CA Final Foreign Exchange Exposure and Risk Management — practice questions
25 free MCQs with worked solutions. Tap any question for the answer + explanation, or practice them all in the app.
Practice CA Final Foreign Exchange Exposure and Risk Management in the app →A Nostro account is best described as:A Vostro account is best described as:Bid-offer spread in an exchange-rate quotation represents:Interest Rate Parity (IRP) links spot and forward exchange rates with:Purchasing Power Parity (PPP) suggests that the exchange rate adjusts to:USD/INR spot quote is 83.20-83.30. A customer wishing to buy USD from the bank will pay:USD/INR spot is 83.50; 3-month forward is 84.00. The annualised forward premium on USD is closest to:If India's annual inflation is 6% and US inflation is 2%, PPP predicts INR will depreciate by approximately:If the INR interest rate is 7% and USD rate is 4% (both annual), IRP implies USD/INR forward should trade at aTransaction exposure refers to:Translation exposure (accounting exposure) affects primarily:Economic exposure is most closely associated with:A cross-rate is needed when:Forward cover for an export receivable in USD is best executed by:Spot USD/INR = 83.00; 6-month INR rate 7% pa; 6-month USD rate 4% pa. IRP-consistent forward (simple) ≈:Importer has 90-day USD 1 million payable. Spot 83.00, 90-day forward 83.60. Forward hedge locks total INR outUSD/INR bid = 83.10; ask = 83.20. Quoting USD/INR using INR/USD inversion gives bid ≈ 1/83.20 and ask ≈ 1/83.1Forward USD/INR 84.00, spot 83.00, time 3 months. Annualised forward premium (continuous-equivalent simple) isCurrency swap exchanges principal + interest cash flows in two currencies. Compared with FX forward, a currencAn exporter expects USD 1,00,000 in 60 days. To hedge transaction exposure most simply:Continuous IRP: F = S · e^{(r_dom − r_for) T}. With S = 80, r_dom = 6%, r_for = 2%, T = 1, F ≈:If IRP is violated and forward is too cheap relative to theoretical, the arbitrage is to:American quote of USD/INR vs European quote: a USD/INR of 83.20 (INR per USD) viewed as European quote becomesMoney-market hedge for a 1-year USD 1 million receivable: borrow USD at 4%, convert to INR at spot 83, invest SWIFT in foreign exchange refers to: