International Finance And Treasury - Study Mode

[#471] The bank account of a non-resident of a country, where the amount of currency in the account cannot be transferred to another country is called as
Correct Answer

(B) Blocked Account

Explanation

Solution: The bank account of a non-resident of a country, where the amount of currency in the account cannot be transferred to another country is called as Blocked Account. A blocked account can be an account that is subject to foreign exchange controls in a country that restricts the amount of its currency that can be transferred to other countries or exchanged into other currencies.

[#472] Exchange rate between currency A and currency B, given the values of currencies A and B with respect to a third currency is known as
Correct Answer

(D) Cross exchange rate

Explanation

Solution: Exchange rate between currency A and currency B, given the values of currencies A and B with respect to a third currency is known as Cross exchange rate. A cross rate is the currency exchange rate between two currencies when neither are the official currencies of the country in which the exchange rate quote is given.

[#473] Agreement to exchange one currency for another at a specified exchange rate and date is
Correct Answer

(A) Currency swap

Explanation

Solution: Agreement to exchange one currency for another at a specified exchange rate and date is Currency swap. A currency swap is an agreement in which two parties exchange the principal amount of a loan and the interest in one currency for the principal and interest in another currency. At the inception of the swap, the equivalent principal amounts are exchanged at the spot rate.

[#474] Long-term securities denominated in two currencies is called as
Correct Answer

(B) Dual currency bonds

Explanation

Solution: Long-term securities denominated in two currencies is called as Dual currency bonds. A dual currency bond is a synthetic security that is redeemed in one currency while interest payments over the life of the bond are made in another currency. For example, a bond issued in U.S. dollars which pays interest in euros will be considered a dual currency bond.

[#475] Foreign exchange transactions involve monetary transactions
Correct Answer

(C) between residents of two or more countries

Explanation

Solution: Foreign exchange transactions involve monetary transactions between residents of two or more countries. The Foreign Exchange Transactions refers to the sale and purchase of foreign currencies. Simply, the foreign exchange transaction is an agreement of exchange of currencies of one country for another at an agreed exchange rate on a definite date.