1) Multilateral exchange rate is calculated by taking the trade-weighted average of the bilateral exchange rates for each currency that the country is trading with.

True

False

2)

In "Crawling Band", during the progressive devaluation of the currency, some variations about the trend is allowed so that speculation over the currency (short sales) are prevented.

True

False

3)

Which of the following is a derivative?

		Options
		Swaps
		Forward Contrats
		All

4)

A US Parent firm wishes to invest in its Japanese subsidiary. If the US Parent firm decides to do credit swap for currency hedging, what should the US Parent Firm do?

		Find another US Parent Firm that wishes to invest in its Japanese subsidiary
		Find a Japanese Parent firm that wishes to invest in its US subsidiary
		Find a German parent firm that wishes to invest in its Japanese subsidiary
		None

5)

Spot contract in FOREX markets is the immediate exchange of one currency for another currency between two parties.

True

False

6)

Today, a British Firm makes sales to a Canadian Firm. However this British Firm will be paid in Canadian Dollars in two months. If this British Firm decides to make a Cross Country Swap to hedge currency exposure, then this British Firm needs to borrow today in Canadian Dollars.

True

False

7)

Today a US Firm imported some goods from Germany and has to pay 500,000 in three months. How is this US firm exposed to the foreign currency risk?

		might appreciate against $
		might depreciate against $
		There is no foreign currency risk exposure in this situation
		None

8)

In floating exchange rate regime, country's exchange rate fluctuates in a wider range and government makes no attempt to fix it against any base currency.

True

False