International Finance And Treasury - Study Mode

[#466] An operation in order to protect the domestic currency value of an asset or a liability that is denominated in foreign currency is called as
Correct Answer

(A) Hedging

Explanation

Solution: An operation in order to protect the domestic currency value of an asset or a liability that is denominated in foreign currency is called as Hedging. A risk management strategy used in limiting or offsetting probability of loss from fluctuations in the prices of commodities, currencies, or securities. In effect, hedging is a transfer of risk without buying insurance policies.

[#467] Difference between buying and selling rates in an exchange rate or interest rate quotation is known as
Correct Answer

(B) Spread

Explanation

Solution: Difference between buying and selling rates in an exchange rate or interest rate quotation is known as Spread. The spread is the gap between the bid and the ask prices of a security or asset, like a stock, bond or commodity.

[#468] International Finance Corporation established in
Correct Answer

(A) 1956

Explanation

Solution: International Finance Corporation (IFC) was established in July 1956 as an affiliate of the World Bank to provide finance to the private sector. The World Bank grants loans to the governments of the member countries or provides loan capital to the private enterprises on the guarantee of the member governments.

[#469] Which exchange rate theory focuses on the inflation exchange rate relationship?
Correct Answer

(C) Purchasing power parity

Explanation

Solution: Purchasing power parity theory focuses on the inflation exchange rate relationship. It states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.

[#470] The exchange rate prevailing at a financial reporting date
Correct Answer

(A) Closing exchange rate

Explanation

Solution: Closing exchange rate is the rate prevailing at a financial reporting date. It is the exchange rate for two currencies at the end of a period of time, such as a trading day or month.