Foreign Exchange Market and Management of Exchange Rate MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Foreign Exchange Market and Management of Exchange Rate, a fundamental topic in the field of IC 89 Management Accounting. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our Foreign Exchange Market and Management of Exchange Rate MCQs are designed to help you grasp the core concepts and excel in solving problems.

In this section, you'll find a wide range of Foreign Exchange Market and Management of Exchange Rate mcq questions that explore various aspects of Foreign Exchange Market and Management of Exchange Rate problems. Each MCQ is crafted to challenge your understanding of Foreign Exchange Market and Management of Exchange Rate principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace IC 89 Management Accounting tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our Foreign Exchange Market and Management of Exchange Rate MCQs are your pathway to success in mastering this essential IC 89 Management Accounting topic.

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Foreign Exchange Market and Management of Exchange Rate MCQs | Page 9 of 9

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Q81.
What is the "Spread" in the foreign exchange market?

a.

The difference between bid and offer

b.

The difference between direct and indirect quotation

c.

The difference between spot and forward transactions

d.

The difference between major and minor currencies

Discuss
Answer: (a).The difference between bid and offer Explanation:The spread is the difference between the bid (price at which the dealer is willing to buy another currency) and the offer (rate at which the dealer is willing to sell another currency).
Q82.
What does "Cross rates" refer to in the foreign exchange market?

a.

Rates between major currencies

b.

Rates involving the US dollar

c.

Rates expressed by a pair of currencies without involving the country's currency

d.

Rates determined by market speculation

Discuss
Answer: (c).Rates expressed by a pair of currencies without involving the country's currency Explanation:Cross rates refer to the Exchange Rate expressed by a pair of currencies in which none of the currencies is the currency of the country.
Q83.
Which of the following is NOT a technique of Exchange Rate forecasting?

a.

Technical forecasting

b.

Fundamental forecasting

c.

Economic forecasting

d.

Market-based forecasting

Discuss
Answer: (c).Economic forecasting Explanation:Technical forecasting, Fundamental forecasting, and Market-based forecasting are techniques of Exchange Rate forecasting, but Economic forecasting is not.
Q84.
What is the first level of the Foreign Exchange Market (FEM)?

a.

Small banks, MNCs, hedge funds, and retailers

b.

Inter-bank market comprising commercial bank, investment bankers, central banks, and Non-Banking financial institutions of countries

c.

Retailers and individual traders

d.

Central banks and large financial institutions

Discuss
Answer: (b).Inter-bank market comprising commercial bank, investment bankers, central banks, and Non-Banking financial institutions of countries Explanation:The first level of the Foreign Exchange Market (FEM) is occupied by the inter-bank market comprising commercial bank, investment bankers, central banks, and Non-Banking financial institutions of countries.
Q85.
What is Purchasing Power Parity (PPP)?

a.

The exchange rate between two countries

b.

The price level in a country

c.

The purchasing capacity of one unit of currency

d.

The balance of payments between countries

Discuss
Answer: (c).The purchasing capacity of one unit of currency Explanation:Purchasing Power Parity (PPP) is defined as the purchasing capacity of one unit of currency, indicating the amount of goods and services that can be purchased with one unit of currency.
Q86.
In case of US dollar what will be the settlement date in a spot transaction?.

a.

Same day

b.

Next Working day

c.

Two days ahead of the transaction

d.

Three days ahead of the transaction

Discuss
Answer: (b).Next Working day Explanation:In spot transaction settlement date is two days ahead of the transaction except in the case of the US dollar, the Canadian Dollar, or Russian Ruble, which are settled on the next working day.
Q87.
Which of the following type of forecasting is greatly used by MNCs for prediction of future value?

a.

Technical Forecasting

b.

Fundamental Forecasting

c.

Market Based Forecasting

d.

Regression Forecasting

Discuss
Answer: (a).Technical Forecasting Explanation:MNCs (Multinational Corporations) greatly use technical forecasting for the prediction of future value. Technical forecasting involves the use of historical data and time series models to predict future values.
Q88.
What is the ISO code for US dollar?

a.

GBP

b.

SGD

c.

USD

d.

AUD

Discuss
Answer: (c).USD Explanation:The International Standard Organization (ISO) code for the US dollar is USD.
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