JAIIB Exam 2025 – IE&IFS Important Questions MCQs Quiz-33

09/04/2025

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JAIIB Exam 2025 IE&IFS Important Questions MCQs Quiz-33

JAIIB Exam Quiz 2025: The JAIIB exam is scheduled for 2025 by IIBF. Here, we are providing JAIIB IE&IFS 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 IE&IFS 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.

Q1. According to Section 2(n) of FEMA, 1999, the definition of “foreign exchange” includes all of the following except:
A) Deposits, credits, and balances payable in any foreign currency
B) Drafts, travellers’ cheques, letters of credit, or bills of exchange expressed in Indian currency but payable in any foreign currency
C) Drafts, travellers’ cheques, letters of credit, or bills of exchange drawn by banks, institutions, or persons outside India, but payable in Indian currency
D) Indian Rupees held by Non-Resident Indians (NRIs) in their domestic bank accounts

Q2. The Foreign Exchange (Forex) Market is an inter-bank market that emerged in 1971 when global trade transitioned from fixed exchange rates to floating rates. The exchange rate of one currency against another is determined primarily by:
A) Government regulations and central bank interventions
B) The supply and demand dynamics in the forex market
C) A fixed rate decided by international financial institutions
D) The purchasing power parity (PPP) formula alone

Q3. Which of the following events marked the beginning of the market-determined exchange rate regime in India?
A) Introduction of the Liberalised Exchange Rate Management System (LERMS) in March 1992
B) Acceptance of Article VIII of the IMF Agreement in August 1994
C) Unification of the dual exchange rates in March 1993
D) Appointment of the Sodhani Committee in November 1994

Q4. Which of the following is not a characteristic advantage of the forex market?
A) High liquidity allowing traders to open and close positions freely
B) Availability of a centralized trading exchange for forex transactions
C) Round-the-clock trading enabling immediate response to global events
D) No additional service charges apart from the bid-ask spread

Q5. In the forex market, margin trading allows investors to control larger positions with a smaller amount of actual capital. The margin (leverage) in the forex market is primarily determined by:
A) The central bank of the trader’s country
B) The agreement between the trader and the broker or bank
C) The International Monetary Fund (IMF) regulations
D) The fixed margin percentage set by global financial institutions

Q6. Which of the following best describes the role of hedge funds and investment entities in the forex market?
A) They primarily engage in forex transactions to facilitate international trade.
B) They intervene in the forex market mainly for speculative purposes and profit generation.
C) They act as regulators to stabilize exchange rates across different economies.
D) They only participate in forex markets to hedge against currency risks.

Q7. Which of the following is not a function of FEDAI?
A) Issuing guidelines and rules for handling foreign exchange transactions
B) Training bank personnel in foreign exchange operations
C) Acting as the central regulatory authority for forex trading in India
D) Accrediting forex brokers and assisting member banks in forex-related matters

Q8. Which of the following is not one of the key regulatory authorities responsible for enforcing FEMA, 1999?
A) Reserve Bank of India (RBI)
B) Directorate of Enforcement, Department of Revenue
C) Securities and Exchange Board of India (SEBI)
D) Capital Market Division, Department of Economic Affairs

Q9. Which of the following was the primary reason for replacing the Foreign Exchange Regulation Act (FERA), 1973, with the Foreign Exchange Management Act (FEMA), 1999?
A) To tighten regulatory control over foreign exchange transactions
B) To align India’s foreign exchange policies with economic liberalization and global standards
C) To eliminate all restrictions on foreign exchange transactions
D) To introduce stricter penalties for violations of foreign exchange laws

Q10. Under Section 3 of FEMA, 1999, which of the following transactions is prohibited unless permitted by the RBI?
A) Receiving a remittance from a relative living abroad through a bank authorized by the RBI
B) Making a payment to a foreign resident without routing it through an authorized person
C) Exchanging foreign currency at a licensed money changer in India
D) Transferring foreign exchange through an authorized dealer for overseas education expenses

Q11. Which of the following is not permitted under Section 4 of FEMA, 1999, unless explicitly allowed by the Act?
A) An Indian resident holding foreign exchange obtained legally through an authorized person
B) A Non-Resident Indian (NRI) purchasing property in India as per FEMA guidelines
C) An Indian resident holding shares in a foreign company received as an inheritance from a relative
D) An Indian resident acquiring immovable property outside India without RBI or government approval

Q12. Section 6 of FEMA, 1999, primarily governs:
A) Transactions related to international trade of goods and services
B) Foreign exchange transactions for remittances of salaries and pensions
C) Capital account transactions involving cross-border investments and asset transfers
D) The regulation of daily exchange rates in India

Q13. Under Section 7 of FEMA, 1999, what is the primary obligation of an exporter of goods and services from India?
A) To obtain prior approval from the RBI before exporting goods
B) To furnish a declaration regarding the full export value to the RBI or any authorized authority
C) To conduct all export transactions only in Indian Rupees
D) To pay a fixed percentage of foreign earnings as a tax to the RBI

Q14. As per Section 8 of FEMA, 1999, residents of India who have foreign exchange due to them must:
A) Repatriate the foreign exchange earnings to India within the prescribed period
B) Keep the foreign exchange in overseas accounts indefinitely
C) Use the foreign exchange only for capital account transactions
D) Obtain RBI approval before accepting foreign exchange from foreign clients

Q15. Under Sections 10 and 12 of FEMA, 1999, which of the following is not a duty of an “Authorised Person” dealing in foreign exchange?
A) To comply with RBI directions and FEMA regulations while conducting forex transactions
B) To ensure all foreign exchange transactions are reported to the RBI as required
C) To deal in foreign exchange freely without any regulatory restrictions
D) To verify and maintain records of foreign exchange transactions carried out by customers

Q16. What is the consequence of violating FEMA, 1999, as per Section 13 of the Act?
A) A person may be required to return the foreign exchange but cannot be penalized
B) A penalty up to three times the amount involved in the contravention, or ₹2,00,000 if the amount is not quantifiable
C) Immediate imprisonment without any monetary penalty
D) Permanent ban from conducting foreign exchange transactions

Q17. What is the significance of Section 15 of FEMA, 1999?
A) It allows compounding of contraventions, reducing legal proceedings for minor violations
B) It authorizes imprisonment for all FEMA violations
C) It provides tax exemptions for foreign exchange transactions
D) It allows unrestricted foreign exchange transactions without RBI approval

Q18. What is the role of the Directorate of Enforcement (DoE) under Sections 36 and 37 of FEMA, 1999?
A) It formulates foreign exchange policies and regulations for RBI
B) It investigates and takes enforcement actions against violations of FEMA provisions
C) It sets exchange rates for foreign currency transactions in India
D) It provides financial assistance for businesses engaging in foreign exchange transactions

Q19. Which of the following statements about American Depository Receipts (ADRs) is true?
A) ADRs can only be bought by U.S. institutional investors.
B) ADRs can be freely traded on U.S. stock exchanges and are settled in US dollars.
C) ADR holders do not have any voting rights or dividend entitlements.
D) The price of an ADR is fixed and does not change after issuance.

Q20. Which of the following correctly describes the process of issuing an American Depository Receipt (ADR) for an Indian company?
A) The Indian company directly issues ADRs to American investors without any intermediary institutions.
B) The Bank of New York, as a Depository Bank, purchases shares from the Indian market and directly lists them on U.S. stock exchanges.
C) An Indian broker purchases shares in the Indian stock market, deposits them with a custodian bank in India, which then informs the Depository Bank in the U.S. (e.g., Bank of New York), allowing it to issue ADRs to investors in America.
D) The Indian government must approve every ADR transaction before it can be traded in the U.S. markets.

Q21. Which of the following statements correctly distinguishes between American Depository Receipts (ADRs) and Global Depository Receipts (GDRs)?
A) ADRs are issued by U.S. banks and traded only in European stock exchanges, while GDRs are issued by European banks and traded globally.
B) ADRs are denominated in U.S. Dollars and listed on U.S. stock exchanges, whereas GDRs are denominated in multiple currencies and traded on European and global stock exchanges.
C) ADRs and GDRs both trade exclusively on the New York Stock Exchange (NYSE).
D) ADRs are issued only for Asian companies, while GDRs are issued for American and European companies.

Q22. Which currency has the highest weight in the U.S. Dollar Index (USDX)?
A) Japanese Yen (JPY)
B) British Pound (GBP)
C) Euro (EUR)
D) Canadian Dollar (CAD)

Q23. Which of the following is not a feature of the FX-Retail Platform introduced by CCIL in August 2019?
A) Customers can transact in USD/INR for Cash, Tom, and Spot settlements
B) There is a daily ceiling on the number of transactions per customer
C) Customers need to register on the CCIL platform and obtain bank approval
D) Transactions up to USD 50,000 per day are exempt from transaction charges

Q24. What is the primary objective of the FX-Retail Platform, introduced by the RBI in June 2019?
A) To allow banks to trade foreign exchange among themselves at preferential rates
B) To provide retail customers direct access to an inter-bank electronic trading platform for better pricing and transparency
C) To eliminate foreign exchange transactions by retail customers and restrict trading to banks
D) To introduce new regulations for money laundering in forex transactions

Answer:

Q1: C
Q2: C
Q3: A
Q4: C
Q5: B
Q6: B
Q7: C
Q8: C
Q9: D
Q10: B
Q11: B
Q12: B
Q13: B
Q14: B
Q15: A
Q16: A
Q17: B
Q18: C
Q19: B
Q20: A
Q21: B
Q22: C
Q23: C
Q24: C
Q25: B
Q26: V