Practice Foreign Exchange Questions and Answers

• An Indian exporter receives a payment of USD 50,000 when the exchange rate is ₹83/USD. At the year-end, the rate drops to ₹80/USD and the amount is sti...
• A foreign subsidiary reports its accounts in USD. On consolidation, the holding company translates the figures into INR. Which rate should be used for inco...
• Beta Ltd., an Indian company, operates a 100% subsidiary in the UAE. The subsidiary manufactures and sells products only in the Gulf region, incurs costs a...
• A company revalues its foreign currency receivable at the closing rate on balance sheet date. Under which Ind AS is this required?
• An Indian company receives a large export order payable in USD after 6 months. The management fears rupee appreciation in this period. To hedge the risk, t...
• An importer based in India has a large payment to make in EUR after 2 months. To reduce exchange rate risk, the firm buys a European Call Option with a str...
• A firm in India has to pay €5 million in 3 months. They expect the rupee to depreciate against the euro. Which of the following hedging tools will best p...
• ParentCo has a net investment in foreign subsidiary of USD 50m. It borrows USD 30m to hedge part of the net investment. The USD loan is designated as a hed...
• A company imports machinery payable in USD after 6 months. If the liability remains unpaid at year-end and the exchange rate has increased, how should the ...
• The exchange rate system where the value of a currency is determined by market forces is called a:
• If the direct quote in India is USD/INR = 83.50, what is the indirect quote?
• The risk of loss due to adverse changes in exchange rates is known as:
• The 'Tom Next' swap in forex markets refers to:
• The exchange rate system where the value of a currency is pegged to another major currency or basket of currencies is called:
• In the forex market, the 'bid rate' refers to:
• The theory that states the exchange rate between two currencies is determined by the relative price levels in the two countries is the:
• An Indian importer buying goods from the USA will be concerned if the Indian Rupee:
• The difference between the buying and selling rates quoted by a dealer is called:
• If USD/INR = 83.00 and GBP/USD = 1.25, what is the GBP/INR cross rate?
• Exchange rate determination by comparing purchasing power of currencies is:
• Covered Interest Arbitrage involves: