CAIIB BFM : DISCUSSION UNIT -1 Exchange Rates And Forex Business

1. Which currency is quoted per 100 units??

Japanese Yen

2. India switched to floating exchange rate regime in which year?

1993

3. The payments made in the same day , so that no loss or gain of interest  accures to either party  is known as .............

Valuer compense

4. Which risk is overall country risk?

Soverign Risk

5. Forex Operations are divided into 3 . Name Them

Forex Dealer

Back Office

Mid Office

6. Entities authorized to buy and sell  foreign currency notes ?

Full Fledged Money Changers

7. A mismatch in assests/liabilities and receivable/payables is known as ____risk.

Credit

Exchange

Gap

Interest

A-Exchange

8. Call option??

Right to buy under the option

9. Put Option ??

Right to sell under the option

10. Forex Markets operate on

Mon to Friday

Mon to Sat

All Days

11. Balance of Payments is ___ reason Which influence exchange rate?

Fundamental

Technical

A-     Fundamental

12. The exchange rates of major currencies fluctuate every____ seconds

A-4

13. Forex markets are not affected by government policies

True/False??

14. Authorized Person Category I also known as ...??

Authorised dealers

15. Direct Quotes??

Local currency is variable

16. Authorized Person Category III also known as ...??

 Restricted Money Changers 

17.  Main Factors affecting exchange rates are technical,__________ and speculation.

18. In a spot contract, settlement of funds takes place on the _______ working day following the date of contract.

19. The date of settlement of funds is known as _________

20. If the forward value of the currency is cheaper, it is said to be at a ____________

21. The rate at which the quoting party is ready to buy the currency is called __________rate.

22. If a currency is costlier in forward,it is said to be at __________Category of authorized dealers in foreign exchange by __________

A-RBI

23. FEDAI full form??

Foreign Exchange Dealers association of India

24. NTP full form?

Normal transit Period

25. Maximum Time Period for crystalization period?
15
30
45
60
A-60

26. which category of authorized dealers is known as Restricted Money Changers?

Category III

27. OTC Market???

Over The Counter Market

28. Foreign exchange markets are 

regional market

domestic market

global market

localized exchange traded markets

29. The date of settlement of funds is known as ?

Value Date

30. The exchange rate is

(a) the price of one currency relative to gold.
(b) the value of a currency relative to inflation.
(c) the change in the value of money over time.
(d) the price of one currency relative to another.
(e) all of the above.

31. In Mumbai, US dollar is quoted as under USD 1 = Rs..6725/6875. It means
A. the buying rate is 43.6725 and selling rate is 43.6875
B. the buying rate is 43.6875 and selling rate is 43.6725
C. the dollar is appreciating in value
D. The dollar is depreciating in value
Ans-a

32. 1USD =64.0251/0290 is a ----- quotation
A. Foreign Exchange quotation
B. Commodity quotation
C. direct quotation
D. Indirect quotation
Ans-a

33. When the value of the British pound changes from $1.50 to $1.25, then
(a) the pound has appreciated and the dollar has appreciated.
(b) the pound has depreciated and the dollar has appreciated.
(c) the pound has appreciated and the dollar has depreciated.
(d) the pound has depreciated and the dollar has depreciated.

34. Suppose that the current exchange rate is €1.00 = $1.60. The indirect quote, from the U.S. perspective is
A.€1.00 = $1.60 
B.€0.6250 = $1.00 
C.€1.60 = $1.00 
D.None of the above

35. When the value of the dollar changes from 0.5 pounds to 0.75 pounds, then
(a) the pound has appreciated and the dollar has appreciated.
(b) the pound has depreciated and the dollar has appreciated.
(c) the pound has appreciated and the dollar has depreciated.
(d) the pound has depreciated and the dollar has depreciated.

36. The immediate (two-day) exchange of one currency for another is a
(a) forward transaction.
(b) spot transaction.
(c) money transaction.
(d) exchange transaction.
(e) daily transaction.

37. When the value of the British pound changes from $1.25 to $1.50, then
(a) the pound has appreciated and the dollar has appreciated.
(b) the pound has depreciated and the dollar has appreciated.
(c) the pound has appreciated and the dollar has depreciated.
(d) the pound has depreciated and the dollar has depreciated.

38. 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) money exchange rate.
(c) forward exchange rate.
(d) monthly exchange rate.
(e) fixed exchange rate

Ans-c

39. An agreement to exchange dollar bank deposits for euro bank deposits in one month is a
(a) spot transaction.
(b) future transaction.
(c) forward transaction.
(d) monthly transaction.
(e) deposit transaction.

40. Assuming the rupee-dollar rate as US dollar 1 = Rs 44.3975 – 44.3995 and the US$-Swiss Franc Rate as 1.1106 — 1.1116, we can calculate the Rupee Swiss Franc rate

a) it is observed that 1 Swiss Franc is Rs 39.9781 and if this is the bid rate in direct quotation the offer rate will be Rs 39.9781.
b) it is observed that 1 Swiss Franc is Rs 39.9761 and if this is the bid rate in direct quotation the offer rate will be Rs 39.9761.
c) it is observed that 1 Swiss Franc is Rs 39.9761 and if this is the bid rate in direct quotation the offer rate will be Rs 39.9781.
d) None

41. When the exchange rate for the Mexican peso changes from 9 pesos to the dollar to 10 pesos to the
dollar, then
(a) the peso has appreciated and the dollar has appreciated.
(b) the peso has depreciated and the dollar has appreciated.
(c) the peso has appreciated and the dollar has depreciated.
(d) the peso has depreciated and the dollar has depreciated.

42. Exchange rates are determined in
(a) the money market.
(b) the foreign exchange market.
(c) the stock market.
(d) the capital market.
(e) both (b) and (c) of the above.

43. Home currency quotation is
(a) Indirect
(b)direct
(c) two way
(d) none

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