oversubscribed,__

A. The size of the Public Portion is raised
B. The allotment is made on a proportionate basis
C. The placement portion is cancelled
D. None of the above

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Question 87

Stock Futures, Stock Options, Index Futures and Index Options are ___________

A. Bonds
B. Combination of Equity and Debt
C. Equity Derivatives
D. None of the Above

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Question 88

Which Stock Exchange of India was set up with an objective to meet the currentinternational standards of securities market?

A. BSE
B. ISE
C. OTCEI
D. NSE

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Question 89

To provide a focal point for central bank (RBI) intervention for influencing liquidity andgeneral level of interest rates in the economy is an important function of

A. Secondary Market
B. Money Market
C. Capital Market
D. Forex Market

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Question 90

Indigenous bankers and money lenders are constituents of _____________

A. Organised Money Market
B. Organised Stock Market
C. Unorganised Money Market
D. None of the Above

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Question 91

The purchase and sell of which of the following instrument is effected throughSubsidiary General Ledger (SGL) account?

A. Treasury Bills
B. Options
C. Equity Shares
D. All of the Above

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Question 92

Minimum Subscription amount of a Certificate of Deposit is ___________

A. Rs. 25,000
B. Rs. 50,000
C. Rs. 1,00,000
D. Rs. 5,00,000

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Question 93

Which instrument was introduced in year 1990 with a view to enable highly ratedcorporate borrowers to diversify their sources of short-term borrowings?

A. Certificate of Deposit
B. Commercial Paper
C. Commercial Bill
D. None of the Above

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Question 94

When money is lent for more than a day and up to 14 days it is called as __________

A. Demand Money
B. Call Money
C. Put Money
D. Notice Money

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Question 95

What type of relationship is there between call rates and short-term money marketinstruments such as CDs and CPs?

A. Inverse
B. Direct
C. Negative
D. None of the Above

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Question 96

_______________ is an important tool to finance credit sales?

A. Commercial Bill
B. Commercial Paper
C. Certificate of Deposit
D. None of the Above

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Question 97

Which instrument involves high risk and high returnsand helps corporates in solvingtemporary capital crisis without many formalities?

A. Equity Shares
B. Term Loan
C. Inter-corporate Deposits
D. All of the Above

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Question 98

Which of the following are money market instruments?

A. Treasury Bills
B. Commercial Bills
C. Call Money
D. All of the Above

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Question 99

What is the full form of CRISIL?

A. Credit Rating and Investment Services of India Limited
B. Credit Rating Information Services of India Limited
C. Credit Rating Institution for Small Industries Limited
D. Credit Rating Information Sector of India Limited

View Answer

Question 100

ICRA was incorporated in which year?

A. 1990
B. 1991
C. 1992
D. 1993

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Question 101

CARE has been set up by ___________ in collaboration with some banks and financialinstitutions.

A. IDBI
B. IFCI
C. ICICI
D. UTI

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Question 102

The concept of Credit Rating was originated in which country?

A. UK
B. USA
C. Russia
D. UAE

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Question 103

Which was the first ever instruments that was rated?

A. US Rail Road Bonds
B. UK Rail Road Bonds
C. US Mines Bonds
D. None of the Above

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Question 104

Which sentence is true? Sentence A – Rating once given remains unchangedSentence B – Rating may be upgraded, downgraded or continue to be unchanged.

A. Sentence A is True
B. Sentence B is True
C. none
D. none

View Answer

Question 105

Which of the following is NOT true with respect to Credit Rating

A. Credit Rating helps the market regulators in promoting stability and efficiency in securities market.
B. Credit Rating helps issuers to have a wider access to capital with better pricing
C. Credit Rating saves the investor’s time and enables him to take quick decision.
D. Credit Rating is a recommendation for the issuers to buy, sell or hold the security.

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Question 106

Which one of the following is the Regulator of the Credit Rating Agencies in India?

A. RBI
B. SBI
C. SIDBI
D. SEBI

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Question 107

‘Where Got’ Where Gone’ Statement is also known as

A. Balance Sheet
B. Profit and Loss Statement
C. Funds Flow Statement
D. Capital Budget

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Question 108

Operating Loss is a

A. Application of Fund
B. Source of Fund
C. Loss of Assets
D. None of the Above

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Question 109

Public Deposit accepted by a company represents

A. Use of Fund
B. Source of Fund
C. Application of Fund
D. Equilibrium

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Question 110

Redemption of Debenture by a company represents

A. Application of Fund
B. Source of Fund
C. Loss of the Company
D. None of the Above

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Question 111

Only Current Assets and Current Liabilities are shown in the statement showing

A. Changes in Assets
B. Changes in Liabiliteis
C. Changes in Working Capital
D. Changes in Fixed Capital

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Question 112

Decrease in Working Capital Denotes

A. Application of Fund
B. Source of Fund
C. Disposition of Fund
D. Operating Loss

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Question 113

Which one of the following is not an Application of Fund?

A. Purchase of Fixed Assets
B. Repayment of Loans
C. Operating Loss
D. Operating Profit

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Question 114

When liability decreases it is a ________

A. Source of Funds
B. Profit
C. Application of Funds
D. Loss

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Question 115

Loss on sale of Fixed Assets / Investment will be shown on the credit side of adjustedprofit and loss account.

A. TRUE
B. FALSE
C. none
D. none

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Question 116

The balances of Provision for Taxation were Rs. 20000 and Rs. 15000 in 2019 and 2020 respectively, if in the current year taxed paid were Rs. 10000 then what will be the current year provision for tax made from profit?

A. Rs. 7000
B. Rs. 5000
C. Rs. 15000
D. Rs. 10000

View Answer

Question 117

The proposed dividend for the Current Year would appear on the debit side of whichaccount?

A. Profit and Loss Account
B. Balance Sheet
C. Adjusted Profit and Loss Account
D. Adjusted Balance Sheet

View Answer

Question 118

If the shares are issued at a premium during the year then the amount of premiumreceived will appear as a _______

A. Source of Fund
B. Application of Fund
C. Profit
D. Loss

View Answer

Question 119

If we want to prepare the funds flow statement, we should have

A. Balance sheets of two consecutive years
B. Funds flow statements of two consecutive years
C. Budget for next financial year
D. All of the Above

View Answer

Question 120

Last year’s proposed dividend has been paid during the current year and hence will beshown as________

A. A source of funds
B. An application of funds
C. Increase in liabilities
D. None of the above

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Question 121

Any change in Current Liabilities will effect inverse change in the working capital.

A. TRUE
B. FALSE
C. none
D. none

View Answer

Question 122

From the following details find out the funds from operations: Net Profit after Tax Rs. 48,000 Depreciation Rs. 30,000 Loss on Sale of Outdated Machinary : Rs. 4000

A. Rs. 82,000
B. Rs. 22,000
C. Rs. 74,000
D. Rs. 14,000

View Answer

Question 123

From the following details find out the fund from operationsPAT Rs. 2,500 Accumulated Depreciation Rs. 2,900 Retained Earning Rs. 4,200 Goodwill Written off Rs. 300 Profit on Sale of Fixed Assets Rs. 200

A. Rs. 9,900
B. Rs. 9,600
C. Rs. 9,700
D. Rs. 5,100

View Answer

Question 124

Funds Flow Statement indicates the necessity of arranging external funds in advance ifprojected outflow is more than inflow.

A. TRUE
B. FALSE
C. none
D. none

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Question 125

Any change in the Current assets is positively correlated to the change in workingcapital

A. TRUE
B. FALSE
C. none
D. none

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Question 126

Non-cash adjustments like Depreciation, Preliminary Expenses and Goodwill Written offare shown on the debit side of which account?

A. Balance Sheet
B. Funds Flow Statement
C. Adjusted Profit and Loss Account
D. Working Capital Statement

View Answer

Question 127

Part of Profit transferred to General Reserve will be shown on the debit side of _________

A. Balance Sheet
B. Funds Flow
C. Cash Flow
D. Adjusted Profit and Loss Account

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Question 128

A projected Funds Flow Statement informs the management about

A. Future Financial Stringency
B. Future Requirement of Funds
C. Funds Position of the Company
D. All of the above

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Question 129

Funds Flow Statement can be prepared in which form?

A. Vertical Form
B. Horizontal Form
C. Complex Form
D. Both a and b

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Question 130

Funds flow statement being based on ________________, which is of limited utility for future planning is a limitation of funds flow statement.

A. Historical Facts
B. Traditional Facts
C. Hypothetical Facts
D. Current Facts

View Answer

Question 131

Which one of the following is NOT a theory of International Parity Relationship

A. Purchasing Power Parity
B. Covered Interest Arbitrage and Interest Rate Parity
C. Money Market Hedge Theory
D. Expectations Theory

View Answer

Question 132

Indirect Quotation is also known as ___________

A. European Quotation
B. Indian Quotation
C. American Quotation
D. Euro Quotation

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Question 133

The spread in a two way quotation is affected by

A. Currency involved
B. The volume of business
C. Market sentiments/rumours about the currency
D. All of the above

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Question 134

The Rate of Exchange applicable for delivery of Foreign Exchange at a future date iscalled ______

A. Spot Rate
B. Current Rate
C. Forward Rate
D. Expected Rate

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Question 135

The act of arbitrage that involves three foreign currencies involving three differentforeign exchange market is called __________

A. Geographical Arbitrage
B. Triangular Arbitrage
C. Cross Arbitrage
D. None of the Above

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Question 136

An option to buy is called a _______

A. Put Option
B. Bid Option
C. Call Option
D. Preemptive Option

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Question 137

‘Speculators’ in the market _______________

A. Need foreign currency to pay their import obligations
B. Invest in securities of foreign country
C. Try to profit from exchange rate movements
D. None of the Above

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Question 138

Which one of the following is NOT a Foreign Exchange Risk Management Technique

A. Forward Contract
B. Futures Contract
C. External Commercial Borrowing
D. Currency Options

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Question 139

Default risk is higher in which one of the following?

A. Forward Contracts
B. Futures Contracts
C. Equal in both a and b
D. None of the Above

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Question 140

A financial instrument that provides its holder a right but no obligation to buy or sell a pre-specified amount of a foreign currency at a pre-determined rate is referred to as ____________

A. A Promise
B. An Option
C. An Obligation
D. A Swap

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Question 141

Establishment of new plants and offices overseas by MNC as a mean of FDI is

A. A Greenfield Investment
B. A Brownfield Investment
C. Vertical FDI
D. None of the Above

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Question 142

Hilton Hotels of United States opening a hotel in Mumbai, India is ____________

A. A Horizontal FDI
B. A Vertical FDI
C. A Conglomerate FDI
D. None of the Above

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Question 143

There are basically two approaches to find out NPV of a foreign based project’s capitalbudgeting exercise. Which are those two?

A. Home Currency and foreign currency approaches
B. One Currency and Multi Currency Approaches
C. Home Country and Foreign Country Approaches
D. None of the Above

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Question 144

If there are no costs or other barriers associated with the movement of goods or services across countries, the price of each product should be the same in each country, after making appropriate currency conversions. It is called ____________ in Economics.

A. Law of Similar Mortgage Rate
B. Law of Similar Labour Rules
C. Law of One Price
D. Law of One type of Manufacturing

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Question 145

The current spot rate for the Euro is Rs. 86,the expected inflation rate is 5 in India and 3in Europe. What is the expected Spot Rate of Euro one year hence?

A. Rs. 87.67/Euro
B. Rs. 84.36/Euro
C. Rs. 86/Euro
D. Rs. 93/Euro

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Question 146

When an Option can be exercised on any date up to maturity, it is called

A. A Flexible Option
B. An European Option
C. A British Option
D. An American Option

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Question 147

Is it necessary for an organization to own 100 % of an overseas firm for its investmentto be classified as an FDI?

A. Yes
B. No
C. none
D. none

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Question 148

Capital investment made by firms in another county is called______

A. Foreign Direct Investment
B. Foreign Direct Involvement
C. Foreign Debt Investment
D. None of he Above

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