This quiz works best with JavaScript enabled. Home > Economics > International > Currency > Foreign Currency Markets – Quiz 3 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Foreign Currency Markets Quiz 3 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. The demand for a currency in a foreign exchange market arises from the demand for the country's goods, services, and financial assets and shows the ..... relationship between the exchange rate and the quantity demanded of a currency A) Positive. B) Inverse. C) Direct. D) None of above. Show Answer Correct Answer: B) Inverse. 2. When the RBI intervenes to maintain a desirable exchange rate, it is termed as ..... A) Sterilized intervention. B) Managed intervention. C) Unsterilized intervention. D) None of the above. Show Answer Correct Answer: C) Unsterilized intervention. 3. Which of the following is NOT the money market instruments? A) Repurchase Agreement. B) Commercial Paper. C) Factoring. D) Banker's Acceptance. Show Answer Correct Answer: C) Factoring. 4. Another word for stocks and shares is ..... A) Turnover. B) Capital. C) Equity. D) None of above. Show Answer Correct Answer: C) Equity. 5. The word that describe something that is easy to sell is ..... A) Trade-able. B) Liquid. C) Sellable. D) None of above. Show Answer Correct Answer: B) Liquid. 6. How would China react to a depreciation of its own currency (the yuan)? A) It would not react to a change in the value of the currency. B) The quantity of yuan supplied would increase. C) The quantity of yuan supplied would decrease. D) None of above. Show Answer Correct Answer: C) The quantity of yuan supplied would decrease. 7. The ..... states that exchange rates between any two currencies will adjust to reflect changes in the price levels of the two countries. A) Theory of money neutrality. B) Theory of purchasing power parity. C) Law of one price. D) Quantity theory of money. Show Answer Correct Answer: B) Theory of purchasing power parity. 8. Managed floating system is A) Flexible system of exchange rate. B) Mixture of fixed exchange rate and fixed exchange rate. C) A system managed by a foreign country. D) None of above. Show Answer Correct Answer: B) Mixture of fixed exchange rate and fixed exchange rate. 9. All of the following are Qualities of Forex Trading Except A) No Risk. B) Minimal Investment. C) Mini Trading account starts at USD200. D) Minimal Time Commitment. Show Answer Correct Answer: A) No Risk. 10. The sale of U.S. treasury bonds on the open market will cause a(n) ..... in the U.S. price level and a(n) ..... of the U.S. dollar in the foreign exchange market. A) Increase, depreciation. B) Decrease, depreciation. C) Decrease, appreciation. D) Increase, appreciation. Show Answer Correct Answer: C) Decrease, appreciation. 11. The thing that belongs to one's own country is ..... A) Domestic. B) Government owned. C) Private. D) None of above. Show Answer Correct Answer: A) Domestic. 12. Foreign Exchange rates in India are determined by: A) Finance Ministry. B) RBI. C) FEDAI. D) Market forces of demand & supply. Show Answer Correct Answer: B) RBI. 13. The volume of foreign currency transactions is 30 ..... A) Times less than the volume of trading in the US stocks. B) Percent of the total volume of stocks trading. C) Times more than the volume of trading in the US stocks. D) None of above. Show Answer Correct Answer: C) Times more than the volume of trading in the US stocks. 14. Spot Market deals in A) Future transaction. B) Current Transaction. C) Transactions meant for future delivery. D) Current as well as future transaction. Show Answer Correct Answer: B) Current Transaction. 15. Pegging down of national currency is known as A) Over valuation. B) Under valuation. C) Revaluation. D) All of the above. Show Answer Correct Answer: B) Under valuation. 16. When an overseas banking operation is incorporated within the parent bank, what is it called? A) Branch bank. B) Subsidiary bank. C) Correspondent bank. D) Offshore bank. Show Answer Correct Answer: A) Branch bank. 17. Contract Lot Sizes:The standard unit of a standard lot has a value of ..... ? A) 1. B) 10.000. C) 100, 000. D) 1, 000. Show Answer Correct Answer: C) 100, 000. 18. Exchange rates are determined in A) The foreign exchange market. B) The money market. C) The capital market. D) The stock market. Show Answer Correct Answer: A) The foreign exchange market. 19. Which of the following is the merit of flexible exchange rate system? A) Optimum resource allocation. B) Market stability. C) External shocks. D) Stable monetary policy. Show Answer Correct Answer: A) Optimum resource allocation. 20. KINDS OF TRADERS:These traders only targets 5 to 10 pips per day. A) Scalpers. B) Day Traders. C) Postion Traders. D) Company Traders. Show Answer Correct Answer: A) Scalpers. 21. In 2009 the exchange rate of the Singapore dollar changed from 1.49 = 1 US dollar to 1.43 Singapore dollars = 1 US dollar.How would this affect the import prices and export prices for Singapore? A) Increase/decrease. B) Decrease/decrease. C) Increase/increase. D) Decrease/increase. Show Answer Correct Answer: D) Decrease/increase. 22. What type of exchange rate system do most countries operate under? A) Flexible. B) Fictitious. C) Floating. D) Fixed. Show Answer Correct Answer: C) Floating. 23. In an agreement to exchange dollars for euros in three months at a price of $ 0.90 per euro, the price is the ..... A) Spot exchange rate. B) Forward exchange rate. C) Money exchange rate. D) Fixed exchange rate. Show Answer Correct Answer: B) Forward exchange rate. 24. Which is money market instruments?i. Negotiable Intruments of Deposits (NIDs)ii. Treasury Bills (TBs)iii. Malaysian Government Securities(MGS)iv. Lembaga Tabung Haji A) I, ii and iii. B) Ii, iii and iv. C) I, ii and iv. D) All of above. Show Answer Correct Answer: A) I, ii and iii. 25. Who maintains the foreign exchange reserves in India? A) Ministry of Finance, Government of India. B) Reserve Bank of India. C) Export-Import Bank of India. D) State Bank of India. Show Answer Correct Answer: B) Reserve Bank of India. 26. In order to prevent appreciation of the rupee against the US$ , the RBI will ..... A) Sell bonds. B) Buy US$. C) Sell US$. D) Buy bonds. Show Answer Correct Answer: B) Buy US$. 27. ..... is a commodity that consists of currencies issued by countries other than one's own. A) Eurozone. B) Direct exchange. C) Foreign exchange. D) Floating exchange. Show Answer Correct Answer: C) Foreign exchange. 28. Forward market is that market which: A) Handles transactions of foreign exchange meant for future delivery. B) Handles current transactions. C) Handles current as well as future transactions. D) None of these. Show Answer Correct Answer: A) Handles transactions of foreign exchange meant for future delivery. 29. When an overseas banking operation is separately incorporated from the parent bank, what is it called? A) Affiliated bank. B) Subsidiary bank. C) Branch bank. D) Correspondent bank. Show Answer Correct Answer: B) Subsidiary bank. 30. Under flexible exchange rate system, exchange rate is determined by: A) Demand for foreign exchange. B) Supply demand forces. C) Supply of foreign exchange. D) Government. Show Answer Correct Answer: B) Supply demand forces. ← PreviousNext →Related QuizzesInternational QuizzesEconomics QuizzesForeign Currency Markets Quiz 1Foreign Currency Markets Quiz 2Foreign Currency Markets Quiz 4Foreign Currency Markets Quiz 5Foreign Currency Markets Quiz 6 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books