International Financial Management MCQ

International Financial Management MCQ

  • Admin
  • 21st Nov, 2022

Take International Financial Management MCQ Test to Test your Knowledge

Practice here the 20+ International Financial Management MCQ Questions that check your basic knowledge of International Financial Management. This International Financial Management MCQ Test contains 20 Multiple Choice Questions, that are very important & mostly asked in exams. apart from this, you can also download below the International Financial Management MCQ PDF completely free.

International Financial Management MCQ

1) The current system of international finance is a ____.

  • A. gold standard
  • B.fixed exchange rate system
  • C.floating exchange rate system
  • D.managed float exchange rate system

2) A simultaneous purchase and sale of foreign exchange for two different dates is called ___.

  • A. currency devalue
  • B.currency swap
  • C.currency valuation
  • D.currency exchange

3) Hedging is used by companies to:

  • A. Decrease the variability of tax paid
  • B.Decrease the variability of expected cash flows
  • C.Increase the variability of expected cash flows
  • D.Decrease the spread between spot and forward market quotes

4) Derivative securities includes:

  • A. swap contract
  • B.futures contract
  • C.option contract
  • D.All of the above

5) By definition, currency appreciation occurs when:

  • A. the value of all currencies fall relative to gold.
  • B.the value of all currencies rise relative to gold.
  • C.the value of one currency rises relative to another currency.
  • D.the value of one currency falls relative to another currency.

6) If purchasing power parity were to hold even in the short run, then:

  • A. quoted nominal exchange rates should be stable over time.
  • B.real exchange rates should tend to increase over time.
  • C.real exchange rates should be stable over time.
  • D.real exchange rates should tend to decrease over time.

7) In the foreign exchange market, the ________ of one country is traded for the ________ of another country.

  • A. currency; currency
  • B.currency; financial instruments
  • C.currency; goods
  • D.goods; goods

8) A floating exchange rate ____.

  • A. is determined by the national governments involved
  • B.remains extremely stable over long periods of time
  • C.is determined by the actions of central banks
  • D.is allowed to vary according to market forces

9) The date of settlement for a foreign exchange transaction is referred to as:

  • A. Clearing date
  • B.Swap date
  • C.Maturity date
  • D.Value date

10) Which one of the following is not a type of foreign exchange exposure?

  • A. Tax exposure
  • B.Translation exposure
  • C.Transaction exposure
  • D.Balance sheet exposure

11) Which of the methods below may be viewed as most effective in protecting against economic exposure?

  • A. Futures market hedging
  • B.Forward contract hedges
  • C.Geographical diversification
  • D.Money market hedges

12) The impact of Foreign exchange rate on firm is called as:

  • A. Operating Exposure
  • B.Transaction exposure
  • C.Translation exposure
  • D.Business risk

13) Foreign currency forward market is ____.

  • A. An over the counter unorganized market
  • B.Organized market without trading
  • C.Organized listed market
  • D.Unorganized listed market

14) An economist will define the exchange rate between two currencies as the:

  • A. Amount of one currency that must be paid in order to obtain one unit of another currency
  • B.Difference between total exports and total imports within a country
  • C.Price at which the sales and purchases of foreign goods takes place
  • D.Ratio of import prices to export prices for a particular country

15) The Purchasing Power Parity should hold:

  • A. Under a fixed exchange rate regime
  • B.Under a flexible exchange rate regime
  • C.Under a dirty exchange rate regime
  • D.Always

16) Covered interest rate parity occurs as the result of:

  • A. the actions of market-makers
  • B.interest rate arbitrage
  • C.purchasing power parity
  • D.stabilising speculation

17) Arbitrageurs in foreign exchange markets:

  • A. attempt to make profits by outguessing the market
  • B.make their profits through the spread between bid and offer rates of exchange
  • C.need foreign exchange in order to buy foreign goods
  • D.take advantage of the small inconsistencies that develop between markets

18) The forward market is especially well-suited to offer hedging protection against

  • A. translation risk exposure.
  • B.transactions risk exposure.
  • C.political risk exposure.
  • D.taxation.

19) Financial management process deals with ____.

  • A. Investments
  • B.Financing decisions
  • C.Both a and b
  • D.None of the above

20) It is very difficult to interpret news in foreign exchange markets because:

  • A. very little information is publicly available
  • B.most of the news is foreign
  • C.it is difficult to know which news is relevant to future exchange rates
  • D.It is difficult to know whether the news has been obtained legally

21) Which of the following refers to currency speculation?

  • A. The exchange rate at which a foreign exchange dealer will convert one currency into another that particular day
  • B.Simultaneous purchase and sale of a given amount of foreign exchange for two different value dates
  • C.The short-term movement of funds from one currency to another in the hopes of profiting from shifts in exchange rates
  • D.None of the above

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