JAIIB Marathon May 2025 AFM Quiz-2

09/05/2025

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JAIIB Marathon May 2025 AFM Quiz-2

JAIIB CAIIB Course Quiz – May 2025: The JAIIB exam for May 2025, conducted by IIBF, is fast approaching. To support your preparation, we are providing regular MCQ-based quizzes specifically designed for the JAIIB CAIIB syllabus. These quizzes are structured module-wise and unit-wise to help you cover the entire syllabus systematically. Practicing these quizzes consistently will strengthen your concepts, improve accuracy, and increase your chances of clearing the exam on your first attempt.

Q.1 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 foreign currency in terms of home 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.2 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.3 Which of the following statements best explains why forward points exist and how they are determined in the foreign exchange market?
(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.4 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.5 Which of the following statements is correct regarding a Bill of Exchange as defined under Section 5 of the Negotiable Instruments Act?
(a) It must be an oral agreement between two parties.
(b) It contains an unconditional promise to pay a certain sum of money.
(c) It involves three parties: the drawer, the drawee, and the payee.
(d) It can be issued only by a bank.

Q.6 Which of the following correctly describes the roles of the three parties in a Bill of Exchange?
(a) The drawer is the person who accepts the bill and promises to pay; the drawee is the person who draws the bill; the payee is the person who receives the money.
(b) The drawer is the person who draws the bill; the drawee is the person on whom the bill is drawn and who is liable to pay; the payee is the person who is entitled to receive the payment.
(c) The drawer is the person who pays the bill; the drawee is the person who receives payment; the payee is the bank processing the transaction.
(d) The drawer is the person who issues the bill on behalf of the bank; the drawee is always the Reserve Bank of India (RBI); the payee is the government.

Q.7 Which of the following correctly differentiates a Promissory Note from a Bill of Exchange?
(a) A Promissory Note is written by the creditor, while a Bill of Exchange is written by the debtor.
(b) A Promissory Note involves three parties, while a Bill of Exchange involves only two parties.
(c) A Promissory Note is an unconditional undertaking by the maker to pay, whereas a Bill of Exchange is an order by the creditor to the debtor to make a payment.
(d) A Promissory Note must always be drawn in favor of a bank, while a Bill of Exchange can be drawn in favor of any individual.

Q.8 Under the Negotiable Instruments Act, which of the following statements is incorrect regarding the distinction between a Bill of Exchange and a Cheque?
(a) A Cheque must be drawn on a banker, whereas a Bill of Exchange can be drawn on any party.
(b) A Cheque does not require a stamp duty, whereas a Bill of Exchange (except for demand bills) requires one.
(c) A dishonored Cheque can attract criminal liability under Section 138 of the Negotiable Instruments Act, whereas dishonor of a Bill of Exchange does not lead to criminal liability.
(d) A Bill of Exchange is always a negotiable instrument, whereas a Cheque is not.

Q.9 Which of the following statements best defines a Holder in Due Course (HDC) under the Negotiable Instruments Act?
(a) A person who possesses a negotiable instrument and is entitled to receive payment, regardless of how the instrument was obtained.
(b) A person who obtains a negotiable instrument for valuable consideration, before maturity, and without knowledge of any defect in the title of the previous holder.
(c) A person who holds a negotiable instrument after its maturity but has no knowledge of any prior fraud.
(d) Any bank or financial institution that accepts a negotiable instrument for clearing and settlement.

Q.10 Which of the following statements is true regarding the retirement of a bill of exchange?
(a) The drawee must pay the full amount along with interest if the bill is retired before its due date.
(b) The bill can be retired only if the drawer provides a written request for early payment.
(c) The drawee may receive a rebate (discount) for making the payment before maturity.
(d) Retirement of a bill is considered a form of dishonour under the Negotiable Instruments Act.

Answer:

Q1: C
Q2: B
Q3: C
Q4: B
Q5: C
Q6: B
Q7: C
Q8: A
Q9: B
Q10: C

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