International Financial Management

5036 words 21 pages
Section A: Objective type
Part One:
1). Foreign exchange market in India is relatively very

Answer: b). Small

2). Balance of payment is a systematic record of all ___________ during a given period of time.
Answer: c). Economic Transactions

3). Merchandise trade balance, services balance & balance on unilateral transfer are the part of _________ account.

Answer: a). Current Account

4). Interest rate swaps can be explained as an agreement between ___________ parties

Answer: b). Two

5). Capital account convertibility in India evolved in August

Answer: c).1994

6). Interest rate parity is an economic concept, expressed as a basic algebraic identity that relates

Answer: b).
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For instance, for a US trader to compare the Singapore Dollar (SGD), to say, the US Dollar, the pair will be listed as USD/SGD, which indicates how many US Dollar are required to buy one Singapore Dollar. Here, the USD is the base and the SGD is the counter currency.
Direct exchange rate quotations are most frequently used by banks in dealing with their non-bank customers. In addition, the prices of currency futures contracts traded on the Chicago Mercantile exchange are quoted using the direct method.
b). Indirect Quotes : Indirect quote indicates how many foreign currencies are needed to purchase one unit of domestic currency. In an indirect quote, the foreign currency is the base currency and the domestic currency is the counter or quote currency.
For instance, if Singapore is the foreign market, then an Indirect Quote will be displayed as SGD/USD. This quotation is the reverse of direct quote which means that how many Singapore Dollars are needed to buy a single US Dollar.
3). What is “International Monetary Fund’?
International Monetary fund (IMF) was originally created as part of the Bretton Woods system exchange agreement in 1944, but came into existence on December 27, 1945. The International Monetary Fund was one of the key organizations of the international economic system; its design allowed the system to balance the rebuilding of international capitalism with the maximization of national economic


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