This quiz works best with JavaScript enabled. Home > Economics > International > Currency > Foreign Currency Markets – Quiz 4 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Foreign Currency Markets Quiz 4 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Major reasons to study international finance include: A) To understand a global economy. B) To understand the impact of global finance on businesses. C) To understand the European Union. D) To make intelligent personal decisions. Show Answer Correct Answer: A) To understand a global economy. 2. The three different types of forex transactions are A) Spot, Cash, OTC. B) Spot, forwards, Futures. C) Spot, futures & options. D) Spot, forward, swaps. Show Answer Correct Answer: D) Spot, forward, swaps. 3. Factors affecting forex market is ..... A) Geopolitical factors. B) Inflation. C) Uncertainty about future. D) None of above. Show Answer Correct Answer: A) Geopolitical factors. 4. Rate at which a foreign exchange dealer converts one currency into another currency on a particular day A) Spot Exchange Rates. B) Exchange Rate. C) Forward Exchange Rates. D) Foreign Exchange Rate. Show Answer Correct Answer: A) Spot Exchange Rates. 5. The forward market is especially well-suited to offer hedging protection against A) Political risk exposure. B) Taxation. C) Transactions risk exposure. D) Translation risk exposure. Show Answer Correct Answer: C) Transactions risk exposure. 6. When the exchange rate Rises due to managed floating, it is called; A) Revaluation. B) Devaluation. C) Depreciation. D) Appreciation. Show Answer Correct Answer: D) Appreciation. 7. India is facing continuous deficit in BOP. In the foreign exchange market, rupee is expected to A) Depreciate. B) Appreciate. C) No specific tendency. D) All of the above. Show Answer Correct Answer: A) Depreciate. 8. Which of the following is not considered a hard currency? A) US dollar. B) Mexican peso. C) Euro. D) Japanese yen. Show Answer Correct Answer: B) Mexican peso. 9. Hedging is used by companies to A) Decrease the variability of tax paid. B) Decrease the spread between spot and forward market quotes. C) Increase the variability of expected cash flows. D) Decrease the variability of expected cash flows. Show Answer Correct Answer: D) Decrease the variability of expected cash flows. 10. All of above are true about Malaysian Government Securities accept A) Issued in multiples of RM 1000. B) Can be traded in secondary market. C) Maturities not exceeding one year. D) Price is determined by forces of supply and demand. Show Answer Correct Answer: C) Maturities not exceeding one year. 11. ..... in the expected future domestic exchange rate causes the demand for domestic assets to shift to the ..... and the domestic currency to depreciate, everything else held constant A) A decrease; right. B) An increase; right. C) A decrease; left. D) An increase; left. Show Answer Correct Answer: C) A decrease; left. 12. All are The Business Forex Trading principles except: A) 24 HOURS Market Gives Flexibility. B) Build your business from anywhere in the world. C) Plan your daily trading routine around your day job. D) Maintenance proof and worry free. Show Answer Correct Answer: D) Maintenance proof and worry free. 13. Stability is a merit of A) Fixed exchange rate system. B) Flexible exchange rate system. C) Both. D) None of above. Show Answer Correct Answer: A) Fixed exchange rate system. 14. Occurs when a buyer and seller enter an agreement of purchase of currency after 90 days A) FUTURE TRANSACTION. B) SWAP TRANSACTION. C) FORWARD TRANSACTION. D) OPTION TRANSACTION. Show Answer Correct Answer: C) FORWARD TRANSACTION. 15. The participants in money market are A) Household and firms. B) Firm and government. C) Banking and non banking instituions. D) None of above. Show Answer Correct Answer: C) Banking and non banking instituions. 16. What is a currency selling at if the forward price is less than the spot price? A) Forward premium. B) Forward discount. C) Par value. D) None of above. Show Answer Correct Answer: B) Forward discount. 17. A(n) ..... is the price of one currency in terms of a second currency. A) Export rate. B) Interest payment. C) Exchange rate. D) Excise tax rate. Show Answer Correct Answer: C) Exchange rate. 18. Forex trading can be ..... A) Done 24 times per day. B) Done 24 hours a day. C) Done 24 hours every week. D) None of above. Show Answer Correct Answer: B) Done 24 hours a day. 19. What is the difference between a fixed rate exchange system and a floating rate system? A) Government sets rate vs market sets rate. B) Currency never appreciates vs can appreciate. C) Never changing vs always changing. D) Doesn't exist vs does exist. Show Answer Correct Answer: A) Government sets rate vs market sets rate. 20. The first eurocurrency, and they still have the most influence A) EUROYEN. B) EURODOLLARS. C) EUROBOND. D) None of above. Show Answer Correct Answer: B) EURODOLLARS. 21. What determines a country's borrowing power from the IMF? A) Country size. B) The World Bank. C) A quota. D) Loan size. Show Answer Correct Answer: C) A quota. 22. Ninety-five percent of Forex transactions ..... A) Are forbidden. B) Dangerous. C) Are speculative. D) None of above. Show Answer Correct Answer: C) Are speculative. 23. Only non-residents can convert their holdings of domestic currency into a foreign currency A) Convertible. B) Externally convertible. C) Nonconvertible. D) Freely convertible. Show Answer Correct Answer: B) Externally convertible. 24. Under which system Demand and supply for FOREX determines the exchange rate A) Flexible exchange rate. B) Fixed exchange rate. C) Both. D) None of above. Show Answer Correct Answer: A) Flexible exchange rate. 25. The ..... consists of foreign-exchange transactions that are to occur sometime in the future. A) Soft currency market. B) Spot market. C) Forward market. D) Bond market. Show Answer Correct Answer: C) Forward market. 26. What term refers to a currency on deposit outside its country of issue? A) Europound. B) Eurodollar. C) Euroyen. D) Eurocurrency. Show Answer Correct Answer: D) Eurocurrency. 27. Under sterilized intervention policy, RBI is likely to ..... A) Sell foreign currencies. B) Use OMO. C) Interest rate manipulation. D) Purchase foreign currencies. Show Answer Correct Answer: B) Use OMO. 28. Out of the following, which is the most rigid exchange rate system, which does not allow any adjustment in the exchange rate? A) Flexible exchange rate system. B) Gold Standard System of exchange rate. C) Bretton Woods system of exchange rate. D) None of these. Show Answer Correct Answer: B) Gold Standard System of exchange rate. 29. The reduction in the value of the currency due to market forces is known as A) Depreciation. B) Devaluation. C) Appreciation. D) None of the above. Show Answer Correct Answer: A) Depreciation. 30. The rate at which one currency is converted into another A) Exchange Rate. B) Currency Swaps. C) Foreign Exchange Market. D) Currency Conversion. Show Answer Correct Answer: A) Exchange Rate. ← PreviousNext →Related QuizzesInternational QuizzesEconomics QuizzesForeign Currency Markets Quiz 1Foreign Currency Markets Quiz 2Foreign Currency Markets Quiz 3Foreign Currency Markets Quiz 5Foreign Currency Markets Quiz 6 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books