International Financial Management MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on International Financial Management, 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 International Financial Management 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 International Financial Management mcq questions that explore various aspects of International Financial Management problems. Each MCQ is crafted to challenge your understanding of International Financial Management 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 International Financial Management MCQs are your pathway to success in mastering this essential IC 89 Management Accounting topic.

Note: Each of the following question comes with multiple answer choices. Select the most appropriate option and test your understanding of International Financial Management. You can click on an option to test your knowledge before viewing the solution for a MCQ. Happy learning!

So, are you ready to put your International Financial Management knowledge to the test? Let's get started with our carefully curated MCQs!

International Financial Management MCQs | Page 11 of 13

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Q101.
When is foreign investment considered as FDI?

a.

Only if it involves upfront pricing

b.

Only if it is made in fully convertible debentures

c.

Only if it is made in equity shares

d.

If it is made in equity shares, fully and mandatorily convertible preference shares, and fully and mandatorily convertible debentures with upfront pricing

Discuss
Answer: (d).If it is made in equity shares, fully and mandatorily convertible preference shares, and fully and mandatorily convertible debentures with upfront pricing Explanation:Foreign investment is considered as FDI if it is made in equity shares, fully and mandatorily convertible preference shares, and fully and mandatorily convertible debentures with upfront pricing.
Q102.
What is the requirement for the pricing or conversion formula of convertible capital instruments according to the FDI policy?

a.

It should be decided at the time of conversion

b.

It should be determined upfront at the time of issue

c.

It should be lower than the fair value worked out at the time of issuance

d.

It should be decided based on the extant FEMA regulations

Discuss
Answer: (b).It should be determined upfront at the time of issue Explanation:The pricing or conversion formula of convertible capital instruments should be determined upfront at the time of issue, according to the FDI policy.
Q103.
What are the permissible methods for an Indian company to receive the amount of consideration for shares or convertible debentures under the FDI Scheme?

a.

Only through inward remittance

b.

Only through debit to NRE/FCNR account

c.

Multiple methods including inward remittance, debit to NRE/FCNR account, and conversion of royalty or technical knowhow fee

d.

Only through conversion of import payables

Discuss
Answer: (c).Multiple methods including inward remittance, debit to NRE/FCNR account, and conversion of royalty or technical knowhow fee Explanation:There are multiple methods, including inward remittance, debit to NRE/FCNR account, and conversion of royalty or technical knowhow fee, for an Indian company to receive the amount of consideration for shares or convertible debentures.
Q104.
What happens if shares or convertible debentures are not issued within 180 days from the date of receipt of inward remittance or debit to NRE/FCNR/Escrow account?

a.

The company is fined by the Reserve Bank

b.

The amount received shall be refunded

c.

The company is obligated to issue shares after 180 days

d.

The amount is forfeited by the government

Discuss
Answer: (b).The amount received shall be refunded Explanation:if shares or convertible debentures are not issued within 180 days, the amount shall be refunded.
Q105.
Under what conditions may the Reserve Bank permit an Indian company to refund or allot shares after the 180-day period?

a.

Without any conditions

b.

If the company provides sufficient reasons

c.

If the company receives a penalty notice

d.

If the FIPB approves the request

Discuss
Answer: (b).If the company provides sufficient reasons Explanation:The Reserve Bank may permit an Indian company to refund or allot shares after the 180-day period for sufficient reasons.
Q106.
In which sectors has FDI not been prohibited under the Government Route or the Automatic Route?

a.

Information Technology

b.

Atomic Energy

c.

Tourism

d.

Education

Discuss
Answer: (b).Atomic Energy Explanation:There are some sectors where FDI has not been prohibited, including Atomic Energy.
Q107.
What is NOT a permissible method for an Indian company to receive the amount of consideration for shares or convertible debentures?

a.

Debit to non-interest bearing Escrow account

b.

Inward remittance through normal banking channels

c.

Conversion of import payables

d.

Cash payment in foreign currency

Discuss
Answer: (d).Cash payment in foreign currency Explanation:Cash payment in foreign currency is not a permissible method for receiving the amount of consideration for shares or convertible debentures.
Q108.
What recent reform has the Reserve Bank of India introduced in India's FDI Policy?

a.

Imposing stricter lock-in periods

b.

Prohibiting exits for non-resident investors

c.

Easing rules for exits with a lock-in period

d.

Mandating an assured return for investors

Discuss
Answer: (c).Easing rules for exits with a lock-in period Explanation:The Reserve Bank of India has eased rules for foreign direct investment, allowing exits subject to a lock-in period.
Q109.
What is the minimum lock-in period for exit according to the recent changes in the FDI Policy?

a.

6 months

b.

1 year

c.

2 years

d.

3 years

Discuss
Answer: (b).1 year Explanation:The minimum lock-in period for exit is at least one year.
Q110.
In the case of an unlisted company, how can an investor exit after the lock-in period?

a.

At the market price prevailing at the stock exchanges

b.

At any price decided by the investor

c.

At a price exceeding the return on equity as per the latest audited Balance Sheet

d.

At a price not exceeding the return on equity as per the latest audited Balance Sheet

Discuss
Answer: (d).At a price not exceeding the return on equity as per the latest audited Balance Sheet Explanation:In the case of an unlisted company, an investor can exit in equity shares at a price not exceeding that arrived at on the basis of return on equity as per the latest audited Balance Sheet.
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