Ch 11 · Foreign Exchange Exposure & Risk Management — CA Final AFM
5 levels · 55 questions · free
How to play
Mixed questions from this chapter — fill the missing term, sort into the right box, match the pairs, order the steps, or catch the formula that is wrong.
What this drills
Every mark in this chapter turns on a direction — which currency sits on top, which rate the premium is measured against, and whether you should lead or lag.
- ✓Direct, indirect, American and European quotes
- ✓Interest Rate Parity, PPP and the International Fisher Effect
- ✓Transaction, translation and economic exposure
- ✓Forwards, money market hedges, leading, lagging and netting
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CA Final books →Ch 11 · Foreign Exchange Exposure & Risk Management — questions
What is the difference between an American term and a European term quote?+
American terms quote US dollars per unit of foreign currency (USD 0.2 per INR). European terms quote foreign currency per US dollar (INR 44.92 per USD). Most currencies are quoted in European terms.
When should an importer lead rather than lag?+
When the foreign currency is expected to STRENGTHEN. Paying early locks in today's cheaper rate. If it were expected to weaken, lagging would be right.