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Foreign Exchange Management - Questions & Answers for Competitive Exams | GkSeries

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Questions
1. A foreign currency account maintained by a bank abroad is its
  • [A] nostro account
  • [B] vostro account
  • [C] loro account
  • [D] oreign bank account

Answer: Option [A]

2. Non-resident bank accounts are maintained in
  • [A] the permitted currencies
  • [B] the currency of the country of the bank maintaining the account
  • [C] the currencies in which FCNR accounts are permitted to be maintained
  • [D] Indian Rupee

Answer: Option [D]

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3. An authorised person under FEMA does not include
  • [A] an authorised dealer
  • [B] an authorised money changer
  • [C] an off-shore banking unit
  • [D] an exchange broker

Answer: Option [D]

4. The term 'loro account' means
  • [A] our account with you
  • [B] your account with us
  • [C] their account with them
  • [D] none of the above

Answer: Option [C]

5. The market forces influencing the exchange rate are not fully operational under
  • [A] floating exchange rate system
  • [B] speculative attack on the market
  • [C] fixed exchange rate system
  • [D] current regulations of IMF

Answer: Option [C]

6. The reduction in the value of a currency due to market forces is known as
  • [A] revaluation
  • [B] depreciation
  • [C] appreciation
  • [D] none of the above

Answer: Option [B]

7. Arbitrageur in a foreign exchange market
  • [A] buys when the currency is low and sells when it is high
  • [B] buys and sells simultaneously the currency with a view to making riskless profit
  • [C] sells the currency when he has a receivable in furture
  • [D] buys or sells to make advantage of market imperfections

Answer: Option [B]

8. Indirect rate in foreign exchange means -
  • [A] the rate quoted with the units of home currency kept fixed
  • [B] the rate quoted with units of foreign currency kept fixed
  • [C] the rate quoted in terms of a third currency
  • [D] none of the above

Answer: Option [A]

9. In direct quotation, the unit kept constant is -
  • [A] the local currency
  • [B] the foreign currency
  • [C] the subsidiary currency
  • [D] none of the above.

Answer: Option [B]

10. The transaction in which the exchange of currencies takes place at a specified future date, subsequent to the spot date is known as a
  • [A] swap transaction
  • [B] forward transaction
  • [C] future transaction
  • [D] non-deliverable forwards

Answer: Option [B]

11. The selling rate is also known as
  • [A] bid rate
  • [B] offer rate
  • [C] spread
  • [D] none of the above

Answer: Option [B]

12. In direct quotation the principle adopted by the bank is to
  • [A] buy low only
  • [B] buy low; sell high
  • [C] buy high; sell low
  • [D] none of the above

Answer: Option [B]

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