Class 12 Finance MCQ Chapter 8 Foreign Exchange Market Solutions in English Medium to each chapter is provided in the list so that you can easily browse through different chapters Class 12 Finance MCQ Chapter 8 Foreign Exchange Market Question Answer and select need one. Class 12 Finance MCQ Chapter 8 Foreign Exchange Market Solutions Download PDF. AHSEC Class 12 Banking Multiple Choice Solutions.
Class 12 Finance MCQ Chapter 8 Foreign Exchange Market
Also, you can read the NCERT book online in these sections Solutions by Expert Teachers as per Central Board of Secondary Education (CBSE) Book guidelines. AHSEC Class 12 Finance Objective Type Solutions are part of All Subject Solutions. Here we have given HS 1st Year Banking Multiple Choice Question and Answer, HS First Year Banking MCQs Solutions for All Chapters, You can practice these here.
Foreign Exchange Market
Chapter: 8
| MCQ |
1. According to Crowther, what does the rate of exchange measure?
(i) Number of units of one currency exchanged for another.
(ii) Total volume of foreign currency.
(iii) The value of commodities in international trade.
(iv) None of the above.
Ans: (i) Number of units of one currency exchanged for another.
2. What is the primary function of the Foreign Exchange Market?
(i) To help convert one currency into another.
(ii) To regulate stock markets globally.
(iii) To create bonds and securities.
(iv) To facilitate domestic trade.
Ans: (i) To help convert one currency into another.
3. Who are the major participants in the Foreign Exchange Market?
(i) Commercial banks and central banks.
(ii) Governments only.
(iii) Only large corporations.
(iv) Only individuals.
Ans: (i) Commercial banks and central banks.
4. Which of the following is a key feature of the Foreign Exchange Market?
(i) Limited geographical location.
(ii) Operates only during stock market hours.
(iii) Operates 24 hours a day.
(iv) Only accessible to large corporations.
Ans: (iii) Operates 24 hours a day.
5. What is the Over-the-Counter (OTC) market?
(i) A physical market where foreign exchange is traded.
(ii) A market that does not have a physical location and operates electronically.
(iii) A market where only stocks are traded.
(iv) A market that only deals with foreign commodities.
Ans: (ii) A market that does not have a physical location and operates electronically.
6. Which of the following is a function of the Foreign Exchange Market?
(i) Providing long-term investment options for companies.
(ii) Ensuring the stability of currency exchange rates.
(iii) Providing loans for international companies.
(iv) Offering investment in foreign commodities.
Ans: (ii) Ensuring the stability of currency exchange rates.
7. Who regulates the Foreign Exchange Market in India?
(i) The Securities and Exchange Board of India (SEBI).
(ii) The Reserve Bank of India (RBI).
(iii) The Ministry of Finance.
(iv) The Indian government.
Ans: (ii) The Reserve Bank of India (RBI).
8. Which of the following defines the term ‘hedging’ in the Foreign Exchange Market?
(i) The practice of buying or selling foreign exchange without any risk.
(ii) A strategy to protect against currency fluctuations.
(iii) A way to invest in foreign stock markets.
(iv) A system to regulate the import of goods.
Ans: (ii) A strategy to protect against currency fluctuations.
9. What is the main role of foreign exchange brokers in the market?
(i) To buy and sell foreign currencies for individuals.
(ii) To act as intermediaries between buyers and sellers of foreign exchange.
(iii) To regulate foreign exchange rates.
(iv) To issue foreign exchange licenses.
Ans: (ii) To act as intermediaries between buyers and sellers of foreign exchange.
10. Which market type deals with smaller transactions involving individual customers?
(i) Retail Market.
(ii) Wholesale Market.
(iii) Interbank Market.
(iv) Central Bank Market.
Ans: (i) Retail Market.
11. What is the main difference between Retail Market and Wholesale Market in the Foreign Exchange Market?
(i) Retail Market deals with large-scale transactions, whereas Wholesale Market deals with small-scale transactions.
(ii) Retail Market deals with individual customers, while Wholesale Market deals with interbank transactions.
(iii) Retail Market has high transaction volumes, while Wholesale Market deals with low volumes.
(iv) There is no difference between both markets.
Ans: (ii) Retail Market deals with individual customers, while Wholesale Market deals with interbank transactions.
12. What is the primary feature of the Wholesale Market in the Foreign Exchange Market?
(i) Deals with small-scale transactions between customers and banks.
(ii) Deals with large transactions between banks and other financial institutions.
(iii) Deals only with securities and bonds.
(iv) Deals with currency fluctuations.
Ans: (ii) Deals with large transactions between banks and other financial institutions.
13. Which of the following is NOT a function of the Foreign Exchange Market?
(i) Transfer of currency from one country to another.
(ii) Providing credit to foreign traders.
(iii) Buying and selling government bonds.
(iv) Hedging against currency fluctuations.
Ans: (iii) Buying and selling government bonds.
14. What type of exchange is involved in the Retail Market of Foreign Exchange?
(i) Transactions between corporations and governments.
(ii) Small transactions between individual customers and banks.
(iii) Large-scale transactions between banks only.
(iv) Currency swaps between central banks.
Ans: (ii) Small transactions between individual customers and banks.
15. Which of the following accurately describes the interbank market?
(i) It is a market for individuals to exchange currencies.
(ii) It deals with small transactions between buyers and sellers.
(iii) It involves large transactions between banks, without physical currency exchange.
(iv) It is a market where only central banks trade currencies.
Ans: (iii) It involves large transactions between banks, without physical currency exchange.
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