BFM A - Unit 1 set 1 - Motivational Banker

1. Foreign Exchange markets are

regional markets.

domestic markets.

global markets.

localized exchange traded markets.

Question 1 of 26

2. Foreign exchange does not include:

Deposits payable in foreign currency.

Instruments drawn in foreign currency and payable in a foreign currency.

instruments drawn in Indian rupees on a checking account of the drawer and payable abroad.

instruments drawn in Indian rupees on a current account of an Indian company and payable in India.

Question 2 of 26

3. Out of the several factors, the following factor does not have an effect in the movement of exchange rates:

Political instability

Increase in domestic interest rates

Change in Taxation policy

Increase in domestic tourism

Question 3 of 26

4. Spot dealing in FX market means:

Delivery of funds is on the 30th working day from the date of deal.

Delivery of funds is on the second working day from the date of deal.

Delivery of funds is next date from the date of deal.

Delivery of funds is one week after the date of deal.

Question 4 of 26

5. The rate at which the quoting bank is ready to sell the currency is called

Bid rate.

Offer Rate.

TT Buying Rate.

Swap rate.

Question 5 of 26

6. Operational Risk does not include:

movement in exchange rates.

Human errors.

Technical Faults.

Systemic failures.

Question 6 of 26

7. Cancellation of forward contacts is to be done at:

Opposite Bill rate.

Opposite Cash rate.

Opposite TT rate.

Opposite TC rate.

Question 7 of 26

8. Crystallization of export bills is to be done:

On the 10th day from the due date of the bills.

Before the due date.

As per the policy of the Bank.

On the due date itself.

Question 8 of 26

9. Crystallization of export bills is to be done:

On the 10th day from the due date of the bills.

Before the due date.

As per the policy of the Bank.

On the due date itself.

Question 9 of 26

10. What are the characteristics of the foreign exchange market?

Limited trading hours due to geographical constraints.

Strictly exchange-driven with no over-the-counter transactions.

Regional market with specific physical locations for trading.

A 24-hour market with global participation, high liquidity, and frequent fluctuations in currency rates.

Question 10 of 26

11. What is the primary function of central banks in the foreign exchange market?

Speculating on currency movements for profit.

Managing forex reserves to stabilize their home currency.

Providing two-way quotes for market participants.

Facilitating OTC transactions between banks.

Question 11 of 26

12. Which of the following is NOT considered a fundamental reason influencing exchange rates?

Balance of payment (BOP)

Monetary policy

Speculative forces

Economic growth rate

Question 12 of 26

13. How can political stability affect exchange rates?

Political stability leads to economic instability, weakening the home currency.

Political instability often strengthens the home currency due to increased investor confidence.

Political stability is unrelated to exchange rate movements.

Political stability typically leads to economic stability and strengthens the home currency.

Question 13 of 26

14. What is the characteristic of a SPOT Forex deal?

Settlement of funds takes place on the same day as the transaction date.

Settlement of funds takes place one working day after the transaction date.

Settlement of funds takes place two working days after the transaction date.

Settlement of funds takes place at the end of the month following the transaction date.

Question 14 of 26

15. In a Ready or Cash FX deal, when does the delivery of funds and settlement typically take place?

On the date of the transaction

One working day after the transaction date

Two working days after the transaction date

At the end of the month following the transaction date

Question 15 of 26

16. How can speculative forces affect exchange rates?

They have no effect on exchange rates.

They can lead to appreciation of the home currency.

They can lead to depreciation of the home currency.

They only impact long-term exchange rates.

Question 16 of 26

17. What is one potential outcome of speculative deals in the foreign exchange market?

Increased market stability

Reduction in market liquidity

Contagious effects on other market participants

Limited impact on exchange rates

Question 17 of 26

18. What is the characteristic of a "Tom" deal in the foreign exchange market?

Settlement of funds occurs on the same day as the deal.

Settlement of funds occurs on the next working day after the deal.

Settlement of funds occurs on the second working day after the deal.

Settlement of funds occurs on any day after the Spot date.

Question 18 of 26

19. How does a "Forward" deal differ from a "Spot" deal in the foreign exchange market?

Settlement of funds occurs on the same day as the deal in both cases.

Settlement of funds occurs on the second working day after the deal in both cases.

Settlement of funds occurs on a specific future date in a Forward deal, while it occurs on the second working day after the deal in a Spot deal.

Settlement of funds occurs on any day after the Spot date in a Forward deal, while it occurs on the second working day after the deal in a Spot deal.

Question 19 of 26

20. In direct quotes for currency exchange rates, which currency's value remains variable?

The foreign currency

The home currency

Both currencies

None of the currencies

Question 20 of 26

21. Cross rates are used to obtain exchange rates for currency pairs that are not directly available in the market by:

Quoting directly from the international market.

Multiplying the rates of two other currency pairs.

Dividing the rates of two other currency pairs.

Adding the rates of two other currency pairs.

Question 21 of 26

22. If USD/INR is quoted at 74.9500/9600 and GBP/USD is quoted at 1.3670/80, what would be the GBP/INR rate using cross rates?

Rs. 102.4567/102.5453

Rs. 101.8774/101.9652

Rs. 103.0543/103.1360

Rs. 104.2800/104.3820

Question 22 of 26

23. Which of the following best describes fixed exchange rates?

Exchange rates determined by supply and demand factors.

Exchange rates allowed to fluctuate within certain bands.

Exchange rates pegged to one or more currencies by monetary authorities.

Exchange rates linked to inflation differentials between home and foreign currencies.

Question 23 of 26

24. In a USD/INR quote of 74.9500/9600, what does the quoted bank offer to do?

Buy USD at 74.9500 and sell USD at 74.9600.

Buy INR at 74.9500 and sell USD at 74.9600.

Buy USD at 74.9600 and sell USD at 74.9500.

Buy INR at 74.9600 and sell USD at 74.9500.

Question 24 of 26

25. What is the method used to fix the rate of exchange between two currencies when direct rates are not available?

Arithmetic rule

Cross rule

Chain rule

Percentage rule

Question 25 of 26

26. What does "per mille" mean in foreign exchange calculations?

One part in every hundred

One part in every thousand

One part in every ten

One part in every million

Question 26 of 26

BFM A – Unit 1 set 1

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