AIMA Online Exam Solution 2021
For solution Call at +91-9911899400 (What’s App Available)
Question 1: In the foreign exchange market, the ________ of one country is traded for the ________ of another country
a)currency; currency
b)currency; financial instruments
c)currency; goods
d)goods; goods
Question 2: By definition, currency appreciation occurs when
a)the value of all currencies fall relative to gold
b)the value of all currencies rise relative to gold
c)the value of one currency rises relative to another currency
d)the value of one currency falls relative to another currency
Question 3: If portable disk players made in China are imported into the United States, the Chinese manufacturer is paid with
a)international monetary credits
b)dollars
c)yuan, the Chinese currency
d)euros, or any other third currency
Question 4: If purchasing power parity were to hold even in the short run, then
a)real exchange rates should tend to decrease over time
b)quoted nominal exchange rates should be stable over time
c)real exchange rates should tend to increase over time
d)real exchange rates should be stable over time
Question 5:-
A forward currency transaction
a)Is always at a premium over the spot rate
b)Means that delivery and payment must be made within one business day (USA/Canada) or two business days after the transaction date
c)Calls for exchange in the future of currencies at an agreed rate of exchange
d)Sets the future date when delivery of a currency must be made at an unknown spot exchange rate
Question 6: Hedging is used by companies to
a)Decrease the variability of tax paid
b)Decrease the variability of expected cash flows
c)Increase the variability of expected cash flows
d)Increase the variability of tax paid
Question 7: Which of the these is not a type of foreign exchange exposure
a)Tax exposure
b)Translation exposure
c)Economic exposure
d)Transaction exposure
Question 8:-
The date of settlement for a foreign exchange transaction is referred to as
a)Value date
b)Clearing date
c)Swap date
d)Maturity date
Question 9:Which of these methods may be viewed as most effective in protecting against economic exposure
a)Futures market hedging
b)Forward contract hedges
c)Geographical diversification
d)Money market hedges
Question 10: If one anticipates that the pound sterling is going to appreciate against the US dollar, one might speculate by _______ pound call options or ________ pound put options
a)buying; buying
b)selling; buying
c)selling; selling
d)buying; selling
Question 11:-
Which of these is not an interest rate derivative used for interest rate management?
a)Swap
b)Floor
c)Interest rate guarantee
d)All of these
Question 12: The impact of Foreign exchange rate on firm is called as
a)
Operating Exposure
b)
Transaction exposure
c)
Business risk
d)
Translation exposure
Question 13:-
Which of these is true of foreign exchange markets?
a)
The futures market is mainly used by hedgers while the forward market is mainly used for speculating.
b)
The futures market and the forward market are mainly used for hedging.
c)
The futures market is mainly used by speculators while the forward market is mainly used for hedging.
/
d)
The futures market and the forward market are mainly used for speculating.
Question 14:-
Exchange rates
a)
are always fixed
b)
fluctuate to equate the quantity of foreign exchange demanded with the quantity supplied
c)
fluctuate to equate imports and exports
d)
fluctuate to equate rates of interest in various countries
Question 15:-
Arbitrageurs in foreign exchange markets
a)
attempt to make profits by outguessing the market
b)
make their profits through the spread between bid and offer rates of exchange
c)
take advantage of the small inconsistencies that develop between markets
d)
need foreign exchange in order to buy foreign goods
Question 16:-
Foreign currency forward market is
a)
An over the counter unorganized market
b)
Organized market without trading
c)
Organized listed market
d)
Unorganized listed market
Question 17:-
Counter party risk is
a)
The risk of loss when exchange rates change during the period of a financial contract
b)
Based on the notional amount of the contract
c)
The risk of loss if the other party to a financial contract fails to honour its obligation
d)
Present only with exchange-traded options
Question 18:-
Forward premium / differential depends upon
a)
Currencies fluctuation
b)
Interest rate differential between two countries
c)
Demand & supply of two currencies
d)
Stock market returns
Question 19:-
Speculator in foreign exchange is a person who
a)
buys foreign currency, hoping to profit by selling it a higher exchange rate at some later date
b)
earns illegal profit by manipulation foreign exchange
c)
causes differences in exchange rates in different geographic markets
d)
None of these
Question 20:-
Covered interest rate parity occurs as the result of
a)
the actions of market-makers
b)
interest rate arbitrage
c)
purchasing power parity
d)
stabilising speculation
Case Study
/
ABC Limited, a company operating in Hungary is a landlocked country in Central Europe, has today effectedsales to an Indian FMCG company, the payment being due 6 months from the date of invoice. The invoice amount is 227 lakhs Hungarian Forint (HUF). At today`s spot rate, it is equivalent to Rs. 53.92 lakhs. It is anticipated that the exchange rate will decline by 11% over the 6 months period and in order to protect the HUF payments, the importer proposes to take appropriate action in the foreign exchange market. The 6months forward rate is presently quoted as 3.91 HUF per rupee. Find –
Question 21:-
Expected spot rate after 6 months
a)
3.65 HUF per Rupee
b)
3.50 HUF per Rupee
c)
3.75 HUF per Rupee
d)
3.70 HUF per Rupee
Question 22:-
Cost at spot rate after 6 months
a)
Rs. 60.50 lakh
b)
Rs. 60.53 lakh
c)
Rs. 60.58 lakh
d)
Rs. 60.63 lakh
Question 23:-
Expected exchange loss at spot rate after 6 months
a)
Rs. 6.40 lakh
b)
Rs. 6.61 lakh
c)
Rs. 6.80 lakh
d)
Rs. 6.70 lakh
Question 24:-
Present cost, if the expected exchange rate risk is hedged by a forward contract
a)
Rs. 53.55 lakh
b)
Rs. 53.29 lakh
c)
Rs. 53.92 lakh
d)
Rs. 53.78 lakh
Question 25:-
Expected loss, if the expected exchange rate risk is hedged by a forward contract
a)
Rs. 4.14 lakh
b)
Rs. 4.24 lakh
c)
Rs. 4.44 lakh
d)
Rs. 4.34 lakh