50+ Foreign Exchange Market MCQ’s | (Free Resource) Business Economics

11. Arbitrage refers to purchase and sale of an asset _________ .
a) at low price in one market and its simultaneous sale at higher price in another market
b) at high price in one market and its sale at lower price in another market
c) purchase and sale at the same price
d) all of the above

12. _______ is not included in the wholesale foreign exchange market.
a) small investor
b) RBI
c) FII
d) Commercial Bank

13. Speculators deal in _________ .
a) spot and forward exchange rate
b) only spot exchange rate
c) only forward exchange rate
d) none of the above

14. Hedgers enter foreign exchange market to ________ .
a) cover risk
b) earn margin
c) speculate
d) none of the above

15. Foreign exchange market is a place where ________ .
a) various foreign currencies are exchanged
b) only foreign tourists exchange currencies
c) only exporters convert the foreign currencies
d) only importers convert the foreign currencies

16. Flexible exchange creates ______ in importers and exporters.
a) uncertainty
b) confidence
c) safety
d) none of the above

17. ________ is not a defect of flexible exchange rate.
a) Stability in international monetary system
b) speculation
c) structural unemployment
d) discourages investments

18. Under _________ exchange rate system, the exchange rate is determined by market forces.
a) flexible
b) fixed
c) managed float
d) all of the above

19. Under ________ exchange rate system, the central bank of a nation intervenes in exchange rate determination.
a) managed float
b) fixed
c) flexible
d) none of the above

20. Fixed exchange rate system, the exchange rate was ________ .
a) stable
b) unstable
c) fluctuating
d) all of the above

Answers: 11)at low price in one market and its simultaneous sale at higher price in another market 12)small investor 13)spot and forward exchange rate 14)cover risk 15)various foreign currencies are exchanged 16)uncertainty 17)Stability in international monetary system 18)flexible 19)managed float 20)stable