In Capital Market Line every investment is
A. infinitely divisible
B. finitely divisible
C. a & b
D. all of answer correct
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Dollar-cost averaging allows investors to stay away from trouble of buying high and selling
A. least
B. high
C. low
D. highest
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Who concern with relations between security returns
A. Markowitz diversification
B. random diversification
C. Friedman diversification
D. correlating diversification
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Superior portfolio is not basically a collection of individually
A. good portfolio
B. good investments
C. negative securities
D. all of answer correct
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Investments would grade uppermost with regard to protection is
A. government bonds
B. common stock
C. preferred stock
D. real estate
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Choice of correlation coefficient is between
A. 0 to 1
B. 0 to 2
C. Minus 1 to +1
D. Minus 1 to 3
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Markowitz model presumed generally investors are
A. risk averse
B. risk natural
C. risk seekers
D. risk moderate
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The statements relate to international financial environment. Denote the statements being correct or incorrect.
Statement I Foreign exchange risk denotes the variance of domestic currency value of assets, liabilities, or operating income attributable to anticipated changes in exchanges rates.
Statement II Foreign exchange exposures denote the sensitivity of the real value of assets, liabilities and operating income to unanticipated changes in exchange rates expressed in its functional currency.
A. Both statements are correct
B. Both statements are incorrect
C. Statement t is correct, but Statement II is incorrect
D. Statement I is incorrect, but Statement II is correct
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Match the following.
List-I
List-II
a. Increase in Volatlity
1. Rise in option premium
b. Increase in interest rate
2. Fall in value of put option
c. Increase in price of underlying asset
3. Rise in price of call option
A. a-1, b-3, c-2
B. a-1, b-2, c-3
C. a-3, b-1, c-2
D. a-2, b-1, c-3
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The counterpart risk is
A. the risk of loss when exchange rates change during the period of a financial contract
B. based on the notional amount of the contract
C. the risk of loss if the other party to a financial contract fails to honour its obligation
D. present only with exchange-traded options
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In a derivative transaction, the term margin denotes to which one of the following?
A. Cash or collateral provided by a customer to a broker to protect the broker from loss on a contract
B. Cash or collateral provided by a broker to a customer to protect the customer from loss on contract
C. A broker's request for more collateral to bring a customer's margin requirement to a premium margin level
D. A customer's request for more collateral to bring a broker's margin requirement to a minimum standard level
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Match the following.
List-I
List-II
a. IRP
1. Law of one price
b. PPP
2. Nominal interest rate
c. IFE
3. Covered interest arbitrage
d. Call option
4. Right to purchase
A. a-2, b-1, c-3, d-4
B. a-3, b-1, c-2, d-4
C. a-2, b-3, c-1, d-4
D. a-3, b-4, c-1, d-2
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Which of the following statements are true with regard to currency appreciation?
A. The value of all currencies fall relative to gold
B. The value of all currencies rise relative to gold
C. The value of one currency rises relative to another currency
D. The value of one currency falls relative to another currency
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The international money market usually has a period of
A. 1 years
B. 2 years
C. 5 years
D. 10 years
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Which of the following causes do investors employ foreign exchange market?
A. Currency hedging
B. Currency speculation
C. Currency conversion
D. All of the above
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Differences in nominal interest rates are removed in exchange rate is
A. Fisher effect
B. Leontief paradox
C. combined equilibrium theory
D. purchasing power parity
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An Indian company is importing machine at a price of 5 , 00 , 000 , p a y ab l e a f t er s i x m o n t h . T h ec u r r e n t e x c han g er a t e i s R s .63 U S . The forward contract for six months is available @ Rs. 64 per US . I f t h er a t e t u r n so u tt o b e R s .64.25 p er U S , the net gain to the importer in case he has entered into contract will be
A. $ 1,25,000
B. $ 2,50,000
C. $ 5,00,000
D. $ 6,25,000
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The sources of finance for an international financial manager are
A. ADR and GDRs
B. international credit market
C. international money market
D. all of the above
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Ask quote is for
A. seller
B. buyer
C. hedger
D. speculator
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Which of the following statement is correct when it is given a home country and a foreign country, purchasing power parity suggests that
A. the home currency will appreciate if the current home inflation rate exceeds the current foreign inflation rate
B. the home currency will depreciate if the current home interest rate exceeds the current foreign interest rate
C. the home currency will depreciate if the current home inflation rate exceeds the current foreign inflation rate
D. the home currency will depreciate if the current home inflation rate exceeds the current foreign interest rate
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