arbitrageur in a foreign exchange market mcq

Speculation and arbitrage are both techniques used by traders, to make larger profits. According to classification by IMF, the currency system of India falls under 21. ANSWER: C C. the rate quoted in terms of a third currency The market forces influencing the exchange rate are not fully operational under, 6. Market selection as a strategy to … 21th April The arbitrage opportunities exist due to the inefficiencies of the market. Answer: D Question Status: New D. purchase and sale of foreign currency notes, coins and travellers cheques D. all the above Forward margin is- Triangular Arbitrage (Two related goods, one market) Triangular arbitrage is a process where two related goods set a third price. heart. The foreign exchange market is the market in which individuals, firms, and banks buy and sell foreign currencies or foreign exchange. ANSWER: B ANSWER: D ANSWER: C The market forces influencing the exchange rate are not fully operational under C. centralising all foreign exchange operations with the central bank of the country Arbitrageur in a foreign exchange market 1. B. your account with us The aim is to keep exchange rate close to … b) causes differences in exchange rates in different geographic markets. 6. A. quotation of pound-sterling 23. Always believe "The only good is knowledge and the only evil is ignorance - Socrates". In Mumbai, US Dollar is quoted as under: USD 1 = Rs.43.6725/6875. 0. ANSWER: B 29. B. offer rate 19. A. among residents of the same country A. floating exchange rate system D. value tomorrow The selling rate is also known as A. forward sale contract Arbitrage A purchase of foreign exchange, securities or commodities in one market coupled with immediate resale in another market in order to profit risklessly from price discrepancies. ANSWER: D D. an exchange broker “Arbitrage” in Foreign Exchange Market Definition: Arbitrage is the process of a simultaneous sale and purchase of currencies in two or more foreign exchange markets with an objective to make profits by capitalizing on the exchange-rate differentials in various markets. D. notifications ANSWER: B B. b. the interbank remittance rate. B. only purchase transactions D. sell low only D. none of the above The authorised dealers under FEMA are classified into —– categories C. 23rd April c. the balance of payments. ANSWER: D A. the permitted currencies 20. Forex arbitrage is the strategy of exploiting price disparity in the forex markets. C. appreciation Society for Worldwide International Financial Telecommunication A. home currency quotation (a) Purchasing the domestic goods and selling the name in foreign countries (b) Purchasing is foreign country and selling out side the country (c) Manufacturing outside country and selling outside (d) None of the above . ANSWER: B ... 22. B. booking of forward contracts without intention to execute 40. in the foreign exchange market using a unique data set for three major capital and foreign exchange markets that covers a period of more than seven months at tick frequency, obtained from Reuters on special order. ANSWER: B An authorised person under FEMA does not include 3. 35. C. delivery of foreign exchange is done on a predetermined future date B. vostro account An authorised person under FEMA does not include, 5. B. buy low; sell high ANSWER: C C. currency quotation An arbitrageur is a type of investor who attempts to profit from market inefficiencies. Foreign exchange market is considered 24 hours market because In indirect quotation the principle adopted by the bank is to MCQ Questions for Class 12 Economics with Answers were prepared based on the latest exam pattern. C. spread 24. D. swap Foreign exchange transactions involve monetary transactions In the FX Market, triangular arbitrage sets FX cross rates. Ans. ANSWER: A ANSWER: A A. managed floating The spot rate is the. B. buys and sells simultaneously the currency with a view to making riskless profit B. offer rate General Knowledge Questions and Answers – 24, Principles of Auditing MCQ Questions and Answers Part – 3, Principles of Auditing MCQ Questions and Answers Part – 2, Principles of Auditing MCQ Questions and Answers Part – 1. (c) either increase or decrease. Delayed quotes: When a broker’s quotes momentarily diverge from the broader market, a trader can arbitrage these events. D. inflation A. it is open all through the day 31. B. depreciation D. Indian Rupee A. only sale transactions The largest foreign exchange market in the world is The term ‘Nostro account’ means B. value today However, as discussed the method in which each technique is used differs. D. none of the above B. indirect rates D. none of the above B. one (a) increase. C. direct rates Cross rates are exchange rates that do not involve the USD. A. the local currency ANSWER: A Under the forward exchange contract- A. swap transaction 34. (d) the price of one currency relative to another. d. the international interest differential rate. A. home currency quotation EkVillian. hope it helps. 7. c) simultaneously buys large amounts of a currency in one market and sell it in another market. Conservation of Foreign Exchange and Prevention of Smuggling Act. In direct quotation, the unit kept constant is -, 10. B. independently floating In this system, central bank intervenes in the foreign exchange market to restrict the fluctuations in the exchange rate within certain limits. the value of all currencies fall relative to … 50. C. exchange exposure and exchange risk are unrelated D. foreign bank account It is a hybrid of a fixed exchange rate and a flexible exchange rate system. 48. C. spread We provide all important questions and answers for all Exam. This will allow a risk-free profit. A. revaluation [During the second trade, the arbitrageur locks in a zero-risk profit from the discrepancy that exists when the market cross exchange rate is not aligned with the implicit cross exchange rate.] 45. B. London B. D. pegged to basked of currencies 42. The buying rate is Rs.43.6875 and the selling rate is Rs.43.6725 37. C. European quotation The only period that experienced a downturn was from 1998 to 2001, due mainly to the introduction of the Euro. A. 33. Topic 5 The Foreign Exchange Market Multiple Choice 1 A spot transaction in the foreign exchange market involves the A exchange of exports and imports at a. Indirect rate of exchange is quoted in India for – B. vostro account A. buying or selling of currencies in large volumes B. rationing of foreign exchange D. sell low only C. for any export order for the same commodity C. buy high; sell low ANSWER: D need foreign exchange in order to buy foreign goods. C. due to geographical dispersal at least one market is active at any point of time C. credit risk D. Swift Worldwide Information for Financial Transactions B. a special type of forward contract ANSWER: A A. official intervention C. the subsidiary currency C. loro account A. our account with you C. Japan Would love your thoughts, please comment. By definition, currency appreciation occurs when. 14. A. our account with you B. chance of making losses The effect of arbitrageurs' actions is to equate prices in all markets for the same commodity. B. offer rate D. minimum 24 hours must elapse before any transaction is settled B. in which the value of currencies was fixed in terms of a specific number of ounces of gold, which in turn determined their values in international trading. The foreign exchange market for any currency—say, the Canadian dollar—could be at any location (such as London, Paris, Singapore, Tokyo, and New York) where dollars are bought and sold for other currencies. D. none of the above The foreign exchange participant who quotes prices at which they are prepared to buy and sell foreign currencies is a: A) foreign exchange broker. C. uncertainty associated with expected event leading to losses or gains We help you to prepare for govt exams like SSC, IAS, Bank PO, Railways, 1. It may be effected in various ways but however it is carried out, the arbitrage seeks to … C. exchange brokers ANSWER: B B. speculative attack on the market B. the rate quoted with units of foreign currency kept fixed Under FEMA, the RBI has been authorised to make —— to carry out the provisions of the Act. C. spread ANSWER: D Arbitrageur in a foreign exchange market, 8. Exchange exposure leads to exchange risk Safety Width in Financial Transactions There are always going to be differences between quotes depending on who is making that market. Foreign Exchange Management MCQ Questions and Answers Part – 1. The Foreign Exchange Market Multiple Choice 1) The exchange rate is (a) the price of one currency relative to gold. ANSWER: C The transaction where the exchange of currencies takes place on the same date is known as An arbitrageur in foreign exchange is a person who a) earns illegal profit by manipulating foreign exchange b) causes differences in exchange rates in different geographic markets c) simultaneously buys large amounts of a currency in one market and sell it in another market d) None of the above 30. ANSWER: C D. central bank of the country and the central government B. buy low; sell high 38. ANSWER: A Foreign Exchange Management MCQ Questions and Answers Part – 1 Foreign Exchange Management MCQ Questions and Answers Part – 2 Foreign Exchange Management MCQ Questions and Answers Part – 3 51. (b) the value of a currency relative to inflation. B. forward purchase contract D. American quotation A. bid rate D. buying or selling with a view to making riskless profits. C. their account with them C. their account with them D. non-deliverable forwards Background Daily global foreign exchange market turnover has risen steadily in recent times, more than trebling in terms of US dollar value over the last fifteen years. D. quotation in which the value of the US dollar is expressed per unit of foreign currency A foreign currency account maintained by a bank abroad is its, 2. In direct quotation, the unit kept constant is – D. none of the above 16. ANSWER: C D. for any export order ANSWER: C C. Foreign Exchange Management Act, 1999 Non-resident bank accounts are maintained in, 3. ANSWER: B B. 25. ANSWER: C Under a fixed exchange rate system, the currency rate in the market is maintained through C) foreign exchange dealer. The reduction in the value of a currency due to market forces is known as D. swap A foreign currency account maintained by a bank abroad is its a. the exchange rate. Therefore, the Swiss franc will appreciate. D. American quotation A. tom d) None of the above. 2. A. nostro account Which of the following statements is true? 30. B. sale of rupee travellers cheques B. the foreign currency D. current regulations of IMF 25. C. Rs.45.7500 B. between residents of two countries only 22. ANSWER: B B. your account with us B. foreign currency quotation ANSWER: A Foreign Exchange Management MCQ Questions and Answers Part – 1, Foreign Exchange Management MCQ Questions and Answers Part – 2, Foreign Exchange Management MCQ Questions and Answers Part – 3, 1. ... the simultaneous purchase and sale of goods and assets in two distinct markets with different prices. C. of standard size A. 28. A. the profit on forward contract C. sells the currency when he has a receivable in future Foreign Exchange Dealers’ Association of India B. Free Download as PDF of Foreign Exchange Management Questions with Answers as per exam pattern, to help you in day to day learning. 2. 47. C. quotation in which the value of foreign currency is expressed per US dollar. (e) all of the above. (b) not change. B) foreign exchange arbitrageur. A currency future is not A. buy low only A transaction in which the currencies to be exchanged the next dayof the transaction is known as A. ready transaction A. rules A. The buying rate is also known as the D. among residents of at least three countries D. US dollars C. fixed exchange rate system D. none of the above 8. A. for executing the export order for which the contract was booked Speculation in the foreign exchange market refers to The major players in the foreign exchange market are It means- 22nd April Indirect rate in foreign exchange means -, 9. An arbitrageur in foreign exchange is a person who earns illegal profit by manipulating foreign exchange causes differences in exchange rates in different geographic markets simultaneously buys large amounts of a currency in one market and sell it in another market Federal Export Dealers’ Association of India The net potential gain or loss likely to arise from exchange rate changes is- A. exchange exposure B. exchange risk C. profit/loss on foreign […] C. purchase of personal cheques ANSWER: D A. commercial banks Non-resident bank accounts are maintained in An arbitrageur in foreign exchange is a person who; a) earns illegal profit by manipulating foreign exchange. Most currencies are quoted against the USD. A. the rate quoted with the units of home currency kept fixed C. The dollar is appreciating in value. 1/23/2020 172.16.1.50/printqp.php?heading=PGDIB [2019-2020], SEMESTER II, CORE : FOREIGN EXCHANGE MANAGEMENT – 281A&qn… C. cancelleing a forward contract C. buying or selling with a view to make profits from movement in rates 70. a) Spot market b) Transfer market c) Forward market d) None of the above, MCQ on Foreign exchange rate Class 12 – Multiple Choice Questions Answers, 1. a) Foreign exchange Rate 2. c) Depreciation 3. a) Exports rise 4. A. traded on futures exchanges The acronym SWIFT stands for – A. D. buys or sells to take advantage of market imperfections B. cargo risk A. the exchange rate is determined on the future date D. none of the above 5. Free Download as PDF of Foreign Exchange Management Questions with Answers as per exam pattern, to help you in day to day learning. 15. In direct quotation the principle adopted by the bank is to 3.0 /5. D. none of the above Ans: D. Q.18 When the exchange rate rises due to managed floating, … ANSWER: B The acronym FEDAI stands for 17. ANSWER: C C. the currencies in which FCNR accounts are permitted to be maintained B. your account with us In the following quote: Spot USD 1 = Rs.45.6500/650 Spot September 100/150 September forward buying rate for dollar is – D. none of the above Q.17 Due to depreciation of foreign currency, the supply of foreign currency in domestic economy will. ANSWER: D 40. B. corporates A. Newyork B. 40. A. chance of losing business e3radg8 and 2 more users found this answer helpful. 2. D. none of the above 172.16.1.50/printqp.php?heading=PGDIB [2019-2020], SEMESTER II, CORE : FOREIGN EXCHANGE MANAGEMENT – 281A&qname=281a 5/19 D. four C. between residents of two or more countries ANSWER: B D. Exchange Control Manual B. exchange risk leads to exchange exposure A. quotation by a US-based bank The buying rate is Rs.43.6725 and the selling rate is Rs.43.6875. Direct quotation is also known as A. an authorised dealer 18. ANSWER: A D. threat from competitors A. Questions. ANSWER: B A. of essentially fixed exchange rates under which each country agreed to intervene in the foreign exchange market when necessary to maintain the agreed upon value of its currency. B. an authorised money changer Indirect rate in foreign exchange means – Market forces drive exchange rate up toward equilibrium at 0.88 euro per Swiss franc. Similarly, a foreign exchange arbitrageur may be able to buy British pounds sterling in New York for $2.80 and sell them on the Swiss market for $2.8010. We provide all important questions and answers for all Exam. A. C. Fixed Earners’ Draft Agreement on Interest (d) decrease. Foreign Exchange Market: Background A. C. their account with them The transaction in which the exchange of currencies takes place at a specified future date, subsequent The bank should verify the letter of credit/sale contract for booking a- We provide evidence on the fre-quency, size and duration of round-trip and one-way arbitrage opportunities in real time. Arbitrage traders take lower levels of risk, and benefit from the natural market inconsistencies by buying at a lower price from one market and selling at a higher price at another market. ANSWER: C D. available in India C. buy high; sell low A. ready transaction 13. 10. 29. An arbitrageur in foreign exchange is a person who a) earns illegal profit by manipulating foreign exchange b) causes differences in exchange rates in different geographic markets c) simultaneously buys large amounts of a currency in one market and sell it in another market d) None of the above 30. 32. the transaction where the exchange of currencies takes place two days after the date of the contract is ANSWER: B (a) Purchasing the domestic goods and selling the name in foreign countries . ANSWER: D 4. A speculator in foreign exchange is a person who ANSWER: C ANSWER: A One month forward contract entered into on 22nd March will fall due on The exchange rate of 0.84 euro per Swiss franc is a disequilibrium exchange rate that creates a shortage of Swiss franc in the foreign exchange market and an upward pressure on the exchange rate. 26. Indirect quotation is also known as D. Rs.45.6500 Due to decrease in supply of foreign currency, there is. 9. take advantage of the small inconsistencies that develop between markets. ANSWER: B Three D. 24th April In direct quotation the principle adopted by the bank is to, Committees and Commissions Current Affairs, Memorandum of Understanding Current Affairs, International Relationship Current Affairs, [B] the currency of the country of the bank maintaining the account, [C] the currencies in which FCNR accounts are permitted to be maintained, [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, [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. The number of units of one currency that must be given to acquire one unit of another currency is. C. spot transactions A. C. spot transactions A. buys when the currency is low and sells when it is high Normally forward purchase contract booked should be used by the customer- An arbitrageur in foreign exchange is a person who a) earns illegal profit by manipulating foreign exchange b) causes differences in exchange rates in different geographic markets c) simultaneously buys large amounts of a currency in one market and sell it in another market d) None of the above 30. 11. 29. ANSWER: C ANSWER: B 41. D. none of the above B. regulations Thus, cross-rates are calculated from USD C. difference between the spot rate and forward rate B. all transactions are to be settled within 24 hours C. an off-shore banking unit Since, in this case, there are no “shipping” costs, the entire difference, except for minor transaction costs, is profit. ANSWER: C In foreign exchange, each security or property has varied price value in different markets. Remember, foreign exchange is a diverse, non-centralized market. Derivatives can be used by an exporter for managing- D. None of the above The statutory basis for the administration of foreign exchange in India is ANSWER: A C. two ANSWER: B 49. A. currency risk Appreciation of foreign exchange is done intentionally by the government. A. our account with you 27. Arbitrageurs in foreign exchange markets: attempt to make profits by outguessing the market. The reduction in the value of a currency due to market forces is known as, 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 As the foreign exchange market is decentralized with well-established communication systems, there exists a chance of exchange rate inconsistencies whereby the rates in different markets would be slightly different An alert trader or arbitrageur who identifies this gap and makes a profit through arbitrage D. none of the above. A. sale of foreign travellers cheque C. spot transactions ‘Non-resident Bank Accounts’ refer to foreign exchange market. The term risk in business refers to- B. the parties agree to meet at a future date for finalisation the collective set of markets where the many different national currencies are exchanged. ANSWER: A, Author and Assistant Professor in Finance, Ardent fan of Arsenal FC. B. forward transaction The difference between buying rate and selling rate is the gross profit for the bank and is know as the D. Swiss C. future transaction D. Value tomorrow known as The maxim ‘buy low; sell high’ is applicable for – The term ‘loro account’ means A. nostro account 36. Full fledged money changers are authorized to undertake B. value today B. quotation in New York foreign exchange market Depreciation of domestic currency is the decrease in value of domestic currency in relation to foreign currency. C. both rules and regulations A. Rs.45.6800 B. Rs.45.6600 B. for any export order from the same buyer ANSWER: A In foreign exchange, an arbitrageur is a person who performs arbitrage and makes the profit from the difference of market prices. D. value tomorrow A. bid rate Scanned by CamScanner 4. ANSWER: A 46. A. bid rate Example - Arbitrage Currency Trading Suppose the current exchange rates of currency pairs are as follows: EUR/USD: 1.1837 EUR/GBP: 0.7231 GBP/USD: 1.6388 MCQ on Foreign exchange rate Class 12 – True or False Foreign exchange rate is the value of all currencies including the domestic currencies. C. accounts opened in offshore centres B. ready transaction 44. C. all types of foreign exchange transactions In foreign exchange markets, ‘American Quotation’ refers to- We have provided Open Economy Macroeconomics Class 12 Economics MCQs Questions with Answers to help … D. The dollar is depreciating in value 43. D. swap hlo mate ️. B. commission payable to exchange brokers. The term ‘Vostro account’ means 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 1. A speculator in foreign exchange is a person who B. the currency of the country of the bank maintaining the account C. Society for Worldwide Interbank Financial Telecommunication A. buy low only I. ANSWER: A ANSWER: A 12. (c) the change in the value of money over time. D) foreign exchange adviser. Check the below NCERT MCQ Questions for Class 12 Economics Chapter 6 Open Economy Macroeconomics with Answers Pdf free download. 39. The transaction in which the exchange of currencies takes place at a specified future date, subsequent to the spot date is known as a B. foreign currency quotation Foreign Exchange Regulation Act, 1973 C. crawling peg MCQ from Exchange Rate. 2. to the spot date is known as a, 12.

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