Friday, October 26, 2012

Lesson-8 on Foreign Exchange



Question: What is Bonded Ware House?
Answer:
A customs store of godown where bonded goods are stored.

Question: What is Bonded Goods ?
Answer:
Goods stored under the care of customs authority in a ware house until the custom duties including duties are paid.

Question: What is Exchange rate?
Answer:
Ø    The rate at which two nations currencies are exchanged.
Ø    Exchange rate is determined by supply of and demand for currency
Ø    In Bangladesh, Floating Exchange rate is practiced.

Question: What Does Spot Exchange Rate Mean?
Answer:
The rate of a foreign-exchange contract for immediate delivery. Also known as "benchmark rates", "straightforward rates" or "outright rates", spot rates represent the price that a buyer expects to pay for a foreign currency in another currency.

Question: What is Soft currency?
Answer:
Soft currency indicates a type of currency whose value may depreciate rapidly or that is difficult to convert into other currencies. It is generally less desirable than hard currency to users. For example , Taka.

Question: What is Hard currency?
Answer:
Ø    A stable currency, well supported by reserves, which is in demand in world markets and therefore easily convertible into other currencies.
Ø    A currency in which investors have confidence, such as that of an economically and politically stable country. For example, Euro, USD , Pound Sterling etc.

Question: What is Special Drawing Right (SDR) ?
Answer:

Ø    Special Drawing Rights (SDR) is costless assets that increase a nation's foreign exchange reserves without the need for an actual transfer of funds.
Ø    Allocated to nations by the International Monetary Fund (IMF), SDR represent a claim to foreign currencies for which they may be exchanged

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