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

The Bank for International Settlements (BIS) hosts the Basel Committee on Banking Supervision, which produces the Basel Accords on capital adequacy.

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 spot transaction is a foreign exchange deal where currencies are exchanged at the current (spot) rate and settlement occurs within two business days.

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

SDRs are an international reserve asset created by the IMF to supplement member nations' official reserves and support global liquidity.

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

The forex market is a global, decentralized OTC market where banks, dealers, and institutions trade currencies directly with each other 24 hours a day.

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

A current account deficit must be offset by a capital account surplus, meaning the country attracts net foreign investment or borrowing to balance its payments.

(FIA) Financial Information Associate Certification Practice Test

(FIA) Financial Information Associate Certification Practice Test

FIA Global Financial Markets 2