International Finance and Treasury MCQs

Question: Loans for education and medical is classified as loans for
a) equilibrium goods
b) non-equilibrium goods
c) durable goods
d) non-durable goods
Answer: d

Question: For an investment, weighted average time to maturity is considered as
a) premium time
b) standard time
c) mean time
d) duration
Answer: d

Question: Purchasing-power parity (PPP) refers to
a) the concept that the same goods should sell for the same price across countries after exchange rates are taken into account
b) the concept that interest rates across countries will eventually be the same
c) the orderly relationship between spot and forward currency exchange rates and the rates of interest between countries
d) the natural offsetting relationship provided by costs and revenues in similar market environments
Answer: a

Question: Type of bonds that are swapped to less developed country against an outstanding loan are classified as
a) Brady bonds
b) swapped bonds
c) developed bonds
d) developing bonds
Answer: a

Question: In commercial banks, subordinate debentures and subordinate notes are considered as
a) stated rates
b) banks debentures
c) banks liabilities
d) banks deposits
Answer: c

Question: A country has a negative balance of trade it means the balance of payments on current account
a) Should also be negative
b) Should be positive
c) May be positive or negative
d) Should be same as balance of trade
Answer: d

Question: Value of option issued to call debt is $670 and return rate on callable bond is $540 then return rate on non-callable bond is
a) $1,210
b) $1,010
c) $130
d) $1,020
Answer: c

Question: Treasury bonds and notes pays interest rate is classified as
a) LIBOR rate monthly
b) coupon interest monthly
c) coupon interest semi-annually
d) coupon interest annually
Answer: c

Question: Maximum maturity days of holding commercial paper are
a) 170 days
b) 270 days
c) 120 days
d) 5 days
Answer: b

Question: Several maturities dates are involved in issued bonds if company earnings are classified as
a) parallel term income
b) pledged
c) volatile
d) non-volatile
Answer: c

Question: In treasury bills auction, treasury bills are sold at
a) premium basis
b) discount basis
c) competitive basis
d) federal basis
Answer: b

Question: Difference between face value of bond and call price of bond is considered as
a) call premium
b) call provision
c) discount premium
d) discount provision
Answer: a

Question: Financial account was earlier called as
a) capital account
b) current account
c) factor income
d) liability account
Answer: a

Question: In Eurodollar market, decrease in demand of Euro dollars results in
a) increase in KIBOR
b) decrease in KIBOR
c) decrease in federal funds rate
d) increase in federal funds rate
Answer: c

Question: The process of acquiring technology from other country is called:
a) Licensing
b) Franchising
c) Technology Transfer
d) Joint Venture
Answer: a

Question: Monetary expansion increases and there is decrease in equilibrium interest rate then supply curve of funds must shift
a) up and to left
b) up and to right
c) down and to left
d) down and to right
Answer: d

Question: Loan-able funds theory is used to determine
a) savings
b) interest rate
c) future value
d) present value
Answer: b

Question: Type of index in which current values of stock are added together and divided by value of stock on base date is classified as
a) value weighted index
b) herring weighted index
c) primary market index
d) stock market index
Answer: a

Question: In financial markets, STRIPS are also classified as
a) treasury KIBOR notes
b) treasury KIBOR bonds
c) treasury zero coupon bonds
d) treasury LIBOR bonds
Answer: c

Question: Agreement between two parties to exchange cash flows in future and cash flows are based on underlying instruments is classified as
a) swaps
b) interchange
c) exchange
d) index
Answer: a

Question: The demand for heavy loans can cause
a) excess funds for banks
b) deficiencies for banks
c) organized reservation
d) competitive reservations
Answer: b

Question: Cash and carry arbitrage explains the determination of
a) Forward Rates for currencies
b) Spot rates for currencies
c) Both forward and spot rates for currencies
d) Penalty for non-execution of forward contracts
Answer: a

Question: As compared to Treasury bonds, trading of municipal bonds in trading market is considered as
a) more index inflation
b) less indexed inflation
c) less active
d) more active
Answer: c

Question: Repurchase price is subtracted from selling price divided by selling price and multiplied to 360 by number of days up to maturity to calculate
a) repurchase agreement yields
b) purchase agreement yields
c) repurchase yields
d) transaction yields
Answer: a

Question: Consider buying call option, if price of stock rises then buyer of call option has
a) low potential of losses
b) high potential of losses
c) high potential of profit
d) low potential of profit
Answer: c

Question: Longer debt instrument issued by government and corporations is considered as
a) contraction bonds
b) expansion bonds
c) dollar bonds
d) bonds
Answer: d

Question: Gifts and Relief are
a) Merchandise Payment
b) Service Payment
c) Factory Income
d) Transfer payment
Answer: d

Question: Call premium is $456 and face value of bond is $234 then call price of bonds is
a) $1.95
b) 1.95%
c) $222
d) $690
Answer: d

Question: Investors of coupon bond will receive cash flow very soon if
a) maturity is lower
b) maturity is higher
c) interest payment is higher
d) interest payment is lower
Answer: c

Question: Which of the following theories suggests that firms seek to penetrate new markets over time?
a) Theory of Comparative Advantage
b) Imperfect Market Theory
c) Product cycle theory
d) None of the above
Answer: c

Question: Holders of debentures receive their payments or bonds yields only after holders of
a) registered debt holders
b) secured debt holders
c) unsecured debt holders
d) unregistered debt holders
Answer: b

Question: Agency problem is between
a) Manager and Employees
b) Manager and Government
c) Manager and Shareholders
d) Parent to Subsidiary
Answer: c

Question: Retail certificate of deposits which are not traded have face value of
a) $250,000
b) $100,000
c) $150,000
d) $200,000
Answer: b

Question: Conversion values is $8500 and conversion rate received on stock conversion is 430 then current market price of stock is
a) $15.24
b) $13.24
c) $20.24
d) $19.24
Answer: c

Question: Situation in which large portion of majority is borrowed from broker of investor is classified as
a) future investment
b) forward investment
c) leveraged investment
d) non-leveraged investment
Answer: c

Question: Risk of financial institutions which states mismatching assets maturities and liabilities maturities is classified as
a) selling intermediation
b) maturity intermediation
c) direct intermediation
d) indirect intermediation
Answer: b

Question: The margin for a currency future should be maintained with the clearing house by
a) The buyer
b) The seller
c) Both the buyer and the seller
d) Either the buyer or the seller as per the agreement between them
Answer: c

Question: Consider buying call option, if price of stock falls then buyer of call option has
a) high potential of profit
b) low potential of profit
c) low potential of losses
d) high potential of losses
Answer: d

Question: Interest rate on Eurobonds are paid
a) monthly
b) quarterly
c) annually
d) semi-annually
Answer: c

Question: Auction of TIPS security is classified as
a) premium bid auction
b) discount bid auction
c) multiple bid auction
d) one bid auction
Answer: d

Question: Source of funds for repayment of municipal bonds is considered as
a) local tax and revenue
b) global tax and revenue
c) print notes
d) commercial notes
Answer: a

Question: Type of market in which short term instruments are traded and purchased by economic units is classified as
a) money markets
b) capital markets
c) debt markets
d) economic markets
Answer: a

Question: Bonds rated lower than triple-B bonds by Standard and Poor’s are considered as
a) split bonds
b) automated bonds
c) junk bonds
d) sinking bonds
Answer: c

Question: Price at which stock is sold to investors by investment banks is called
a) gross proceeds
b) cumulative proceeds
c) non-cumulative proceeds
d) net proceeds
Answer: a

Question: According to loanable funds theory, fall in interest rates results in
a) zero demand of funds
b) equilibrium demands of funds
c) higher demand of funds
d) lower demand of funds
Answer: c

Question: Type of preferred stock in which dividend does not increase or decrease with increase or decrease in profit of firm is classified as
a) non-cumulative preferred stock
b) cumulative preferred stock
c) non-participating preferred stock
d) participating preferred stock
Answer: c

Question: US and Chile agreed on which agreement in 2003?
a) free trade agreement
b) European union
c) Berlin wall
d) NAFTA
Answer: a

Question: In zero coupon bonds, impact of higher duration on maturity is that
a) maturity will be zero
b) maturity will be elastic
c) maturity will be higher
d) maturity will be lower
Answer: d

Question: Foreign bonds issued in Japan financial institutions are classified as
a) bull dog bonds
b) bull cat bonds
c) Yankee bonds
d) samurai bonds
Answer: d

Question: Price of treasury notes and treasury bonds without including accrued interest is classified as
a) clean price
b) full price
c) dirty price
d) accrued price
Answer: a

Question: Determination of forward rates is explained by
a) Purchasing power parity theory
b) Uncovered interest arbitrage
c) Demand and supply for spot currency
d) Demand and supply of currency in future
Answer: a

Question: Investors who want cash flows in near terms show preference for
a) interest portion of RIAPS
b) interest portion of STORI
c) interest portion of STRIPS
d) interest portion of bonds
Answer: c

Question: The legal settlement of international trade disputes is
a) negotiation
b) arbitration
c) litigation
d) conciliation
Answer: a

Question: Interest rate paid on traded Eurodollars is called
a) London intra bank offered rate
b) London interbank offered rate
c) euro interbank offered rate
d) demand intra bank rate
Answer: b

Question: Superior portfolio is not basically a collection of individually
a) good portfolio
b) good investments
c) negative securities
d) all of answer correct
Answer: b

Question: Subsidiary may be favourable to acquisitions because
a) easy to incorporate
b) can be tailored
c) can’t be tailored
d) easy to manage
Answer: b

Question: Shift of demand curve to down and to left means there must be
a) support from World Bank
b) decreases in funds traded
c) increase in funds traded
d) rise of international funds
Answer: b

Question: International Finance Corporation was established in
a) 1956
b) 1960
c) 1966
d) 1970
Answer: a

Question: Position which came into existence because of holding assets less than liabilities is considered as
a) net surplus in assets
b) net surplus in liabilities
c) net long in currency
d) net short in currency
Answer: d

Question: Treasury bills are issued on
a) treasury basis
b) corporate basis
c) premium basis
d) discount basis
Answer: d

Question: Joint venture is
a) Not jointly owned by
b) Jointly owned by two or more firms
c) Acquired by firm
d) It is licensing
Answer: b

Question: Currency in which Eurobonds are denominated is decided by
a) buyers of bond
b) issuers of bonds
c) close market prices
d) open market prices
Answer: b

Question: Gross proceeds of stock is $37000 and underwriter spread is $25000
a) $25,000.00
b) $37,000
c) $12,000
d) $62,000
Answer: c

Question: Bidder who can receive allocation of treasury bills before all other bidders is result of
a) highest bidder
b) lower bidder
c) zero bidder
d) non-competitive bidder
Answer: a

Question: Euro is the official currency of
a) All the States of Europe
b) All the states of European Union
c) Only 12 of the states of European Union
d) Only 10 of the States of European Union
Answer: b

Question: Expected rate that originates at any point in future for a specific security is classified as
a) forward rate
b) backward rate
c) termed rate
d) structured rate
Answer: a

Question: Type of option that gives right to buyer to sell underlying option at specific exercise price is considered as
a) call option
b) put option
c) European option
d) Australian option
Answer: b

Question: Depository institutions includes
a) mutual funds
b) commercial banks and thrifts
c) savings banks
d) credit unions
Answer: b

Question: Value of conversion option to bond holder is $220 and rate of return on nonconvertible bond is $350 then rate of return on convertible bond is
a) $570
b) $130
c) $670
d) $1.59
Answer: b

Question: Principal investors of US treasury bills which are issued by US treasury does not includes
a) mutual funds
b) extensive funds
c) corporations
d) brokers and dealers
Answer: a

Question: Most favourable portfolio is proficient portfolio with the
a) lowest risk
b) highest risk
c) highest utility
d) least investment
Answer: c

Question: Curve representing demand of funds shifts to left if economic growth in
a) global market is stagnant
b) global market is not stagnant
c) domestic market is stagnant
d) domestic market is not stagnant
Answer: c

Question: Financial instrument such as commercial paper can be sold
a) issued by commercial banks
b) directly
c) with brokers or dealers
d) functional buyers
Answer: b

Question: The marking to market of a futures contract is done
a) Daily, based on the opening price for the day
b) Weekly, based on the opening price for the week
c) Daily, based on the closing price for the previous day
d) Weekly, based on the closing price for the previous week
Answer: c

Question: Selling price is added in to repurchase agreement paid interest to calculate
a) direct price of security
b) repurchase price of securities
c) purchase price of security
d) transaction price of security
Answer: b

Question: Global bond market consists of all bonds sold by issued companies, governments, or other firms
a) within their own countries
b) outside their own countries
c) to London banks
d) to developing nations only
Answer: b

Question: Earned interest rate which is reinvested in other investment is classified as
a) compound interest
b) investment risk
c) interest rate
d) stated rate
Answer: a

Question: The threshold limit for the handloom industry as per the recent EXIM policy is:
a) 500 crores
b) 350 crores
c) 250 crores
d) 100 crores
Answer: c

Question: Interest rate considering compounding of interest rate and is earned in 12 months is considered as
a) effective annual return
b) ineffective annual return
c) decrease in return
d) increase in return
Answer: a

Question: For a particular security transaction, agreement is ’repo’ with point of view of
a) security seller
b) security buyer
c) security function
d) security function
Answer: a

Question: Deposit that are required in futures contract and is considered as guarantee that conditions of contracts would be fulfilled is classified as
a) initial margin
b) futures margin
c) conditional margin
d) non-conditional margin
Answer: a

Question: Agreement which incurs transaction between two parties and promise held that second party will repurchase security at specific price is classified as
a) repurchasing commercial notes
b) repurchase bills
c) repurchase agreement
d) reverse repurchase agreement
Answer: c

Question: Uruguay Round that has started
a) earlier 8 years
b) earlier 5 years
c) earlier 10 years
d) earlier 7 years
Answer: d

Question: Bonds that are not pledged against revenue stream or specific assets are classified as
a) general obligation bonds
b) general obligation notes
c) general obligation tax
d) general obligation savings
Answer: a

Question: Current market price of common stock is $18 and conversion rate received on conversion is $410 to calculate
a) $3,580
b) $5,380
c) $6,380
d) $7,380
Answer: d

Question: Type of risk in which value of liabilities and assets is affected by exchange rate is classified as
a) economic rates
b) foreign exchange risk
c) selling rate
d) buying rates
Answer: b

Question: MIGA stands for
a) Multilateral Investment Guarantee Agency
b) Multilateral Institutional and Government Agencies
c) Mutual Interest Guaranteeing Agencies
d) Mutual Institutional and Government Agencies
Answer: a

Question: Voting ballot that is sent to stock holders by corporation is classified as
a) corporate paper
b) white voting paper
c) screened paper
d) proxy
Answer: d

Question: Interest rate that investors receive on financial security to calculate fair value of security is classified as
a) forward rate of return
b) unturned rate of return
c) required rate of return
d) termed rate of return
Answer: c

Question: In United States, JPMorgan Chase is considered as
a) largest foreign exchange trading
b) smaller foreign exchange trading
c) largest bond holder
d) smaller bond holder
Answer: a

Question: IN negotiated sale, services provided by investment banks are
a) origination services
b) document collection services
c) advising services
d) both a and c
Answer: d

Question: The nodal agency of the Government of India for promoting the country’s external trade is
a) Indian Trade Promotion Organisation
b) Indian Institute of Foreign Trade
c) Federation of Indian Exports
d) Trade Development Authority of India
Answer: b

Question: Underwriter spread of stock is added to net proceeds to calculate value of
a) over writer spread
b) Gross proceeds
c) participation proceeds
d) non participation proceeds
Answer: b

Question: Liquidity risk is
a) is risk investments bankers face
b) is lower for small OTC
c) is risk associated with secondary market transactions
d) increases whenever interest rates increases
Answer: c

Question: According to best efforts offering, investment bank in return of providing services must
a) not receive fee
b) receive fee
c) receive interest rate
d) receive market rate of return
Answer: b

Question: What is the role of IMF
a) It controls the budgets of national government
b) It acts as a forum for international economics
c) It observes world exchange rates, balance of payments and multilateral payments
d) It seeks to promote free international trade
Answer: c

Question: Current Account in BOP characterize summary of stream of funds between particular country and all other country due to
a) sale of assets
b) purchase of goods and services
c) liabilities of long term
d) liabilities of short term
Answer: b

Question: Intrinsic value of option is subtracted from exercise price of an option to calculate
a) forward price of asset
b) price of underlying asset
c) future price of asset
d) spot price of asset
Answer: b

Question: Investors should be agreeing to invest in riskier investments merely
a) if return is short
b) if there are no safe alternatives except for holding cash
c) if expected return is adequate for risk level
d) if there are true speculators
Answer: c