Download GTU (Gujarat Technological University) MBA 2019 Winter 3rd Sem 3539225 International Finance Previous Question Paper
Seat No.: ________ Enrolment No.___________
GUJARAT TECHNOLOGICAL UNIVERSITY
MBA - SEMESTER ? III EXAMINATION ? WINTER 2019
Subject Code: 3539225 Date:07-12-2019
Subject Name: International Finance
Time: 10:30 AM TO 1.30 PM Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1 Explain the following:
(a) Gresham?s Law
(b) SDR
(c) Bid Ask Spread
(d) Types of exchange rates quotations.
(e) Purchasing Power Parity
(f) American Depository Receipts
(g) Arbitrage
14
Q.2 (a) Explain how a country can run an overall balance of payments deficit or
surplus. Why would it be useful to examine a country?s balance of payments
data?
07
(b) Discuss the implications of the interest rate parity for the exchange rate
determination.
07
OR
(b) What do you mean by Forward Contract? Describe its major benefits 07
Q.3 (a) What are multinational corporations (MNCs) and what economic roles do they
play?
07
(b) The current spot exchange rate is $1.55/? and the three-month forward rate is
$1.50/?. Based on your analysis of the exchange rate, you are pretty confident
that the spot exchange rate will be $1.52/? in three months. Assume that you
would like to buy or sell ?1,000,000.
a. What actions do you need to take to speculate in the forward market? What
is the expected dollar profit from speculation?
b. What would be your speculative profit in dollar terms if the spot exchange
rate actually turns out to be $1.46/?.
07
OR
Q.3 (a) Explain any two F Group of Inco terms. 07
(b) Suppose that the current spot exchange rate is ?1.06/$ and the three-month
forward exchange rate is ?1.02/$. The three-month interest rate is 5.6 percent
per annum in the United States and 5.40 percent per annum in France. Assume
that you can borrow up to $1,000,000 or ?1,060,000.
Show how to realize a certain profit via covered interest arbitrage, assuming
that you want to realize profit in terms of U.S. dollars. .
07
Q.4 (a) Briefly discuss the various types of international banking offices. 07
(b) Explain the mechanism of letter of credit with the help of an example. 07
OR
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Page 1 of 2
Seat No.: ________ Enrolment No.___________
GUJARAT TECHNOLOGICAL UNIVERSITY
MBA - SEMESTER ? III EXAMINATION ? WINTER 2019
Subject Code: 3539225 Date:07-12-2019
Subject Name: International Finance
Time: 10:30 AM TO 1.30 PM Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1 Explain the following:
(a) Gresham?s Law
(b) SDR
(c) Bid Ask Spread
(d) Types of exchange rates quotations.
(e) Purchasing Power Parity
(f) American Depository Receipts
(g) Arbitrage
14
Q.2 (a) Explain how a country can run an overall balance of payments deficit or
surplus. Why would it be useful to examine a country?s balance of payments
data?
07
(b) Discuss the implications of the interest rate parity for the exchange rate
determination.
07
OR
(b) What do you mean by Forward Contract? Describe its major benefits 07
Q.3 (a) What are multinational corporations (MNCs) and what economic roles do they
play?
07
(b) The current spot exchange rate is $1.55/? and the three-month forward rate is
$1.50/?. Based on your analysis of the exchange rate, you are pretty confident
that the spot exchange rate will be $1.52/? in three months. Assume that you
would like to buy or sell ?1,000,000.
a. What actions do you need to take to speculate in the forward market? What
is the expected dollar profit from speculation?
b. What would be your speculative profit in dollar terms if the spot exchange
rate actually turns out to be $1.46/?.
07
OR
Q.3 (a) Explain any two F Group of Inco terms. 07
(b) Suppose that the current spot exchange rate is ?1.06/$ and the three-month
forward exchange rate is ?1.02/$. The three-month interest rate is 5.6 percent
per annum in the United States and 5.40 percent per annum in France. Assume
that you can borrow up to $1,000,000 or ?1,060,000.
Show how to realize a certain profit via covered interest arbitrage, assuming
that you want to realize profit in terms of U.S. dollars. .
07
Q.4 (a) Briefly discuss the various types of international banking offices. 07
(b) Explain the mechanism of letter of credit with the help of an example. 07
OR
Page 2 of 2
Q.4 (a) Briefly define each of the major types of international bond market
instruments, noting their distinguishing characteristics.
07
(b) Explain the benefits of Letter of Credit to Importers as well as exporters 07
Q.5
CASE STUDY:
EFFICIENT FUNDS FLOW AT EASTERN TRADING COMPANY
The Eastern Trading Company of Singapore purchases spices in bulk from
around the world, packages them into consumer-size quantities, and sells them
through sales affiliates in Hong Kong, the United Kingdom, and the United
States. For a recent month, the following payments matrix of interaffiliate cash
flows, stated in Singapore dollars, was forecasted.
Eastern Trading Company Payments Matrix (S$000)
Disbursements
Receipts
Singapore
Hong
Kong
U.K.
U.S.
Total
Receipts
Singapore
--
40
75
55
170
Hong Kong
8
--
--
22
30
U.K.
15
--
--
17
32
U.S.
11
25
9
--
45
Total
disbursements
34
65
84
94
277
(a) Show how Eastern Trading can use multilateral netting to minimize the foreign
exchange transactions necessary to settle interaffiliate payments.
07
(b) Explain in detail the concept of transfer pricing in International Cash
Management
07
OR
Q.5 (a) Descibe the Bretten Woods regime. Explain the role of WTO in International
trade.
07
(b)
Explain the role of Export Import Bank of India in promoting International
trade
07
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This post was last modified on 19 February 2020