The 'Covered Interest Parity' condition uses which instrument to eliminate exchange rate risk? MCQ with Answer and Explanation

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The 'Covered Interest Parity' condition uses which instrument to eliminate exchange rate risk?

A. stock option

B. forward contract

C. credit default swap

D. currency swap

Answer: Option B

Solution (By JKSSB Mock Tests)

Covered interest parity involves a forward contract to hedge exchange rate risk.

This question belongs to: Economy GK Economy Set 1

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Question #1

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The 'Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act' was enacted in which year?

A. 1999

B. 2010

C. 2002

D. 2005

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Correct Answer: Option C

Explanation:
SARFAESI Act was enacted in 2002.

This question belongs to: Economy GK Economy Set 1

Question #2

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The 'break-even point' in consumption occurs when:

A. consumption equals saving

B. consumption equals income

C. saving equals investment

D. MPC equals zero

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Correct Answer: Option B

Explanation:
At break-even point, consumption equals income, so saving is zero.

This question belongs to: Economy GK Economy Set 1

Question #3

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The 'Insolvency and Bankruptcy Board of India' regulates:

A. insurance companies

B. banks only

C. stock exchanges

D. insolvency professionals and agencies

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Correct Answer: Option D

Explanation:
IBBI regulates insolvency professionals, agencies and information utilities.

This question belongs to: Economy GK Economy Set 1

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