Foreign Exchange Markets MCQs for Entry Test with Answers and Explanations [PDF]

For a foreign exchange of specific currency, the non-hedged position is classified as __________?

Option A: open position

Option B: close position

Option C: currency long position

Option D: currency short position

Correct Answer: open position ✔

Click for More Details

The theory according to which the difference between expected appreciation and foreign interest must be equal to domestic interest rate, is called __________?

Option A: interest rate parity theorem

Option B: appreciation parity theorem

Option C: domestic parity theorem

Option D: foreign interest parity theorem

Correct Answer: interest rate parity theorem ✔

Click for More Details

The reasons for smaller exposure of foreign exchange than US money center are __________?

Option A: regulations

Option B: prudent individuals

Option C: smaller size of assets

Option D: all of the above

Correct Answer: all of the above ✔

Click for More Details

In United States, the JPMorgan Chase is considered as __________?

Option A: largest foreign exchange trading

Option B: smaller foreign exchange trading

Option C: largest bond holder

Option D: smaller bond holder

Correct Answer: largest foreign exchange trading ✔

Click for More Details

The inflation rate in United States is added into real rate of interest to calculate __________?

Option A: quoted interest rate in United States

Option B: nominal interest rate in United States

Option C: interest rate in United States

Option D: discount rate of country

Correct Answer: interest rate in United States ✔

Click for More Details

The position which came in to existence because of holding assets more than liabilities is considered as __________?

Option A: net long in currency

Option B: net short in currency

Option C: net surplus in assets

Option D: net surplus in liabilities

Correct Answer: net long in currency ✔

Click for More Details

In equilibrium position, the spread between foreign and domestic rate of interest must be equal to spread of __________?

Option A: domestic rates

Option B: forward and spot exchange rates

Option C: forward rate

Option D: spot rates

Correct Answer: forward and spot exchange rates ✔

Click for More Details

The rule which states that similar set of goods and services produced in various countries should have equal price is classified as __________?

Option A: law of similar mortgage rate

Option B: law of one type manufacturing

Option C: law of similar labor rules

Option D: law of one price

Correct Answer: law of one price ✔

Click for More Details

The position which came in to existence because of holding assets less than liabilities is considered as __________?

Option A: net surplus in assets

Option B: net surplus in liabilities

Option C: net long in currency

Option D: net short in currency

Correct Answer: net short in currency ✔

Click for More Details

The larger fluctuations in portfolio value of foreign exchange of financial institutions leads to __________?

Option A: greater liquidity of assets

Option B: greater volatility of rates

Option C: lesser volatility of rates

Option D: lesser liquidity of assets

Correct Answer: greater volatility of rates ✔

Click for More Details

The services such as commercial trade transactions and positions in financial investments provided by financial institutions are classified as __________?

Option A: trade services

Option B: investment services

Option C: agent services

Option D: commercial services

Correct Answer: agent services ✔

Click for More Details

The theory which considers the change in exchange rate with the fluctuations in inflation rates is classified as __________?

Option A: liquidated power parity

Option B: purchasing power parity

Option C: selling power parity

Option D: volatile power parity

Correct Answer: purchasing power parity ✔

Click for More Details