JAIIB Paper 1 Module D Quiz 3

A recognised exchange provides trading infrastructure, surveillance and rule-based market access. It does not guarantee profits or perform the central bank’s monetary-policy role.

A depository maintains electronic records of securities holdings and facilitates transfers through depository participants. Credit ratings and statutory audits are different functions.

Investors generally open and operate demat accounts through a Depository Participant that is registered with the relevant depository and subject to applicable regulations.

Registrars to an issue support application processing, reconciliation, allotment-related work and investor records in accordance with the issue’s procedures and regulations.

Custodians provide safekeeping and operational services for securities and other assets, including settlement support and corporate-action processing. They do not guarantee market prices.

Credit ratings express an assessment of creditworthiness under the rating agency’s methodology. They are opinions, not guarantees, and do not by themselves measure market-price volatility or assure repayment.

A debenture trustee monitors compliance with specified covenants and acts for debenture holders within the legal and contractual framework. The trustee does not manage the issuer’s ordinary business.

Trading on material non-public information can give certain persons an unfair advantage and damage market integrity. SEBI’s insider-trading framework restricts such conduct subject to the regulations and applicable exceptions.

Price bands and circuit mechanisms can slow or halt trading when specified thresholds are reached, helping manage disorderly moves. They do not prevent all losses or guarantee a fair value.

FIMMDA is an industry association associated with fixed-income, money-market and derivatives markets. Its work includes market practices and valuation-related conventions; it is not a statutory monetary authority.

A spot FX transaction exchanges currencies for delivery on the market’s standard spot value date, subject to market conventions. It differs from a forward contract with a later agreed value date.

An FX forward allows parties to agree today on an exchange rate for a future currency exchange. It can hedge uncertainty but may create obligations even if the eventual spot rate moves favourably.

When the dollar strengthens relative to the rupee, more rupees are needed to purchase the same number of dollars. This increases the rupee cost of an importer’s dollar-denominated payable.

In a standard two-way quote, the bid is the dealer’s buying price for the base currency and the ask/offer is the dealer’s selling price. The customer’s perspective depends on which currency is treated as base.

FEDAI is an association of authorised dealers that supports market practices, conventions and related guidance in the Indian foreign-exchange market. Statutory regulation remains with the relevant authorities.

FEMA replaced FERA and has a management-oriented framework intended to facilitate external trade and payments while regulating foreign-exchange transactions. It did not abolish regulation.

FX-Retail was developed to improve access and transparency for eligible retail FX transactions through participating entities. Availability, products and transaction conditions depend on the platform’s current rules.

The US Dollar Index tracks the dollar against a basket of major currencies. It is not a single USD/INR exchange rate and does not directly measure the dollar against every currency.

ADRs represent interests in shares of a non-US company and are used to facilitate trading in the US market. The depositary arrangement and applicable securities rules govern the receipts.

GDRs represent underlying shares and are used to raise or facilitate investment across international markets. Their issuance, listing and trading are subject to the applicable jurisdictions’ rules.