Chapter 20: International Finance — Online MCQ Test
COMMERCE · CLASS 11th · Tamil Nadu State Board
Practice Chapter 20: International Finance with a free chapter-wise online MCQ test.
This chapter covers: Exploring international capital markets this chapter covers foreign direct investment and foreign institutional investors. Students examine depositary instruments like GDRs ADRs an....
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Chapter 20: International Finance — Important Questions & Answers
What does the abbreviation GDR stand for in international finance?
- A. Global Depositary Receipt
- B. General Debt Reserve
- C. Gross Domestic Revenue
- D. Global Development Rate
Answer: A. Global Depositary Receipt
GDR stands for Global Depositary Receipt, a financial instrument used by companies to raise capital in international markets.
GDR stands for Global Depositary Receipt, a financial instrument used by companies to raise capital in international markets.
Which type of investor invests in the stocks or bonds of a company located in a foreign country?
- A. Domestic Trader
- B. Foreign Institutional Investor
- C. Local Retailer
- D. Sole Proprietor
Answer: B. Foreign Institutional Investor
Foreign Institutional Investors (FIIs) are entities established outside a country that invest in the financial markets of that country.
Foreign Institutional Investors (FIIs) are entities established outside a country that invest in the financial markets of that country.
Which of the following is a feature of Foreign Currency Convertible Bonds (FCCBs)?
- A. They cannot be converted into equity
- B. They are issued in foreign currency
- C. They are debt-free instruments
- D. They are restricted only to domestic investors
Answer: B. They are issued in foreign currency
FCCBs are equity-linked debt securities issued by a company in a foreign currency, which are convertible into shares of the issuing company.
FCCBs are equity-linked debt securities issued by a company in a foreign currency, which are convertible into shares of the issuing company.
Compare GDR and ADR. Which statement is true?
- A. ADR is global, GDR is American
- B. GDR is usually listed on the London or Luxembourg exchanges, ADR on US exchanges
- C. Both are issued by domestic banks only
- D. ADR cannot be converted to cash
Answer: B. GDR is usually listed on the London or Luxembourg exchanges, ADR on US exchanges
ADRs are specific to the US market, while GDRs are global instruments typically listed in European financial centers.
ADRs are specific to the US market, while GDRs are global instruments typically listed in European financial centers.
An investor wants to invest in a company's shares but wants a debt instrument that can be converted to equity if the company performs well. What should they choose?
- A. Fixed Deposit
- B. Foreign Currency Convertible Bonds
- C. Government Bond
- D. Treasury Bill
Answer: B. Foreign Currency Convertible Bonds
FCCBs offer the safety of a bond and the potential upside of an equity share upon conversion.
FCCBs offer the safety of a bond and the potential upside of an equity share upon conversion.