International Finance And Treasury - Study Mode
[#181] Conditional currency options are
Correct Answer
(B) options where the premiums are cancelled if a trigger level is reached
Explanation
Solution: Conditional currency options are options where the premiums are cancelled if a trigger level is reached. A conditional call option is a provision attached to some callable bonds. Conditional call provisions are meant to protect investors if their high-yield bonds are called well in advance of maturity.
[#182] International Monetary Fund formal existence came into being in
Correct Answer
(C) 27-12-45
Explanation
Solution: International Monetary Fund formal existence came into being in 27-12-45. The IMF formally came into existence on 27 December 1945, when the first 29 countries ratified its Articles of Agreement. By the end of 1946 the IMF had grown to 39 members. On 1 March 1947, the IMF began its financial operations, and on 8 May France became the first country to borrow from it.
[#183] Based on interest rate parity, the larger the degree by which the foreign interest rate exceeds the UK interest rate, the.
Correct Answer
(A) larger will be the forward discount of the foreign currency
Explanation
Solution: Based on interest rate parity, the larger the degree by which the foreign interest rate exceeds the UK interest rate, the larger will be the forward discount of the foreign currency. Interest rate parity (IRP) is a theory in which the interest rate differential between two countries is equal to the differential between the forward exchange rate and the spot exchange rate.
[#184] Which year the Bretton Wood agreement failed?
Correct Answer
(B) 1971
Explanation
Solution: The Bretton Wood agreement failed in 1971, when President Richard Nixon severed the link between the dollar and gold — a decision made to prevent a run on Fort Knox, which contained only a third of the gold bullion necessary to cover the amount of dollars in foreign hands.
[#185] A banker's acceptance is a draft drawn on and accepted by an__________.
Correct Answer
(A) bank
Explanation
Solution: A banker's acceptance is a draft drawn on and accepted by an bank. A banker's acceptance is an instrument representing a promised future payment by a bank. The payment is accepted and guaranteed by the bank as a time draft to be drawn on a deposit. The draft specifies the amount of funds, the date of the payment (or maturity), and the entity to which the payment is owed.