FIA Global Financial Markets 2

Question 1

Which organization is responsible for setting international banking capital adequacy standards known as the Basel Accords?

Accepted Answer

Bank for International Settlements

Answer

International Monetary Fund

Answer

World Bank

Answer

Financial Stability Board

Question 2

In currency markets, what does a 'spot transaction' refer to?

Accepted Answer

A trade settled within two business days at the current exchange rate

Answer

A forward contract locked in today for future delivery

Answer

An options contract on a currency pair

Answer

A swap exchanging currency cash flows over multiple periods

Question 3

What is the primary purpose of the IMF's Special Drawing Rights (SDRs)?

Accepted Answer

To supplement member countries' official foreign exchange reserves

Answer

To provide direct loans to private corporations

Answer

To set global interest rate benchmarks

Answer

To regulate cross-border capital flows

Question 4

Which market structure is most characteristic of the global foreign exchange market?

Accepted Answer

Decentralized over-the-counter (OTC) network of dealers

Answer

Centralized exchange with a single clearing house

Answer

Government-controlled fixed-price mechanism

Answer

Auction-based platform open only during business hours

Question 5

A country running a persistent current account deficit is most likely financing it through which mechanism?

Accepted Answer

Net capital inflows from foreign investors

Answer

Reductions in domestic money supply

Answer

Increases in domestic government spending only

Answer

Export of natural resources

Question 6

What does the term 'carry trade' mean in global currency markets?

Accepted Answer

Borrowing in a low-interest-rate currency and investing in a higher-yielding currency

Answer

Buying a currency immediately and simultaneously selling a forward contract

Answer

Exchanging one currency for another to pay for imports

Answer

Using derivatives to hedge foreign exchange exposure

Question 7

In global bond markets, what does a 'Eurobond' refer to?

Accepted Answer

A bond issued in a currency other than the currency of the country in which it is issued

Answer

Any bond issued by a European Union member state government

Answer

A bond denominated exclusively in euros

Answer

A bond backed by the European Central Bank