International Finance and Treasury MCQs

✅ The correct answer is option C.
More instability in currency is called as currency risk. Currency Risk, sometimes referred to as exchange rate risk, is the possibility that currency depreciation will negatively affect the value of one’s assets, investments, and their related interest and dividend payment streams, especially those securities denominated in foreign currency.

✅ The correct answer is option B.
Mortgages used to purchase townhouses and apartment complexes are classified as multifamily dwelling mortgages. A mortgage is a loan from a bank or a financial institution that helps the borrower purchase a house. A mortgage is secured by the home itself, so if the borrower defaults on the loan, the bank can sell the home and recoup its losses.

✅ The correct answer is option C.
Bonds issued by corporations for relatively longer term are classified as corporate bonds. A corporate bond is a debt security issued by a corporation and sold to investors. The backing for the bond is usually the payment ability of the company, which is typically money to be earned from future operations. In some cases, the company’s physical assets may be used as collateral for bonds.

✅ The correct answer is option D.
In negotiated sale, services provided by investment banks are origination services and advising services. A negotiated sale is when the issuer and an underwriter negotiate the terms of municipal bonds in lieu of groups bidding to establish the terms.

✅ The correct answer is option B.
A depository receipt represents shares issued in local currency. A depositary receipt (DR) is a negotiable financial instrument issued by a bank to represent a foreign company’s publicly traded securities.

✅ The correct answer is option A.
Theory according to which difference between expected appreciation and foreign interest must be equal to domestic interest rate is interest rate parity theoremcalled. Interest rate parity (IRP) is a theory in which the interest rate differential between two countries is equal to the differential between the forward exchange rate and the spot exchange rate.

✅ The correct answer is option A.
Typically, municipal bonds have a minimum denomination of $5,000, but some issuers may impose a higher minimum denomination, most commonly in the amount of $100,000.

✅ The correct answer is option C.
Curve representing demand of funds shifts to left if economic growth in domestic market is stagnant. The demand curve is a representation of the correlation between the price of a good or service and the amount demanded for a period of time.

✅ The correct answer is option D.
Foreign bonds issued in Japan are known as samurai bonds. A samurai bond is a yen-denominated bond issued in Tokyo by a non-Japanese company and subject to Japanese regulations. Other types of yen-denominated bonds are Euroyens issued in countries other than Japan, typically in London.

✅ The correct answer is option B.
Single bid auction of TIPS securities means that all bidders pays same price. In the single-price format – all bids accepted by the Treasury are awarded at the same interest rate which is the highest yield of accepted competitive bids.