JAIIB Exam 2025 – AFM Important Questions MCQs Quiz-23

18/04/2025

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JAIIB Exam 2025 AFM Important Questions MCQs Quiz-23

JAIIB Exam Quiz 2025: The JAIIB exam is scheduled for 2025 by IIBF. Here, we are providing JAIIB AFM MCQ-based quizzes on a regular basis. You can attempt the quizzes regularly to prepare for the upcoming JAIIB exam. The quizzes will be provided module-wise and unit-wise. You can attempt the JAIIB AFM quizzes from the links below and improve your preparation by practicing regularly. These quizzes will help you boost your score in the JAIIB exam and guide you to clear the exam on your first attempt.

Q.1 Which of the following statements accurately reflect the fundamental aspects of the general mechanism of foreign exchange?
A. Each country generally has its own legal tender, and access to this currency is typically limited to within that country’s borders.
B. Currency exchange is primarily facilitated by banks through bookkeeping entries in the respective financial centers.
C. Most foreign exchange transactions are executed with the help of credit instruments.
D. All of the above.

Q.2 Which of the following best distinguishes between direct and indirect currency quotations?
A. A direct quotation expresses the amount of foreign currency per unit of home currency, whereas an indirect quotation expresses the
amount of home currency per unit of foreign currency.
B. A direct quotation is the price of the home currency in terms of foreign currency, while an indirect quotation is the opposite.
C. A direct quotation is expressed as the amount of home currency per unit of foreign currency, while an indirect quotation is the amount of foreign currency per unit of home currency.
D. There is no significant difference between direct and indirect quotations in foreign exchange.

Q 3 bank in India wants to remit Euros (€) for a customer. Since there is no direct INR/Euro rate, the bank uses the USD as an intermediary currency.
Given the following exchange rates:
•In Mumbai:
USD 1 = ₹74.8450/8545
•In London:
USD 1 = €0.9027
GBP 1 = USD 1.2720/40
Using the chain rule, what is the cross rate in INR for 1 Euro (€)?
A. ₹67.53
B. ₹74.92
C. ₹82.92
D. ₹95.20

Q.4 Which of the following statements about value dates and exchange rate types is correct?
A. A TOM rate refers to a currency exchange that takes place two working days after the deal date.
B. A forward rate is applied when the currency exchange occurs after the spot date and may include a premium or discount.
C. A spot rate refers to an exchange of currencies that happens on the same day the deal is concluded.
D. When a currency is at a discount, the value is added to the quoted rate under the direct quotation method.

Q.5 Which of the following best describes the forward exchange rate in the foreign exchange market?
A. It is the rate applicable only for same-day (cash) settlement of currency transactions.
B. It is the exchange rate quoted for settlement on the spot date, usually two working days after the transaction date.
C. It is the exchange rate quoted for settlement beyond the spot date and is made up of the spot rate and forward points.
D. It is the average of multiple spot rates quoted by different dealers in the interbank market.

Q.6 Which of the following statements best explains why forward points exist and how they are determined in the foreign exchangemarket?
A. Forward points arise only due to speculative trading and do not depend on interest rates or currency demand.
B. Forward points are determined solely by central bank interventions and have no relation to market expectations or interest differentials.
C. Forward points reflect the difference between the spot rate and forward rate, primarily influenced by interest rate differentials, and adjusted by supply-demand and market expectations.
D. Forward points are added randomly to spot rates to create future projections of currency value and are not based on financial logic.

Q.7 Which of the following best describes arbitrage in the context of financial markets?
A. A high-risk strategy where investors speculate on future currency movements to maximize returns.
B. The simultaneous buying and selling of a currency or asset in different markets to exploit price differences and earn a risk-free profit.
C. A technique used by central banks to artificially fix exchange rates between two or more currencies.
D. A financial strategy where interest is compounded to generate exponential returns over time.

Q.8 Given the following data:
•Spot exchange rate (USD/EUR) = 1.2000
•Interest rate differential (USD – EUR) = 2% per annum
•Forward period = 60 days
•No. of days in a year = 360
What are the approximate forward points?
A. 0.0010
B. 0.0040
C. 0.0020
D. 0.0035

Q.9 Let’s try this:
•Spot rate (USD/EUR) = 1.2500
•Forward points (for 180 days) = 0.0450
•No. of days in a year = 360
What is the annualized interest rate differential?
A. 6.00%
B. 7.20%
C. 5.76%
D. 4.32%

Q.10 The following rates are quoted for USD/INR:
•Spot rate = ₹83.2000
•1-month forward premium = ₹0.1200
•2-month forward premium = ₹0.2500
Based on the above information, what is the 2-month forward exchangerate for USD/INR?
A. ₹83.0700
B. ₹83.4500
C. ₹83.3200
D. ₹83.2500