International Trade and Finance

Trade finance is the money businesses use to help them do business across borders. People who work for businesses can use a trade finance service to help them do business with each other through trade. There are a lot of different financial products that banks and businesses use to make trade deals happen. Trade finance is an umbrella term for all of them. Use a third party to ensure you don’t pay for and get what you need. In trade finance, the exporter gets money or receivables based on the agreement, and the importer might get a loan to pay for the goods they need to buy.

MCQs:

Q1. Trade among 2 nations can be helpful if the price ratios of products are:

1. 1. Equal
   2. Decreasing
   3. Undetermined
   4.  Different

Answer: D- Different

Explanation 

As long as the cost ratio for commodities differs between the two countries, one of them will be better at making that commodity than the other. This means that trade between the two countries can be good.

Q2. The word Euro Exchange rate refers to

1. 1.  The foreign exchange market is an international one.
   2. The countries that use the Euro as their money.
   3. The exchange market where the Euro is traded for other currencies, such as the dollar.
   4. The market where the borrowing and lending of currencies take place outside the country of issue

Answer: D-The market where the borrowing and lending of currencies take place outside the country of issue

Explanation

The term “Eurocurrency Market” refers to the market where currencies are borrowed and lent outside of the country where they are made. This is the money market where banks borrow and lend currencies that aren’t legal tender in the country where they are kept in banks. The euro currency market is this money market.

Q3. This question is about one of the following theories: Which one says firms try to get into new markets over time?

1. 1. Theory of Comparative Advantage
   2. Product cycle theory
   3. Imperfect Market Theory 
   4. None of the above

Answer: D None of the above

Explanation

Using the product cycle concept, it is thought that companies try to get into new markets over time.

Q4.the Dumping word refers to

1. 1.  Tariffs should be cut to make more money.
   2. A lower-priced sale of goods abroad is below the cost and price of their home market.
   3. Buying goods at low prices in another country and selling them at a higher price here.
   4. Expensive goods are being sold at low prices.

Answer: D A lower-priced sale of goods abroad, below the cost and price in their home market.

Explanation

When a company or an organization sells a product to a foreign country at a lower price than they would sell it for in their own country.

Q5. Domestic trade and International trade differ because of:

1. 1. Trade restrictions
   2. Immobility of factors
   3.  Different government policies
   4. All of the above

Answer: D All of the above

Explanation

International trade refers to the exchange of goods and services between countries and across borders, and it is called that. When this business is done inside a country’s borders, it’s called “domestic trade.”

Q6. The margin for a currency long term must be retained with the repository by

1. 1. The buyer
   2. The seller
   3.  Both the buyer and the seller
   4. None

Answer: C. Both the buyer and the seller

Explanation

The range for a currency long-term must be kept both by the buyer and the seller so that the clearinghouse can keep track of the money. You need this money to buy or sell something in the futures market: Initial Futures Margin.

Q7.which one of the following sentences with regard to the currency option is wrong.

1. 1. An American option can be bought or sold on any day of the week or month during its currency.
   2. Foreign currencies can be exchanged for Indian rupees in India.
   3. The put option allows you to sell the foreign currency if you don’t want to keep it.
   4. The call option will be used by exporters.

Answer: D. Call option will be used by exporters

Explanation 

The call option that export markets can use when it comes to the currency option is not correct, though. When someone buys a call option, they agree to buy a stock, bond, commodity, or other asset or instrument at a certain price. They don’t have to do this.

Q8. Government. strategy regarding exporters and importers is called:

1. 1.  Commercial policy
   2. Monetary policy
   3.  Fiscal policy
   4. Finance policy

Answer: A. Commercial policy

Explanation

When it comes to business, there is a set “Companies and people in one country must follow certain rules and policies when they do business with people and businesses in another country. The term “trade policy” or “commercial policy” is sometimes used to describe this type of policy “policy for international trade.

Q9.Which one of the following is international trade?

1. 1. Trade between regions
   2. Trade between countries
   3. Trade between provinces
   4. Both a and c

Answer: B-Trade between countries

Explanation

It is called international trade when people from different countries buy and sell things with each other. Trading is buying and selling products and services. The aim of make money. Thus, international trade implies selling and buying outside of a country’s borders, which is what it means to do trade.

Buying goods outside of your country helps people get them.

Q10. Market wherein exchange rates sell and buy and one‘s prices resolve on is called the

1. 1. International capital market
   2. International bond market
   3. Foreign exchange market
   4. None

Answer: C. Foreign exchange market

Explanation

There is a foreign exchange market where currencies can buy and sell, and prices come to a certain point.

Q11 made several rounds of bargaining through which tariffs have been reduced.

1. 1.  GATT
   2. NAFTA
   3.  IMF
   4. IBRD

Answer : 1. GATT

Explanation

Public Agreement on Tariffs and Trade (GATT), which was signed by 23 countries on October 30, 1947, was a legal agreement that cut down on tariff barriers by preventing or minimizing quotas, tariffs, and subsidies but kept important rules in place.

Q12 what occurs once Imported products are more than exported goods.

1. 1.  Trade deficit
   2.  Trade barrier
   3.  Trade surplus
   4.  None

 Answer A-Trade deficit

Explanation

It has a positive trade balance if a country exports more money than imports. If a country imports more money than it exports, it has a trade deficit.

Q13 Trade between countries can indeed be useful if the price ratios of products are:

1. 1.  Different
   2.  Decreasing
   3.  Undetermined
   4.  Equal

Answer A. Different

Explanation

As long as the cost ratio for commodities differs between the two countries, one of them will be better at making that commodity than the other. This means that trade between the two countries can be good.

Q14 Which one of the following ideas implies that businesses seek to penetrate new marketplaces over time?

1. 1.  Product cycle theory
   2.  Imperfect Market Theory
   3.  Theory of Comparative Advantage
   4.  all of the above

Answer: 1. Product cycle theory

Explanation

Product cycle theory says that businesses try to get into more and more markets over time.

Q15   Term Dumping called 

1. 1.  Tariffs should be cut to make more money.
   2. Buying goods at low prices in another country and selling them at a higher price here.
   3. Expensive goods are being sold at low prices.
   4. Sale of goods abroad at low a price, below their cost and price in the home market

Answer: D-Sale of goods abroad at low a price, below their cost and price in the home market

Explanation

In business, “dumping” is when companies sell their products to other countries at a lower price than they sell them in their own country. This is called “dumping.”

Q16 Global commerce and domestic trade differ because of:

1. 1.  Different government policies
   2. Trade restrictions
   3.  Immobility of factors 
   4.  All of the above

Answer – 4. All of the above

Explanation

International trade refers to the exchange of goods and services between countries and across borders, and it is called that. When this business is done inside a country’s borders, it’s called domestic trade.

Q17The margin for just a currency future should be retained with the clearing house by

1. 1. The buyer
   2. The seller
   3. Both the buyer and the seller
   4. None

Answer D. Both the buyer and the seller

Explanation

The range for a currency long-term should be kept both by the buyer and the seller so that the clearinghouse can keep track of the money. You need this money to buy or sell something in the futures market: Initial Futures Margin.

Q18, which one of the following options is incorrect

1. 1.  People who buy put options can sell the foreign currency at a certain price.
   2. It is possible to buy and sell American options on any day during its currency.
   3. Foreign currencies can be exchanged for Indian rupees in India.
   4. The call option will be used by exporters.

Answer: D. Call option will be used by exporters

Explanation

A call option can be used by export markets when the currency option is not correct, but When someone buys a call option, they agree to buy a stock, bond, commodity, or other asset or instrument at a certain price in a certain amount time. They don’t have to do this.

Q19 The percentage of trade to GDP was just as high as ________ in 1913.

1. 1. 25

1. 1. 13
   2. 87
   3. 21

Answer A – 25

Explanation

In 1800, the ratio of world trade to output was just 2%. It then rose to 10% in 1870, 17% in 1900, and 21% in 1913, but fell back to 2% in 1800.

Q20 Trade around two or more different countries is called ________.

1. 1. International Trade
   2. External Trade
   3. Internal Business
   4. Unilateral Trade

Answer A. International Trade

Explanation

International trade is when people from different countries buy and sell things and services with each other.