Management Questions and Answers for Competitive Exams | MBA BBA Quiz Set 13

Questions
1 When a direct quote of the home currency or any other currency is not available in the forex market, it is computed with the help of exchange quotes of other pairs of currencies, is referred to by which one of the following ?
1 Cross rate
2 Arbitrage rate
3 Transaction rate
4 Translation rate

Answer:Cross rate
2 In a derivative transaction, the term margin denotes to which one of the following ?
1 Cash or collateral provided by a customer to a broker to protect the broker from loss on a contract
2 Cash or collateral provided by a broker to a customer to protect the customer from loss on contract
3 A broker’s request for more collateral to bring a customer’s margin requirement to a premium margin level
4 A customer’s request for more collateral to bring a broker’s margin requirement to a minimum standard level

Answer:Cash or collateral provided by a customer to a broker to protect the broker from loss on a contract
3 In the area of corporate risk management, systematic risk fulfils which one of the following conditions ?
1 Systematic risk is unavoidable; this is the contribution of an individual asset to the risk of market portfolio.
2 Systematic risk is avoidable by an investor, and it can be eliminated by diversification.
3 The level of systematic risk in an asset cannot be measured by the beta coefficient.
4 The expected return-beta relationship is referred to as Systematic Market Line (SML)

Answer:Systematic risk is unavoidable; this is the contribution of an individual asset to the risk of market portfolio.
4 The difference between a forward trade and a derivative may be attributed to which one of the following ?
1 The position of owning a good that one plans to sell in the future, the position of expecting to purchase the good in the future
2 The parties agree to trade at a specified time in the future, at a price set now; a derivative involves only payments of money, with no delivery of any commodity or assets
3 The parties agree to trade at a future time, at a price to be decided in future ; a derivative involves payments at a future specified time along with physical delivery of any commodity or asset
4 The parties agree to trade and the amounts to be paid or received will not depend on the value at that time

Answer:The parties agree to trade at a specified time in the future, at a price set now; a derivative involves only payments of money, with no delivery of any commodity or assets
5 Multilateral Investment Guarantee Agency (MIGA), an affiliate of World Bank, aims to address which one of the following ?
1 To promote comparative advantage among the trading nations to foster international trade
2 To promote a platform for dispute settlement mechanism in world trade guarantee
3 To encourage foreign direct investment in developing countries by protecting investors from non-commercial risk
4 To promote international trade in goods and intelligence services

Answer:To encourage foreign direct investment in developing countries by protecting investors from non-commercial risk
6 Under foreign exchange risk measurement, economic risk emerges out of which of the following ?

(a) Riskiness of company’s foreign exchange positions resulting from its business activities.

(b) The holding period or length of time over which the foreign exchange position is planned to be held.

(c) A change in the present value of the future after tax cash flows due to changes in exchange rates.

(d) The unit of currency to be used for the denomination of the value of currency.

Code :
1 (a) only
2 Both (a) and (b)
3 (c) only
4 (d) only

Answer:(c) only
7 Regional trading block agreement among USA, Canada and Mexico is formed and named by which one of the following ?
1 North American Free Trade Region
2 North American Free Trade Agreement
3 North and Central American Free Trade Agreement
4 North American Free and Tariff Trade Agreement

Answer:North American Free Trade Agreement
8 If a bank in India, SBI, has an account with citibank, Newyork, and another Indian Bank, Allahabad Bank, wants to refer to that account while corresponding with citibank, Newyork, the Allahabad Bank would refer to which one of the following accounts ?
1 Loro account
2 Mirror account
3 Vostro account
4 Mix of Nostro and Vostro account

Answer:Loro account
9 Treaties of Rome (1957) was responsible for creation of which one of the following ?
1 European Economic Community (EEC)
2 General Agreement on Tariffs and Trade (GATT)
3 WTO
4 General Agreement on Trade in Services (GATS)

Answer:European Economic Community (EEC)
10 Agreement on Trade Related Investment Measures (TRIMS) under WTO regime aims to address which one of the following measures ?
1 Protection of investment in creation of Intellectual Property Rights (IPRs)
2 No member shall apply any measures in violation of the national treatment principles of GATT and discriminate against foreigners or foreign products
3 It does not prohibit investment measures that place a restriction on quantities and measures requiring a certain percentage of local procurement
4 It encourages measures which limit imports or set targets for exports and trade balancing requirements

Answer:No member shall apply any measures in violation of the national treatment principles of GATT and discriminate against foreigners or foreign products
11 In international marketing, export documentation framework engulfs which one of the following ?
1 Export census documents compiled by the department of commerce
2 Shipper’s Export Declarations (SEDs)
3 Foreign commercial service including websites of individual countries
4 All of the above

Answer: All of the above
12 In dispute resolution mechanism of the WTO regime, the collapse of the Doha Round talks at Cancun in September 2003 has been attributed to which one of the following ?
1 Subsidies in agriculture and agricultural domestic support policies of developed nations
2 Measures on protecting intellectual property rights of innovators
3 Agreement on Textiles and Clothing (ATC) under Multi-Fibre Arrangement
4 Trade in the shape of individuals travelling to foreign countries to supply services

Answer:Subsidies in agriculture and agricultural domestic support policies of developed nations
13 In international financial environment for settlement of debts there is a practice known as netting practice. The netting practice pertains to which one of the following ?
1 A practice by which subsidiaries of affiliates within the TNC network settle intersubsidiary debts for the net amount owed during the post-transaction period
2 A practice involving the sale of export accounts receivable to a third party within the TNC network.
3 A practice of purchasing an account receivable where the credit term exceeds the permissible limit within the TNC network.
4 Where the difference between international transaction of gross capital account receivables and payables are settled against current account receivables and payables.

Answer:A practice by which subsidiaries of affiliates within the TNC network settle intersubsidiary debts for the net amount owed during the post-transaction period
14 Indicate the correct code for the scope of managerial economics from the following :

a. Demand Analysis

b. Production and Cost Analysis

c. Pricing and Investment Decisions

d. Factor pricing Decisions

e. Economic Environmental Analysis

Codes :
1 a, b, c, d
2 b, c, d, e
3 a, b, c, e
4 a, c, d, e

Answer: a, b, c, e
15 Which one of the following will be the appropriate pricing strategy for a new product expecting an expanding market ?
1 Monopoly pricing
2 Skimming pricing
3 Penetrating pricing
4 Differential pricing

Answer:Penetrating pricing

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