Finance in Global Market

1. ….…………….is the right, but not the obligation to buy foreign currency at the specified
exchange rate called the strike price?

A. American Option

B. European option

C. Call Option

D. Put Option

2. Which of the following is the main objective of Bank of international settlement

A Ensure price stability of member countries

B. Ensure adherence to standard of auditing of member states

C. Ensure proper functioning of the capital market of member countries

D. Serve central banks in their pursuit of monetary and financial Stability

3.Which of the following theories is associated with arbitrage?

A. Purchasing Power Parity.

B. Fisher Effect.

C International Fisher Effect.

D. Interest Rate Parity.

4. Which of the following is NOT a money market hedging technique?

A Currency Swap.

B. Currency Futures.

C. Currency Borrowing.

D. Currency Netting

5. Which of the following is NOT a benefit of future exchange contracts ?

A. Hedging investement.

B. Hedging efficiency.

C. Competitive

D. Commiment to performance

6. The balance of payment account that records foreign investments is the:

A.Current Account

B.External Account

C.Transfer Account

D.Capital Account

7. Which of these is not a precondition to qualify for loan from International

Finance Corporation?

A The project must be in the private sector

B. The project must be technically sound

C. The project must satisfy IFC environmental and social standard

D.The project must be mutually exclusive

8. A right, but not an obligation to perform is known as?

A. Futures

B. Trade

C. Option

D. Swaption

9. All of these are constituents of World Bank Group (WBG) except;

A. International Bank for Reconstruction and Development.

B. International Finance Corporation

C. Multilateral Investment Guarantee Agency

D. Bassel Committee for Banking Supervision.

10. The entities of the AfDB include the following EXCEPT:

A. African Development Bank (AFDB)

B. African Development Fund (ADF)

C. Nigerian Trust Fund (NTF)

D. African Trust Fund

11. An international multilateral institution whose goal is to formulate broad supervisory

standards and guidelines for best practice in banking supervision is --

A. The Bank of International Settlement (BIS)

B. The World Bank

C. The Bassel Committee for Banking Supervision (BCBS)

D. The lnternational Monetary Fund (IMF)

12. ldentify which one of the following best describes a multilateral financial institution set
up with the general objective of promotion of international monetary co-operation and
growth of world trade:

A. Multilateral Investment Guarantee Agency.

B. International Monetary Fund.

C. International Finance Corporation.

D. International Bank for Reconstruction and Development.

13. The buyer of a future contract

A. Has the obligation to receive the underlying financial instrument at the specified future
date.

B. Assumes the short position.

C. Has the obligation to deliver the underlying financial instrument at the specified date.
D. May at his or her option, deliver or receive the underlying financial instrument at the
specified date.

14.The International Monetary Fund (IMF) was established at the Bretton Woods

Conference to

A. Provide financial support to the needy

B. Intermediate between countries that have BOP deficit

C. Promote exchange rate stability

D. Facilitate FINTECH

15. Currency option is said to provide a more favourable position to the holder than forward
contracts and future contracts because

A. It allows the holder to exercise his right before the expiration of the option.

B. It allows the holder to take advantage of favourable movement in exchange rate.

C It is cheaper to arrange than forward contract and future contract.

D. It can be cancelled at will by the holder.

16. All of these are services offered by Nigerian Trust Fund (NTF) except;

A. Concessional project financing loans

B. Concessional loan operations with short-term maturity

C. Private sector operation

D. Concessional loan operations with long term maturity

17. The following institutions with the exception of one are considered member of

Bretton Wood Institutions.

A. The World Bank

B. The International Monetary Fund

C. The African Development Bank

D. The International Finance Corporation

18. The International Organization of Securities Commissions (I0SCO) is an association of

organizations that regulate the world's securities and futures markets. Which of the
following markets in Nigeria is associated with I0SC0?

A. Money Market as regulated by Central Bank of Nigeria (CBN)

B. Capital Market as regulated by Security Exchange Commission (SEC)

C Foreign exchange Market as regulated by Central Bank of Nigeria

E. Commodities Market as regulated by yet to be active Commodities

19. All except one of the followings adequately describe correspondent banking

A. Opening of customers account on behalf of another bank for domestic services

B. A correspondent bank is a financial institution that services on behalf of

another

B. A correspondent bank can facilitate wire transfers, conduct business

transactions, accepts deposits and gather documents on behalf of

another bank

D. Act as an agent of another bank in the establishment and advice of letters

of credit

20. Which of the following does NOT appropriately define balance of payment accounting?

A. Balance of Payment records flows rather than stocks and reflects changes in accounts
similar to an income statement

B. Balance of Payment statement summarizes all the flow of economic transactions between
the government, business and private residents of other countries

C. Balance of Payment summarizes all the flow of economic transactions between

government, business and private residents of that particular country

D. Balance of Payment records transactions that affect the local residents and only
transaction in local currencies are recorded
21. Which of the following is not the cause of Balance of Payment (BOP) disequilibrium?

A. Level of economic development

B. Over-valued currency

C. Relative peace in the country

D. Interest rate differential.

22. Under the BOP only one of the following items can be categorized as Miscellaneous
(errors and omissions). Which of the following is classified as miscellaneous?

A. Allocation of special drawing rights (SDRS)

B. Miscellaneous organization running expenses

C. Corporate travelling expenses

D. Corporate medical expenses

23. One major advantage of Euro between participating countries is:

A. Complete elimination of exchange rate risk

B. Removal of trade barrier

C. Similarity of interest rate offered by government

D. Promotion of high level of employment among member countries

24. Which of the following is not among the original aim of international monetary fund?

A. Promotion of international monetary cooperation

B. Facilitate the expansion and balanced growth of international trade

C. Assist in the establishment of a multilateral system of payment

D. Grant additional resources available to member country experiencing Balance of payment

surplus

25. Which of the following is incorrect about Multilateral Development Bank (MDB)?
A. The mission of the multilateral development banks is to serve as Central Banks in their
pursuit of monetary and financial stability.

B. Multilateral Development Banks are institutions created by a group of countries to

provide financing and professional advising.

C. Multilateral Development Banks (MDBs) have large membership including developed

donor countries

D. Multilateral Development Banks (MDBS) finance projects in the form of long-term loans
at market rates

26. Foreign exchange risk which is managed by a binding contract between banker and
customer for trading in currencies whose performance is by delivery at an agreed future
date and rate, falls into one of the following.

A. Foward contract

B. Spot contract

C Option contract

D. Future contract

27. In a balance of payment accounting, a situation where there is an increase in purchasing

power is regarded as …

A. Balance of payment deficit

B. Balance of payment surplus

C. Balance of payment disequilibrium

D. Balance of payment equilibrium

28. "Vostro" in international correspondence Accounting means

A. Various account in our bank

B. Your account with our bank

C. Our account with your bank

D. Your account in your bank

29. In the balance of payment capital account, the distinction between foreign direct
investment and foreign portfolio investment is made on the basis of ...

A. Rate of return on investment

B. Degree of management of investment

C. Origin of the capital flow

D. Ease of transferability of ownership

30. The balance of payment account that records foreign investments is the:

A.Current Account

B.External Account

C.Transfer Account

D.Capital Account

31. Which one of the following is not among the World Bank Group?

A. Africa Development Bank [AFDB)

B. International Bank for Reconstruction and Development [|BRD]

C. International Finance corporation (IFC)

D. Multilateral Investment guarantee agency (MIGA)

32. A component of balance of payment account where the immediate means of

international payment by the monetary authorities and some private sector operators are
recorded is called.

A. Current account

B. Capital account

C. Miscellaneous (errors and omissions)

D. Official reserve account

33. International Project Financing has a number of advantages. Which of these is NOT
among its advantages over Balance Sheet Financing?

A. Eliminate or reduce the lenders recourse to the sponsor

B. Minimize the leverage of a project

C. Avoid any restriction or covenants binding the sponsors under their respective financial
obligations

D. Obtain better financial conditions when the credit risk of the project is better than the
credit standing of the sponsors.

34. Owners or shareholders of International Financial Institutions such as WorldBank Group

and IMF are generally national governments, although other international organizations
occasionally figure as shareholders. Which of the following functions is not a broad function
of these Institutions?

A. Provision of loans, grants, and technical assistance to governments

B. Loans to private businesses investing in developing countries.

C. Mandatory capacity development for all licensed banks in the world

D. Play significant role in the privatization and regulation of public utilities and natural
resources

35. ….…………………is an interest- bearing international reserve asset created by the

International Monetary Fund (IMF) to supplement other reserve asset of member

countries.

A. Eurobond

B. Foreign Bond

C Special Drawing Right

D. International Monetary fund reserve

36. One of these is not a known attribute of Eurocurrency.

A. Eurocurrency is deposits in banks that are located outside the borders of the country

B. The Eurocurrency market is the money market in which currency held in banks outside of
the country where it is a legal tender
C. The Eurocurrency market has expanded to include Naira and Cedis whenever they trade
outside of their home market

D. The Eurocurrency market is now utillzed by banks, multinational corporation mutual

funds and hedge funds

37. The following are the characteristics of Global Depository Receipts. Except;

A. It is a secured security

B. It can be converted into a number of shares

C. It is listed and traded on the stock exchange

D. Earnings and redemption price is public in foreign currency.

38. The balance of payment (BOP) must always be balanced because:

A. BOP records flow of foreign exchange between countries

B. BOP records international transactions

C. BOP is based on the double entry principles

D. BOP Is a cash flow statement

39.The World Bank Group consists of:

A. IBRD, IDA, MIGA, MAGA, APGA

B. IBRD, ICSID, IFC, MIGA, IDA

C. IBRD, MIGA, MENU, IDA, ICSID

D. IBRD, AFC, AFDB, IFC, IMF

40. When the overall trade balance is zero:

A. Merchandse exports equal merchandise imports

B. The service trade balance must be zero

C. Exports equal imports

D. All of the above