Q.5. India is facing continuous deficit in its balance of payments.

In the foreign exchange market rupee is

expected to: a) Depreciate

Q.6. If PPP holds: b) The real exchange rate will not change

Q.7. The forward US dollar is quoted at premium against Indian Rupees. This implies: a) Money market
rates are higher in India than in the US

Q.8. The effect of speculation on exchange rate is: c) Either or of 1 and 2

Q.9. The demand for domestic currency in the foreign exchange market is indicated by the following
transactions in balance of payment: c) Export of goods and services and capital inflows

Q.10. Determination of forward rates is explained by d) None of the above

0.11. According to International Fisher Effect: b) Forward Premium for a currency indicates its
appreciation in future

Q.12. A feature of currency option that distinguishes it from other derivatives is: c) The buyer has only
right, but no obligation to execute the contract.

Q.13. The following statement with respect to currency option is wrong: a) Call option will be used by
exporters

Q.14. For contingency exposure of foreign exchange, the best derivative that can be used to hedge is: c)
Options

Q.15. The strike price under an option is b) The exchange rate which the currencies are agreed to be
exchanged under the contract

Q.16. An option at-the-money when: d) The strike price and the spot price are the same

Q.17. Where an option is out of the money: c) The seller gains to the extent of the premium received

Q.18. Banks permitted to run option book is required to fulfill the condition of: d) All the above.

Q.19. Zero coupon swap is an arrangement: c) Whereby one of the counter-parties makes payment in
lump suminstead of periodically

Q.20. The acronym CIRCUS stands for: d) Combined interest Rate and Currency Swap

Q.21. Cash and carry arbitrage explains the determination of: a) Forward Rates for currencies

Q.22. A currency future is not: d) Available in India

Q.23. The margin for a currency future should be maintained with the clearing house by: b) the seller
Q.24. The marking to market in respect of a currency future refers to b) Adjusting the margin money of
buyer and seller to reflect the current value of futures

Q.25. For the balance kept in the margin account for futures: d) No interest is paid

Q.26. A forward rate agreement helps the user to: a) Fix the cost of borrowing

Q.27. The swap arrangement where principal amounts are not exchanged, but periodical payments will
be a: c) Interest rate swap

Q.28. An interest rate cap is a series of: a) Call options

Q.29. Leading refers to: c) advancing payments either receivables or payables

Q.30. Translation exposure arises in respect of items translated at: a) Current rate

Q.31. Translation loss is: c) A notional loss

Q.32. FRAs can't be used for: d) Any of the above

Q.33. The true cost of hedging transaction exposure by using forward market is: b) Difference between
agreed rate and spot rate on the due date of contract

Q.34. Hedging with options is best recommended for: c) Hedging contingency exposures

Q.35. A firm operating in India cannot hedge its foreign currency exposure through: b) Futures

Q.36. Foreign currency exposures can be avoided by: b) Denominating the transaction in domestic
currency

Q.37. Maintaining a foreign currency account is helpful to: c) Avoid both transaction cost and exchange
risk

Q.38. The following method does not result in sharing of an exchange risk between importer and
exporter d) Denominating in domestic currency

Q.39. The translation exposure is positive when: b) Exposed liabilities are lesser than exposed assets.

Q.40. For the purpose of translations, current rate refers to: b) The rate prevailing on the date of the
balance sheet

Q.41. Exposed assets are those translated at: c) Current rate

Q.42. The refers to the orderly relationship between spot and forward currency exchange rates and the
rates of interest between countries b) interest rate parity

Q.43. The is especially well suited to offer hedging protection against transactions risk exposure a)
forward market
Q.44. A multinational company that is faced with mild interference up to complete confiscation of all
assets is encountering c) political risk exposure

Q.45. Which of the following is not an example of an international trade draft? c) Both the first and
second answers are correct

Q.46. This is not established method of translation: c) Temporary method

Q.47. A positive exposure will lead to when the currency of the subsidiary company appreciates. a)
Translation gain

Q.48. Translation loss may occur when b) Exposed assets exceed exposed liabilities and foreign currency
depreciates

Q.49. The following method cannot be used for managing translation exposure: b) Option contract

Q.50. Economic exposure does not deal with: c) Expected exchange rate changes

Q.51. The World Bank Group is made up of how many organisations? b) 5

Q.52. Which organisation of the World Bank Group deals with matters related to the development of the
poorest countries in the world? b) The International Development Association

Q.53. India's foreign exchange rate system is? b) Managed float

Q.54. The most liquid asset among the following is? c) Cash

Q.55. A group of European countries have formed a union and created a common currency known as d)
Euro

Q.56. The forward exchange rate b) Is the rate today for exchanging one currency for another at a
specific future date

Q.57. The spot exchange rate a) Is the rate today for exchanging one currency for another for
immediate delivery

Q.58. What are the forms of assistance that the World Bank provides to its members? a) Technical and
financial

Q.59. The system operated by the WTO is known as the: a) Multilateral trading system

Q.60. CIF stands for: c) Cost insurance Freight

Q.61. The market where long term securities (shares, bonds, etc) are bought and sold is called as: b)
Capital market
Q.62. A bank located usually in another country that provides service for another bank is: c) UK bank

Q.63. is a process of taking advantage of differentials in interest rates of two currencies while
eliminating exchange risk. c) Arbitrage

Q.64. Quotation where the price of one unit of foreign currency is given in terms of local currency units
is called as: b) Direct quotation

Q.65. FOB stands for: b) Free on board

Q.66. The price at which a market maker is prepared to buy (a currency) or borrow (money) is termed
as: b) Bid rate

Q.67. A deposit or borrowing domiciled outside the home country of the currency is called as: c) Euro
currency

0.68. The price at which a market maker is prepared to sell (a currency) or lend (money): d) Offer rate

Q.69. Bretton woods agreement arrived at in a) July 1994

Q.70. A contract that gives the buyer the right to buy commodity or a foreign currency from the seller at
a fixed price is called as: b) Call option

0.71. An operation in order to protect the domestic currency value of an asset or a liability that is
denominated in foreign currency is called as: a) Hedging

Q.72. Difference between buying and selling rates in an exchange rate or interest rate quotation is
known as: b) Spread

0.73, means using short term forward contracts to offset paper gains and losses on the long term
assets and liabilities of foreign subsidiaries. b) Hedging balance-sheet exposure

Q.74. Which exchange rate theory focuses on the inflation exchange rate relationship? c) Purchasing
power parity

Q.75. The exchange rate prevailing at a financial reporting date: a) Closing exchange rate

Q.76. The bank account of a non-resident of a country, where the amount of currency in the account
cannot be transferred to another country is called as: b) Blocked account

Q.77. Funds that cannot be remitted from the subsidiary to the parent due to host government
restrictions is known as: c) Blocked funds

Q.78. Exchange rate between currency A and currency B, given the values of currencies A and B with
respect to a third currency is known as: d) Cross exchange rate
Q.79. Agreement to exchange one currency for another at a specified exchange rate and date is: a)
Currency swap

0,80. IMF augments its resources by borrowing under. d) All the above

0.81. The abbreviations SDR stands for: a) Special Drawing Rights

Q.82. The value of SDR is: d) Based on basket of five currencies

Q.83. The term World Bank refers to: c) Both a and b

Q.84. Long term securities denominated in two currencies is called as: b) Dual currency bond

Q.85. Foreign exchange transactions involve monetary transactions: c) Between residents of two or
more countries

0.86. A foreign currency account maintained by a bank abroad is its: a) Nostro account

Q.87. Non-resident Bank Accounts refer to: b) Vostro account

Q.88. The number of nostro accounts that can be maintained by a bank in a particular currency is: d) No
limit

0.89. Full-fledged money changers are authorized to undertake: d) Purchase and sale of foreign
currency notes, coins and travelers cheques

Q.90. IBRD lending is not available for: c) Multilateral agencies

0.91. The eligibility to borrow from IDA is based on: d) All the above

0.92. The activities of ADB includes: c) Both a and b

0.93. A credit in balance of payments indicates: d) Earning of foreign exchange or incurring of liability
abroad or decrease in asset abroad

Q.94. Financial products of IFC does not include: d) None of the above

Q.95. MIGA stands for: a) Multilateral Investment Guarantee Agency

Q.96. Guarantee provided by MIGA to private investors covers risk of: d) All of the above

Q.97. The price which one subsidiary or one unit of business charges from another for selling goods or
providing services is: a) Transfer price

Q.98. The bond that does not pay any interest and issued at a price lower than its reimbursement value
is called as: a) Zero coupon bond

Q.99. International Development Association established in: c) 1960

Q.100. International Finance Corporation established in: a) 1956

0.101. International capital market: c) Allows investors to reduce risk by holding international securities
whose price move independently

Q.102. The International capital market's rapid growth rate is traced to all these except c) Foreign
exchange Rate

Q.103. Which is not aim of international capital market? a) Preserving hard currencies to finance trade
deficits

Q.104. Eurobonds are placed for buying and selling in primary markets by: a) Investment banks

Q.105. Interest rate on floating rate Eurobonds is paid: b) Semiannually

Q.106. Type of Eurobonds which are convertible are considered as: b) Related to equity

Q.107. Promised payments on Eurobonds will be paid in: a) Currency of denomination

0.108. Eurobonds are issued by financial firms to: a) Avoid taxes

Q.109. Foreign bonds that are issued before Eurobonds are also called as: a) Traditional international
bonds

Q.110. Issued bond which is considered as hybrid bond is called: d) convertible -onds

Q.111. Mortgages used to purchase shopping malls and office buildings are classified as: c) Commercial
mortgages

Q.112. When interest rate is higher than equilibrium rate of borrowing loanable funds then financial
system has: c) Surplus of funds

Q.113. Inflation rate in United States is added into real rate of interest to calculate: c) Interest rate in
United States

Q.114. Exchange markets and over counter markets are considered as two types of: c) Secondary
market

Q.115. Bonds that are backed by cash flow from project and are sold to finance particular project are
classified as b) Revenue bonds

• Q.116. Type of bonds in which there are many maturity dates and part of issue is paid off at every
maturity date is considered as: b) Serial bonds

Q.117. What is the full form of 'ECB'? d) External Commercial Borrowing

Q.118. Bank branches which can undertake foreign exchange business directly are known as in foreign
exchange: a) Authorized dealers
Q.119. Suppose, a company publicly listed in New York Stock Exchange (NYSE) wants to raise money
from India. It may list its securities (stocks or equities) in Bombay Stock Exchange (B3E). Now Indian
investors can buy the securities in the form of: b) Depository Receipts

Q.120. Expand ADR: c) American Depository Receipts

Q.121. Expand GDR: b) Global Depository Receipts

Q.122. Which of the following is/are correct steps for issuance of Depository Receipts? d) All are correct

Q.123. Which receipt is listed in India and traded in rupees declaring ownership of shares of a foreign
company? b) Indian Depository Receipt (IDR)

Q.124. Exchange Earners' Foreign Currency Account (EEFC) is an account maintained in foreign currency
with an Authorised Dealer i.e. a bank dealing in foreign exchange. What is the benefit of maintain an
EEFC account by an Indian Exporter / Importer? . b) The account holder does not have to convert
foreign exchange into Rupees and vice versa, thereby minimizing the transaction costs

Q.125. Rule which states that similar set of goods and services produced in various countries should
have equal price is classified as: d) Law of one price

Q.126. Reasons for smaller exposure of foreign exchange than US money center are: d) All of above

Q.127. In equilibrium position, spread between foreign and domestic rate of interest must be equal to
spread of: b) Forward and spot exchange rates

Q.128. In United States, JPMorgan Chase is considered as: a) Largest foreign exchange trading

Q.129. Theory which considers change in exchange rate with fluctuations in inflation rates is classified
as: b) purchasing power parity

Q.130. How much percentage of foreign currency can be credited to EEFC account of a customer in
Special Economic Zone? b) 100%

Q.131. Margin that is to be retained on loans granted to the depositor against FCNRB deposits is: a) 10%

Q.132. Margin that is to be retained on loans to third parties against FCNB deposits is: c) 25%

Q.133. Deposits under FCNB scheme can be opened for a maturity period of: d) 1-5 years

Q.134. Compounding of interest on FCNB deposit is done: c) Half-yearly

Q.135. EEFC Account is: a) Exchange Earners Foreign Currency Account

Q.136. FCNB A/c can be in: d) Pound Sterling, U.S. $, Euro, Yen, Canadian $, Australian $

Q.137. Minimum maturity period for FCNB deposits is months: c) 12

Q.138. The market for shares sold outside the boundaries of the issuing company's home country is the:
d) Euro equity market

Q.139. Which one of the following is not a cause but a consequence of globalization? c) Technology and
know-how

Q.140. Which one of the following is not a source of fund available to banks Pre-shipment Credit in
Foreign Currency (PCFC) Scheme? a) EEFC A/c

Q.141. A major advantage of private placements over public offerings is: c) Elimination of SEC
registration

142. For small issues, which is the best method of marketing the securities? a) Public issue

Q.143. Which is the best method of selling the securities in India (big size)? a) Public issues

0.144. Private placements can be advantageous rather than public issue because: I) Private placements
are cheaper to market than public issues II) Private placements may still be sold to the general public
under SEC Rule 144A III) Privately placed securities trade on secondary markets a) I only

0.145. Which one of the following statements about IPOs is not true? c) IPOs generally provide superior
long term performance as compared to other stocks.

0.146. The bulk of most IPOs of equity securities go to: a) Institutional investors

0.147. IPOs are usually relative to the levels at which their prices stabilize after they begin trading in the
secondary market. c) Underpriced

0.148. Transaction that do not involve the original issue of securities take place in b) Secondary markets

Q.149. The scheme for opening of Resident Foreign Currency (RFC) Accounts was introduced in: a) 1992

0.150. It is the process of allowing market forces to progressively determine who gets and grants credit
and at what price. c) Deregualtion

Q.151. The following is not a feature of globalization: a) Similar strategies are adopted by a firm in all
markets

Q.152. Globalisation of markets has brought about economies of: d) All business operations

Q.153. is designed to give the investor exposure to growth in emerging and developed markets and
provide diversification. a) International portfolio

Q.154. The following is a characteristic of international investment in recent years: a) The total value of
international investment is less than the value of international trade in goods and services during the
same year

Q.155. Most favorable portfolio is proficient portfolio with the: c) Highest utility
Q.156. Larger fluctuations in portfolio value of foreign exchange of financial institutions leads to: b)
greater volatility of rates

Q.157. Ambiguity introduced by v,..cy by which organization finances its investments is: c) Financial risk

Q.158. Expected worth is the: d) Weighted average of all possible outcomes

Q.159. Liquidity FISK is c) is risk associated with secondary market transactions

Q.160. Bondholders usually accept interest payments each b) 6 months

Q.161. A corporate bond is a corporation's write undertaking that it will refund a specific amount of
money plus: b) Interest

Q.162. A price weighted index is an arithmetic mean of b) Current prices

Q.163. In the foreign exchange market, the of one country is traded for the of another country. a)
Currency; currency

Q.164. The date of settlement for a foreign exchange transaction is referred to as: d) Value date

Q.165. Which of the following is true of foreign exchange markets? c) The futures market is mainly used
by speculators while the forward market is mainly used for hedging

Q.166. An arbitrageur in foreign exchange is a person who: c) Simultaneously buys large amounts of a
currency in one market and sell it in another market

Q.167. A simultaneous purchase and sale of foreign exchange for two different dates is called: b)
Currency swap

0.166. Larger fluctuations in portfolio value of foreign exchange of financial institutions leads to: b)
Greater volatility of rates

0.169. Services such as commercial trade transactions and positions in financial investments provided by
financial institutions are classified as: c) Agent services

Q.170. For a foreign exchange of specific currency, non-hedged position is classified as: a) Open position

Q.1.

Indirect rate in foreign exchange means: a) The rate quoted with the units of home currency kept fixed

Q.2. The maxim 'buy low; sell high' is applicable for: c) Direct rates

Q.3. Hedging transaction is indicated by: d) None of the above

Q.4. The acronym SWIFT stands for: c) Society for Worldwide Interbank Financial Telecommunication

Q.177. Theory which considers change in exchange rate with fluctuations in inflation rates is classified
as: b) Purchasing power parity

Q.178. Benefits of using an FTZ: d) All of the above

Q.179. All foreign trade zones are special economic zones but all special economic zones are not foreign
trade zones. a) True

Q.180. Coupon rate of convertible bond is b) Lower

Q.181. Bonds that do not pay original coupon payment but payment is made from additional bonds are
classified as a) Payment in-kind bonds

Q.182. Type of bonds that pays no coupon payment but provides little appreciation are classified as: c)
Zero coupon bond

Q.183. Coupon payment is calculated with help of interest rate, then this rate considers as: c) Coupon
interest

Q.184. Coupon payment of bond which is fixed at time of issuance: a) Remains same

0.185. As compared to publicly placed issues, privately placed bonds are issued for: b) Higher paid
interest rates

Q.186. Type of Eurobonds which are convertible are considered as: d) Related to national market

Q.187. Longer debt instrument issued by government and corporations is considered as: b) Expansion
bonds

Q.188. Type of bonds that pay coupon interest are classified as: c) Coupon bond

Q.189. Type of bond whose present value is lesser than that of its face value is classified as: a) Discount
bond

Q.190. Type of bond for which bonds present value is greater than bonds face value is classified as: d)
Premium bond

Q.191. Type of bonds in which whole issues matures on a single date is considered as: a) Term bonds

0.192. Type of bonds that have tangible property as a collateral are classified as c) Equipment trust
certificates

0.193. Bond call provision that is not practiced even after several years of issuance is classified as: b)
Deferred call
Q.194. Price of an outstanding bond increases when market rate: c) Decreases

Q.195. An average inflation rate which is expected over life of security is classified as: a) Inflation
premium

Q.196. Type of bond which pays interest payment only when it earns is classified as a) Income bond

Q.197. Which of the following statement is false? . c) Bond prices remain fixed overtime

Q.198. Which of the following statements is true? a) Bonds are usually less liquid than stocks.

Q.199. Most Bonds: . c) Are interest-bearing obligations of governments or corporations

Q.200. Which of the following is not an advantage of investing in bonds? c) Bonds have unlimited profit
potential.

Q.201. Which of the.following is a capital market security? . d) Federal agency bonds.

Q.202. Which of the following is a money market security? b) Repurchase Agreements.

Q.203. Corporations borrow for the short term by issuing: b) Commercial paper.

Q.204. What is used to quote the rates on Eurodollar deposits? b) LIBOR.

Q.205. Which of the following provides income that is fully exempt from taxation for the individual
investor? c) Municipal Bonds.

Q.206. Which of the following is a residual claim on a firm's assets? a) Common Stock.

Q.207. Which of the following types of assets is least risky? b) Short-term corporate bonds.

Q.208. Which of the following types of assets offers the highest expected return? a) Options and futures.

Q.209. Which of the following types of financial assets represents a creditor relationship with an entity?
d) Bonds.

Q.210. Financial assets are also called. a) Securities

Q.211. A syndicated loan is a form of lending in which: a) A group of lenders collectively extend a loan to
a single borrower

Q.212. represents any restriction imposed on a borrower by a lender and would be part of the loan
agreement. b) Covenant

Q.213. A assets. a) Negative pledge clause

Q.214. lease refers to a short-term lease that is often cancelable. For example, a lease for office space
represents this type of lease where the lease life is less than the useful life of the asset. b) An operating
Q.215. A is a continuously offered debt instrument that is designed to fill the gap between commercial
paper and long-term bonds with maturities currently ranging from 9 months to 30 years and has gained
favor from the existence of shelf registration. c) Medium-term note

Q.216. are debt securities issued by foreign companies or governments and sold domestically. A)
international bonds

Q.217. Features of international bonds are d) All of the above

Q.218. is the financial market where participants buy and sell debt securities usually in the form of
bond. d) The bond market

Q.219. International bond markets can be done: b) Over the counters

Q.220. where bonds are issued for l' time from an issuing entity and then sold to leaders. a) Primary
bond market

Q.221. In the foreign exchange market, the of another country. a) Currency; currency

of one country is traded for the

0.171. Position which came in to existence because of holding assets less than liabilities is considered as
d) Net short in currency

0.172. Theory according to which difference between expected appreciation and foreign interest must
be equal to domestic interest rate is called: a) Interest rate parity theorem

Q.173. Rule which states that similar set of goods and services produced in various countries should
have equal price is classified as: d) Law of one price

Q.174. Reasons for smaller exposure of foreign exchange than US money center are: duals d) All of
above

Q.175. In equilibrium position, spread between foreign and domestic rate of interest must be equal to
spread of b) Forward and spot exchange rates

Q.176. In United States, JPMorgan Chase is considered as a) Largest foreign exchange trading

0.227. seek to profit from trading in the market itself rather than having the foreign exchange
transaction being incidental to the execution of a commercial or investment transaction. a) Speculators
and arbitragers

Q.228. Which of the following may be participants in the foreign exchange markets? d) All of the above

Q.229. While trading in foreign exchange takes place worldwide, the major currency trading centers are
located in: a) London, New York, and Tokyo. .
Q.230. A/An is an agreement between a buyer and seller that a fixed amount of one currency will be
delivered at a specified rate for some other currency. c) Foreign exchange transaction

Q.231. The date of settlement for a foreign exchange transaction is referred to as: d) Value date

Q.232. is where the investors who have bought bonds from the issuing entity go to sell these bonds and
where buyers looking for these bonds go. a) Secondary bond market

Q.233. In the year the bond market association was merged with securities industry association which
formed a new institution called the securities industry and financial market association. b) 2006

Q.234. the four major currencies used to denominate bonds are: d) Only a and b.

Q.235. In , a foreign company issues a bond denominated in a currency which is not the home currency
of the investors. c) Euro bond

Q.236. Participants in international bond market is/are: d) All of the above.

Q.237.

are issued in the offshore market and not governed by any specific country rules and regulation. d)
Euro bond

Q.238. is a bond where foreign compan le Choice Questions MCQs y Multi issues bond denominated in
the currency denomination of the foreign country. a) Foreign bond

Q.239. If the US company issues bond in pound sterling in Japan, it will also be considered as: b) Euro
bond

Q.240. If US company issues bond and raises capital in Japan denominated in Japanese yen is an
example of: c) Foreign bond

Q.241. A is a specific debt instrument issued by the government. d) Sovereign bond

Q.242. are normally associated with shorter duration bonds. a) Fixed coupon bonds

Q.243. is a security that pays interest or a coupon linked to a variable benchmark. b) Floating rate bond

Q.244. The most popular floating rate benchmark is the: c) LIBOR

Q.245. In a bonds are issued at a discount to the face value and when investors sale these bonds or at
maturity, they receive a higher amount. d) Zero coupon bond

Q.246. is also called as purchasing power risk. a) Inflation risk

Q.247. is the chance that companies or individual will be unable to the required payments om their
debt obligations. b) Default risk

Q.248. is the risk that a bond price will decline due to a downgrade in its credit rating. c) Downgrade
risk

Q.249. In loan syndication, the bank that heads the pact is known as: a) Lead Manager

Q.250. "Accounting standards set out the broad rules which govern financial reporting but do not lay
down the detailed accounting treatments of transactions and other items". b) False

Q.251. The abbreviation "GAAP" stands for: b) Generally accepted accounting practice

Q.252. Standards issued by the International Accounting Standards Board (IASB) are known as : c)
International Financial Reporting Standards (IFRSs)

Q.253. The sources of regulation which comprise the regulatory framework for financial reporting
include: d) All of the above

Q.254. The body to which the International Accounting Standards Board is responsible is: c) The IFRS
Foundation

Q.255. One of the main advantages of standardisation in financial reporting is: a) Comparability between
accounting periods and between entities

Q.256. "An entity which adopts international financial reporting standards must always circumstances".
adhere to the requirements of every standard, no matter what the b) False

Q.257. Credit risk is the risk that: a) One party to a financial instrument will cause a financial loss for the
other party by failing to discharge an obligation

Q.258. The accounting principle applied by standard IAS32 when distinguishing between liabilities and
equity is: c) Substance over form

Q.259. A conceptual framework for financial reporting is: c) A set of principles which underpin financial
reporting

Q.260. The primary users of general purpose financial reports are b) Investors and lenders

Q.261. The fundamental qualitative characteristics of financial information are a) Relevance and faithful
representation

Q.262. The enhancing qualitative characteristics of financial information include: b) Comparability and
understandability

Q.263. Which of the following is not a contributory factor towards faithful representation? d) Predictive
value
Q.264. Allowing a choice of alternative accounting treatments improves the consistency and
comparability of financial statements. b) False

Q.265. The elements of financial statements which relate to financial position are: c) Assets, liabilities
and equity

Q.266. If the current cost measurement basis is used, assets are measured at: a) Replacement cost

Q.267. The role of the IFRS Advisory Council is to: d) Inform the IASB of the Council's views on standard-
setting projects

Q.268. The IASB requires all entities to produce interim financial statements. b) False

Q.269. Standard IAS1 does not prescribe a format for each of the primary financial statements. a) True

Q.270. The main financial performance statement is a) The statement of profit or loss and other
comprehensive income

0.271. The main purpose of the statement of changes in equity c) To show how each component of an
entity's equity has changed during an accounting period

0.272. The notes to the financial statements should provide information: d) All of the above

Q.273. The term "accounting policies" refers to: d) All of the above

0.274. An entity may change one of its accounting policies: b) If this would result in the provision of
reliable and more relevant information

Q.275. For all changes in accounting policy, the entity concerned must disclose c) The nature of the
change

Q.276. A change in an accounting estimate should be accounted for: b) Prospectively

Q.277. The use of estimates always undermines the reliability of financial statements. b) False

Q.278. Prior period errors could be caused by: d) Any of the above

Q.279. A material prior period error should be corrected: a) Retrospectively

Q.280. The convergence of the Indian Accounting Standards with IFRS began in: a) Apr-11

Q.281. The global key professional accounting body is: b) The International Accounting Standards Board

0.282. The original cost at which an asset or liability is acquired is known as: d) Historical cost
Q.283. The International Accounting Standards Committee was set up in c) 1967

Q.284. The process of converting foreign-subsidiary financial statements into the home currency is
known as: a) Translation

Q.285. The accounting process in which the financial statements of a parent company and its
subsidiaries are added together to yield a unified set of financial statements is called: c) Consolidation

Q.286. A price on goods and services sold by one member of a corporate family to another, such as from
a parent to its subsidiary in a foreign country, is known as d) Transfer price

Q.287. Triple bottom line accounting is also called: c) Full cost accounting

Q.288. Which of the following is not a tax haven? a) England

Q.289. Accounting in India is governed by the: d) Institute of Chartered Accountants of India

Q.290. The process of providing financial information to external decision makers is referred to as: c)
Financial accounting.

Q.291. Financial statements generally include all but which of the following: b) Federal income tax
return.

Q.292. The primary objective of financial reporting is to provide information: d) Useful in predicting
cash flows.

Q.293. GAAP include which of the following pronouncements: d) All of the above.

Q.294. The documents that set forth fundamental concepts on which financial accounting and reporting
standards will be based are: b) statement of financial accounting concept

Q.295. The two primary decision-specific qualities that make accounting information useful are: d)
Relevance and reliability.

Q.296. Relevance requires that information possess predictive and/or feedback value and be: c) Timely.

Q.297. The qualitative characteristic that means there is agreement between a measure and a real-
world phenomenon is: b) Representational faithfulness.

Q.298. Which of the following is considered a practical constraint on the qualitative characteristics: c)
Cost effectiveness.

Q.299. Which of the following characteristics does not describe an asset: c) Requires the payment of
cash.

Q.300. Which of the following characteristics does not describe a liability: d) Must be legally
enforceable.
Q.301. The underlying assumption that presumes a company will continue indefinitely is: b) Going
concern.

Q.302. The underlying assumption that assumes that the life of a company can be divided into artificial
time periods is: a) Periodicity

Q.303. In general, revenue is recognized when the earnings process is virtually complete and: a)
Collection of the sales price is reasonably assured..

Q.304. The primary objective of the matching principle is to: c) Recognize expenses in the same period
as the related revenue.

Q.305. provide a common universal language for business affairs so that company accounts are
understandable and comparable across international boundaries. a) IFRS

0.306. foundation is a not-for-profit, public interest organization established to develop a signal set of
high-quality, understandable, enforceable and globally accepted accounting standard. d) IFRS

Q.307. The mission of IFRS is to bring developing IFRS standards. d) All of the above

to financial markets around the word by

Q.308. are a set of principles, companies follow when they prepare and publish their financial
statements, providing a standardized way of describing the company's financial performance. b)
Accounting Standards

Q.309. The IFRS foundation has a a) Three-tier

governance structure.

Q.310. IFRS Foundation monitoring board was created in a) January 2009

Q.311. The are responsible for the governance International Accounting Standards Board. b) Trustees

and oversight of the

Q.312. The are not involved in any technical matters relating to IFRS Standards. d) Trustees

Q.313. are responsible for the development and publication of IFRS Standards, including the IFRS for
SMEs Standards. c) Board Members

Q.314. The Interpretations Committee comprises 14 voting member, appointed by the of the IFRS
Foundation. d) Trustees

Q.315. was founded under the auspices of global securities regulators with the aim of contributing to
the development of global financial markets and cross-border economic activity. d) IFRS
Q.316. The objective of is to provide an advisory forum in which members can constructively contribute
toward the achievement of the Board's goal of developing globally accepted high-quality accounting
standards. a) Accounting Standards Advisory Forum (ASAF)

0.317. generally meets four times a year for two days, normally in London b) Accounting Standards
Advisory Forum(ASAF)

Q.318. staff normally provides an update for the Council, and invites Adviso ry questions and
comments from Council members. c) International Accounting standards Board(IASB)

Q.319. The was created as a body that would be independent of the IASB and the IFRS Foundation, with
the specific aim to provide the Board with regular input from the international community of users of
financial statements. d) Capital Market Advisory Committee(CMAC)

Q.320. The meets with the Board representatives three times a year in the IFRS Foundation office. a)
Capital Market Advisory Committee(CMAC)

Q.321. The was created in 2011 at the direction of the IFRS Foundation Trustees, with the aim of
enhancing the participation of emerging economies in the development of IFRS Standards. b) Emerging
Economic Group(EEG)

Q.322. is an independent body from the International Accounting Standards Board (the board) and the
IFRS Foundation, with the specific aim to provide the Board with regular input from the international
community of preparers of financial statements. c) Global Preparers Forum (GPF)

Q.323. The mission of the is to support the international adoption of the IFRS for SMEs Standard and
monitor its implementation. d) SME Implementation Group

Q.324. IFRS 1 is a) First -time Adoption of International Financial Reporting Standards

Q.325. IFRS 2 is b) Share-based Payment

Q.326. IFRS 4 is c) Insurance Contracts

Q.327. IFRS 5 is c) Non-current Assets Held for Sale and Discontinued Operations

Q.328. IFRS 6 is a) Exploration for and Evaluation of Mineral Resources

Q.329. IFRS 7 is b) Financial Instruments and Disclosures

Q.330. Ind-AS stands for: a) Indian accounting standard

Q.331. Ind AS was notified on which date: a) February 16, 2015

Q.332. As per the roadmap for Ind AS adoption, Net worth means? b) As defined in clause 2 (57)of the
Companies Act 2013
Q.222. Which of the following may be participants in the foreign exchange markets? d) All of the above

Q.223. It is characteristic of foreign exchange dealers to: b) Act as market makers, willing to buy and sell
the currencies in which they specialize

Q.224. The foreign exchange market is NOT efficient because: d) None of the reasons listed are accurate
because the foreign exchange market is efficient.

Q.225. Dealers sometimes use brokers in the foreign exchange market because the dealers desire: d)
All of the above

Q.226. Foreign exchange earn a profit by a bid-ask spread on currencies they purchase and sell. Foreign
exchange , on the other hand, earn a profit by bringing together buyers and sellers of foreign currencies
and earning a commission on each sale and purchase. b) Dealers; brokers

Thakur start

1) The existence of money is a beneficial to international business because . d) Money avoids costly
cross-border bartering of goods and services.

2) The International Monetary Fund is important because b) It has sufficient financial resources to help
individual countries facing balance of payments problems.

3) The functions of the International Monetary Fund include all of the following except.. c) ...to serve as
the world central bank.

4) The World Bank's Multilateral Investment Guarantee Agency (MIGA)...... d) Offers various forms of
political risk insunince.

5) This World Bank affiliate was developed to encourage direct investment in developing countries by
offering private investors insurance against non-commercial risks. b) Multilateral Guarantee Agency

6) The International Monetary Fund was developed to oversee the functioning of the international
monetary system out of which international meeting. a) Bretton Woods Agreement

7) A country's membership quota for the International Monetary Fund must hi madc in which forms of
deposit. c) The country's own currency and gold

8) This World Bank affiliate offers soft loans for a small fee. d) International Development Association

9) This World Bank affiliate provides debt and equity capital for promoting commercial activities in
developing countries. a) International Financial Corporation

I0i This is the official name of the World Bank. c) International Bank for Re-construction and
Development
I) Which of the following is a book entry with the IMF which can be used to settle debt between
countries? c) SDR

12) An overseas subsidiary is preferred to other methods of conducting international business

operations for all of the following reasons except: d) An overseas subsidiary allows international
business operations to be conducted without incurring significant risks.

I8) Given a home country and a foreign country. purchasing-power parity suggests that b) The home
currency will depreciate if the current home inflation rate exceeds the current foreign inflation rate

19) If Euro-sterling interest rates were consistently below Euro-dollar interest rates, then for the
International Fisher Effect to hold

b) The value of the British pound would tend to appreciate against the dollar.

20) If purchasing-power parity were to hold even in the short run then d) Real exchange rates should be
cable over time.

21) The international Fisher Effect suggests that should pound interest rates exceed U.S. dollar interest
rates c) The pound will depreciate against the dollar.

22) The Fisher Effect states that a) The nominal interest rate in any country equals. approximately, the
real rate of interest plus the expected rate of inflation.

13) Identify which of the following is not normally given as a factor that distinguishes international
capital investment decisions from domestic ones: c) A project-specilic discount rate will be needed for
overseas investment.

14) Identify the incorrect statement concerning the international financing decision. c) Parem company
guarantees on the debts of its subsidiaries can be ignored when making parent company financing
decisions.

15) Which of the following statements concerning the international financing decision is not correct? b)
The provision by a parent company of guarantees on the debts of its overseas subsidiaries means that
overall gearing is irrelevant.

16) The refers to the orderly relationship between spot and forward currency exchange rates and the
rates of interest between countries. b) Interest-rate parity

17) 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

25) The Fisher hypothesis is . b) The decomposition of the nominal interest rate into the sum of the
expected real interest rate and the expected rate of inflation.

26) The international parity conditions consist of c) UIRP. PPP. C1RP. and the Fisher hypothesis only
27) Interest-rate parity refers to the concept that, where market imperfections are few. c) There is an
offsetting relationship between interest rate differentials and differentials in the forward spot exchange
market.

4) The the expected profit from holding a foreign currency. the greater is the in the foreign exchange
market. b) Larger; quantity supplied of dollars

23) If the identical product or service can be sold in two different markets, no restrictions exist on the
sale, and transportation costs of moving the product between markets arc zero, the product's price
should be the same in both markets. This theory is called c) The Law of One Price

24) Interest-rate Parity (IRP) implies that d) The difference in interest rates in different currencies for
securities of similar risk and maturity should be consistent with the forward rate discount or premium
for the foreign currency.

I ) In the foreign exchange market, the of one country is traded for the of another country. a) Currency;
currency

2) The foreign exchange rate is the price at which the of one country exchanges for the_ of another
country. c) Currency; currency

3) Which of the following statement is correct? b) The higher the exchange rate, the larger is the
expected profit from selling dollars in the foreign exchange market.

5) A forward currency transaction a) Calls for exchange in the future of currencies at an agreed rate of
exchange.

6) Under a fixed exchange rate system a) Central bank intervention in the foreign exchange market is
often necessary.

7) Due to market forces should realign the relationship between the interest rate differential of two
currencies and the forward premium or discount) on the forward exchange rate between the two
currencies. c) Covered interest arbitrage

8) In which case will locational arbitrage most likely be feasible? b) One bank's bid price for a currency
is greater than another bank's ask price for the currency.

9) Under a managed float regime . b) The central bank attempts to influence the exchange rate.

10) Advantages of exchange rate targeting include a) Effective control of inflation.

27) Governments use a multiple exchange rate system to c) control foreign exchange convertibility
20) Why do most companies use the foreign exchange market? c) To convert currency for import and
export, transactions.

29) What is the goal of arbitrage? d) Purchasing foreign currency on one market for immediate re-sale
on .other market in order to make a profit.

30) Which of the following statement is true regarding financial institutions and foreign exchange? . c)
Most foreign exchange trades take place in the OTC market.

31) Tarapore Committee II has suggested fuller capital account convertibility of Indian rupee by the year
in 3 different stages. c) 2007

32) The bid-ask spread in the foreign exchange market is the c) Difference between the hid and ask
quotes for a currency

3) For which of the following reasons do investors use the foreign exchange market? d) All of the above

11) Under a fixed exchange rate regime, if the exchange rate is overvalued the central bank must
domestic currency to the expected return on domestic deposits. a) Purchase: increase

12) Managed float b) Prevents large fluctuations in exchange rates, making it easier to plan for the
future.

13) A (an) is an arrangement by which two parties exchange one currency for another and agree that
the exchange will be reversed at a stipulated date in the future. b) Swap

14) The relationship between the exchange rate and the prices of tradable goods is known as the a)
Purchasing-power-parity theory

15) An exchange rate is said to when its short-run response to a change in market fundamentals is
greater than its long-run response. a) Overshoot

16) Which of the following is not a potential disadvantage of freely floating exchange rates a) They
require larger amounts of international reserves than other exchange systems.

17) Under a system of fixed exchange rates, which of the following policies promotes internal balance
for a nation? a) Fiscal policy

18) Under a system of floating exchange rates, which of the following policies promotes internal balance
for a nation? b) Monetary policy

42) The spot exchange rate _ a) Is the rate today for exchanging one currency for another for immediate
delivery

43) Which of the following is an example of a natural hedge? a) The prices and costs are both
determined in the global marketplace.
 44) According to GAAP, goods shipped with a foreign currency-denominated invoice use the to record
the value of the sale in the local currency. c) Spot rate on the day of the transaction

45) Translation exposure arises only when a firm c) Has a foreign subsidiary/has foreign joint venture.

46) When the Rupee strengthens, the reported consolidated earnings of India-based MNCs are affected
by translation exposure. When the Rupee weakens, the reported consolidated earnings are affected. d)
Favourably; unfavourably affected

47) Which of the following is not true about translation risk? c) The gain and losses are purely of a paper
nature.

34) is the instantaneous purchase and sale of a currency in different markets for profit b) currency
arbitrage

35) The exchange rate between the euro ( ) and the dollar is 0.84614. Which of the following is the
correct direct quote on the dollar? b) $1.1819/

36) An exchange rate calculated using two other exchange rates is called a d) Cross rate

37) Which of the following is an exchange rate that requires delivery of the traded currency within two
business days? b) Spot rate

38) If the spot for the British pound (GBP) is $1.6950/GBP and the 30-day forward rate is $1.6921/GBP,
then the pound is trading at a in the 30-day market. b) Discount

39) Which of these is the simultaneous purchase and sale of foreign exchange for two different dates?
c) Currency swap

40) What are convertible currencies? d) Currencies that can be freely exchanged for other currencies
without legal restrictions.

41) The forward exchange rate b) Is the rate today for exchanging one currency for another at a specific
future date

8) Margin that is to be retained on loans granted to the depositor against FCNRB deposit is a) 10
percentage

9) Margin that is to he retained on loans to third parties against FCNB deposits is c) 25%

101 Deposits under FCNB scheme can he opened for a maturity period of d) 1-5 years

11) Compounding of interest on FCNB deposit is done c) Half-yearly

12) EEFC Account is a) Exchange Earners Foreign Currency Account

13) FCNB A/c can be in d) Pound Sterling, U.S. $, Euro, Yen, Canadian $, Australian $
14) Minimum maturity period for FCNB deposits is months c) 12

15) The market for shares sold outside the boundaries of the issuing company's home country is the

d) Euroequity market

16) Which one of the following is not a cause but a consequence of globalisation? c) Technology and
know-how

17) Which one of the following is not a source of fund available to banks Pre-shipment Credit in Foreign
Currency (PCFC) Scheme? d) FCNR(B) A/cs

Which of the following is not a purpose of the international capital market? d) Preserving hard
currencies to finance trade deficits

2) The international capital market d) Allows investors to reduce risk by holding international securities
whose prices move independently

3) The international capital market's rapid growth rate is traced to all these except c) Foreign exchange
rates

4) Deregulation of capital markets resulted in all of the following except d) Reduced the use of micro-
credit

5) An efficient capital market is one where c) Security prices always rationally reflect all relevant
information. d) Security prices do not reflect all relevant information.

6) The primary capital market is one d) Where businesses raise finance from investors.

7) How much percentage of foreign currency can be credited to EEFC Account of a customer in Special
Economic Zone? b) 100%

18) A major advantage of private placements over public offerings is c) Elimination of SEC registration

19) For small issues. which is the best method of marketing the securities a) Public issues

20) Which is the most popular method of selling the securities in India (big size)? a) Public issues

21) Private placements can be advantageous rather than public issue because I) Private placements are
cheaper to market than public issues II) Private placements may still be sold to the general public under
SEC Rule 144A III) Privately placed securities trade on secondary markets a) I only

22) Which one of the following statement about IPOs is not true? c) IPOs generally provide superior
long-term performance as compared to other stocks.

23) The bulk of most Initial Public Offerings (IPOs) of equity securities go to a) Institutional investors
Which of the following statements explains why a company may want to borrow money in the
international bond market? b) It allows a company to diversify its funding S011iCeS.

2) Deregulation of capital markets resulted in all of the following except d) Reduced the use of micro-
credit

3) The international bond market consists of all bonds sold by issuing companies, governments, or other
organisations c) Outside their own countries

4) The most important factor fuelling growth in the international bond market is d) Low interest rates

5) Typical buyers of bonds include all of the following except d) Governments in need of funds

6) Eurobonds account for per cent of all international bonds. d) 75 to 80

7) Eurobonds are popular because c) Of the absence of government regulation

8) The absence of government regulation in the Eurobond market a) Substantially reduces the cost of
issuing a bond

Initial Public Offerings (IPOs) are usually relative to the levels at which their prices stabilise after they
begin trading in the secondary market. c) Underpriced

25) Transactions that do not involve the original issue of securities take place in b) Secondary markets

26) The scheme for opening of Resident Foreign Currency (RFC) Accounts was introduced in a) 1992

27) It is the process of allowing market forces to progressively determine who gets and grants credit and
at what price. c) Deregulation

28) The following is not a feature of globalisation a) Similar strategies are adopted by a firm in all
markets.

29) Globalisation of markets has brought economies of d) All business operations

30) is a secured domestic area in international commerce, considered to be legally outside a country's
customs territory. It is an area designated by a government for the duty-free entry of goods. b) Foreign
trade zone

9) Bonds sold outside the borrower's country and denominated in the currency of the country in which
they are sold are called b) Foreign bonds

10) Foreign bonds account for about per cent of all international bonds. a) 20 to 25

11) Bonus issues are given to the shareholders d) None of these

12) Which one of the following is not an advantage of Eurobonds as a source of finance for firms? c)
They are relatively safe instruments to hold, as ownership rights of bonds are registered with the
company.

13) Which of the following is true : a) A convertible bond is one that entitles the holder to convert the
bond to shares at a future date(s) on pre-set temis.

14) A is a bond underwritten by a syndicate from a single country, sold within that country,
denominated in that country's currency, but the issuer is from outside that country. a) Foreign bond

15) A (An) loan is a credit in which a group of banks makes funds available on common terms and
conditions to a particular borrower. c) Syndicated

16) are debt instruments that have their principal or coupon payments tied to some other underlying
variable. a) Structured notes

22) The duration of a coupon bond d) non of the given answers are true

23) The duration of a bond normally increases with an increase in a) Term to maturity

24 ) The duration of a 15-year zero-coupon bond is c) Equal to 15

25) A coupon bond is a bond that . a) Pays interest on a regular basis (typically every six months).

26) A bond will sell at a premium to par when a) its coupon rate is greater than its yield to maturity

17) has coupons denominated in a currency other than that of their principal , c) Euromarket bonds

18) The "agent bank" in a syndicated loan c) Is the agent for all parties to the transaction and acts as
the designated channel for communications between the borrower and the syndicate.

19) is the charge paid on undrawn balances of the credit. This is also known as facility fee and is levied
to compensate the banks for keeping funds ready. b) Commitment fee

20) Which of the following is true about a zero coupon bond? b) You pay taxes on the interest earned
each year even though you do not receive it until maturity .

2 1) Which of the following information cannot he found in a bond's indenture? c) The price of the
bond

The sources of regulation which comprise the regulatory framework for financial reporting include d) all
of the above

2) Standards issued by the International Accounting Standards Board (IASB) are known as c)
International Financial Reporting Standard (IFRSs)

The role of the IFRS Advisory Council is to d) Inform the !ASH of the ('ouncil's views on standard-setting
projects
6) The word "entity" as used by the IASB refers to a) Profit-oriented organisations only

7) IFRS requires changes in accounting principles to be reported b) On a retrospective basis

Under IFRS, changes in accounting policies are a) Permitted if the change will result in a more reliable
and more relevant presentation of the financial statements.

9) Under IFRS, a voluntary change in accounting method may only be made by a company if c) The new
method provides reliable and more relevant information.

40) International Accounting Standards are a) Issued by the IASB

11) IAS 21, "Accounting for the Effects of Changes in Foreign Exchange Rates", does not address
forward . contracts d) Of any type

3) The body to which the International Accounting Standards Board is responsible is c) The IFRS
Foundation

4) One of the main advantages of standardisation in financial reporting is: a) Comparability between
accounting periods and between entities

Which of the following is not a precautionary motive for holding cash? c) The firm must pay ordinary
wages in two days.

19) Which of the following is not a function covered by international cash management? b)
Manipulating transfer prices.

12) Which one of the following is not an objective of the International Accounting Standards Board
(IASB)? b) To develop and promote a global acclaiming system

13) An entity Much complies with IRIS may depart from the requirements of an international standard
b) If compliance would produce misleading information

14) The conceptual framework for financial reporting is c) A set of principles which underpin financial
reporting

15) The IASB conceptual framework is being developed jointly with d) The U.S. Financial Accounting
Standards Board

16) Which of the following statements most accurately describes the modern approach to cash
management?. c) Cash management involves the efficient processing, collection, and depositing of cash.

17) Which of the following statements about financial reporting requirements in different countries is
correct? d) The U.S. accounting profession has rejected efforts toward international standards.

19) Concerning the pursuit of internal balance under a fixed exchange rate system a) Fiscal policy is
successful in promoting internal balance, while monetary policy is unsuccessful.
20) Under a system of managed-floating exchange rates with heavy exchange rate intervention b)
Monetary policy is successful in promoting internal balance, while fiscal policy is unsuccessful.

21) With floating exchange rates, an autonomous increase in imports a) Increases exports because the
currency depreciates.

22) is money denominated in the currency of another nation or group of nations a) Foreign exchange

23) A(An) is the number of units of one currency that buys one unit of another currency, and this
number can change daily. d) Exchange rate

24) is the price of a currency. c) Exchange rate

25) If Andrea wanted to purchase Spanish castanets from a company in Barcelona and needed euros to
complete the transaction, she would use the b) Foreign exchange market

26) Outright forward transactions involve the exchange of currency beyond three days at a fixed
exchange rate, known as the b) Forward rate

20) is the process that cancels via offset all, or part, of the debt owed by one entity to another related
entity. c) Multilateral netting

21) Which of the following methods for translating foreign currency financial statements may be used
under IAS 21? c) Temporal method

22) Preparation of "Consolidated Financial Statement Details" are given in b) AS 21