BFM Module A
(Question-Answer)
UNIT 1. Exchange Rate and
Forex Business
Fill in the blanks:
1. The term
Foreign Exchange is used to denote ______ as well as the _______ of one
currency into another.
2. The
exchange rates of major currencies fluctuate every______ seconds.
3. Main
factors affecting exchange rates are technical, _________ and speculation.
4. In a spot contract, settlement of funds
takes place on the_________ working day following the date of contract.
5. If the currency is costlier in forward, it
is said to be at a _________
6. If the forward value of the currency is
cheaper, it is said to be at a_________.
7. The date of settlement of funds is known
as_________ date.
8. The rate at which the quoting party is
ready to buy the currency is called_________ rate.
9. The
dealers are officials, who are actually involved in the ________and________ of
currencies.
10. The section which handles processing of deals,
reconciliation, etc., is called________ office.
11. Banks
permitted to deal in foreign exchange are called ________ persons.
12. Unpaid
Import bills drawn under Letters of Credit must be crystallized into Rupees as
per the policy of the________.
13. In terms
of FEDAI rules, besides, Japanese Yen, _______, and________ are the other
currencies which are quoted as 100 units = so much Rupee
14. Exchange
rate denotes a__________ at which one currency exchanged for another.
15. Foreign
Exchange Markets are__________ Markets, with no barriers.
16. The
currency appreciates due to inflow of overseas capital, if local interest rates
are__________
17. __________ deals provide depth and liquidity
to the market.
18. Direct
quotes are also called__________ currency quotations.
19. The part of dealing room operations, which
deals with risk management is called__________ office.
20. Risk of
loss arising due to inability or unwillingness of the counter party to meet its
obligations is called__________ risk.
21. __________ guidelines prescribe code of
conduct for dealers’ brokers.
State True or False:
1. The FOREX
markets are dynamic and round the clock markets.
2. FOREX
markets are not affected by government policies.
3. A large
part of the total global FOREX turnover results from global commodities trade
Terminal Questions.
1. Foreign
Exchange markets are
(a) regional markets.
(b) domestic
markets.
(c) global
markets.
(d)
localized exchange traded markets.
2. Foreign
exchange does not include:
(a) Deposits
payable in foreign currency.
(b)
Instruments drawn in foreign currency and payable in a foreign currency.
(c)
instruments drawn in Indian rupees on a checking account of the drawer and
payable abroad.
(d)
instruments drawn in Indian rupees on a current account of an Indian company
and payable in India.
3. Out of
the several factors, the following factor does not have an effect in the
movement of exchange rates:
(a)
Political instability
(b) Increase
in domestic interest rates
(c) Change
in Taxation policy
(d) Increase
in domestic tourism
4. Spot
dealing in FX market means:
(a) Delivery
of funds is on the 30th working day from the date of deal.
(b) Delivery
of funds is on the second working day from the date of deal.
(c) Delivery
of funds is next date from the date of deal.
(d) Delivery
of funds is one week after the date of deal.
5. The rate
at which the quoting bank is ready to sell the currency is called-
(a) Bid
rate.
(b) Offer
Rate.
(c) TT
Buying Rate.
(d) Swap
rate.
6. Operational
Risk does not include:
(a) movement
in exchange rates.
(b) Human
errors.
(c)
Technical Faults.
(d) Systemic
failures.
7. Cancellation
of forward contacts is to be done at:
(a) Opposite
Bill rate.
(b) Opposite
Cash rate.
(c) Opposite
TT rate.
(d) Opposite
TC rate.
8. Crystallization
of export bills is to be done:
(a) On the
10th day from the due date of the bills.
(b) Before
the due date.
(c) As per
the policy of the Bank.
(d) On the
due date itself.
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Answer Key
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Fill in the Blanks
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1
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Foreign currency, Exchange
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8
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Bid
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15
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Communication System based
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2
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Four
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9
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Buying & Selling
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16
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High
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3
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Fundamental
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10
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Back office
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17
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Speculative
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4
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Second
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11
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Authorized
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18
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Home
|
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5
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Premium
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12
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Bank
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19
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Credit
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6
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Discount
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13
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Indonesian Rupiah/Kenyan Shilling
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20
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FEDAI
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7
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Value
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14
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Price/Ratio/Value
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21
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True & False
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1
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True
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2
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False
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3
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False
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Terminal Question
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1
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c
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4
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b
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7
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c
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2
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d
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5
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b
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8
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d
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3
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d
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6
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a
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