Download GTU (Gujarat Technological University) MBA (Master of Business Administration) 2019 Summer 3rd Sem 3539225 International Finance Previous Question Paper
Seat No.: ________ Enrolment No.___________
GUJARAT TECHNOLOGICAL UNIVERSITY
MBA ? SEMESTER 3 ? EXAMINATION ? SUMMER 2019
Subject Code:3539225 Date:13/05/2019
Subject Name: International Finance
Time: 02.30 PM TO 05.30 PM Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.
No.
Question Text and Description Ma
rks
Q.1 Definitions / terms / explanations / short questions based on concepts of
theory/practical
(a) Explain the term Spot Rate.
(b) State the different types of Options.
(c) Differentiate between devaluation and depreciation of currency.
(d) What are ?Masala? Bonds
(e) Expand the terms LIBOR and ADR.
(f) Define the term Forfaiting.
(g) State any 4 INCOTERMS.
14
Q.2 (a)
Discuss the significance of International Finance in the current era of
Globalisation.
07
(b) What does Capital Account in the Balance of Payment indicate? What are
the reasons behind surplus and deficit in capital accounts?
07
OR
(b) Explain the main causes responsible for disequilibrium in the Balance of
Payments.
07
Q.3 (a)
Discuss the factors responsible for fluctuations in the exchange rates.
07
(b) i) current spot rate for the U.S. dollar is Rs. 72. The expected inflation
rate is 6% in India and 2% in the U.S. What will be the expected spot rate
of dollar after one year?
ii) Explain the mechanism behind the working of Relative Purchasing
Power Parity theory.
03
04
OR
Q.3 (a) How does Export and Import bank of India help the exporters? 07
(b) A diamond merchant from Surat plans to import 10,000 pieces of diamonds
in three months. The prices could be $320, $340, or $360 a piece. The
merchant is thinking of buying a 3 month call option on 10,000 pieces of
diamonds. The option will cost $4 per piece.
i) Suggest when should the merchant exercise his call option?
ii)Calculate the amount of payoff on exercising the option.
and the total cost to the merchant under different diamond prices?
01
06
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Page 1 of 2
Seat No.: ________ Enrolment No.___________
GUJARAT TECHNOLOGICAL UNIVERSITY
MBA ? SEMESTER 3 ? EXAMINATION ? SUMMER 2019
Subject Code:3539225 Date:13/05/2019
Subject Name: International Finance
Time: 02.30 PM TO 05.30 PM Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.
No.
Question Text and Description Ma
rks
Q.1 Definitions / terms / explanations / short questions based on concepts of
theory/practical
(a) Explain the term Spot Rate.
(b) State the different types of Options.
(c) Differentiate between devaluation and depreciation of currency.
(d) What are ?Masala? Bonds
(e) Expand the terms LIBOR and ADR.
(f) Define the term Forfaiting.
(g) State any 4 INCOTERMS.
14
Q.2 (a)
Discuss the significance of International Finance in the current era of
Globalisation.
07
(b) What does Capital Account in the Balance of Payment indicate? What are
the reasons behind surplus and deficit in capital accounts?
07
OR
(b) Explain the main causes responsible for disequilibrium in the Balance of
Payments.
07
Q.3 (a)
Discuss the factors responsible for fluctuations in the exchange rates.
07
(b) i) current spot rate for the U.S. dollar is Rs. 72. The expected inflation
rate is 6% in India and 2% in the U.S. What will be the expected spot rate
of dollar after one year?
ii) Explain the mechanism behind the working of Relative Purchasing
Power Parity theory.
03
04
OR
Q.3 (a) How does Export and Import bank of India help the exporters? 07
(b) A diamond merchant from Surat plans to import 10,000 pieces of diamonds
in three months. The prices could be $320, $340, or $360 a piece. The
merchant is thinking of buying a 3 month call option on 10,000 pieces of
diamonds. The option will cost $4 per piece.
i) Suggest when should the merchant exercise his call option?
ii)Calculate the amount of payoff on exercising the option.
and the total cost to the merchant under different diamond prices?
01
06
Page 2 of 2
Q.4 (a) Explain the Techniques available in order to reduce the risk arising due to
Transaction Exposure.
07
(b) Discuss the various methods of issuing equity in the International market.
07
OR
Q.4 (a) Discuss the issues and the remedies available to MNC?s regarding surplus
cash flows.
07
(b) Discuss the importance of Letter of Credit as a tool for international
finance and discuss any two types of LOC with examples.
07
Q.5
CASE STUDY:
Matrix pharma is a mid ? sized pharmaceutical company that focuses
mainly on branded formulations with a significant proportion of its sales
coming from international operations in several countries. Given its healthy
growth in the last five years, partly fueled by an acquisition in the UK, the
company has in recent years stepped up its R&D activity.
It?s CEO Mr. Prateek Vyas recently attended a seminar for CEO?s at a
prestigious UK university in which there was a module on corporate risk
management. After attending the seminar, Prateek Vyas was convinced that
Matrix Pharma, given its increasing internationalization and growing thrust
on R&D, had to gradually institute a comprehensive risk management
programme. In view of the growing importance of risk management in
international finance answer the following questions.
(a) What are the principle risks faced by a business firm? 07
(b) What is the principle of hedging? Explain the advantages of hedging. 07
OR
Q.5 (a) Explain the various participants involved in international transactions. 07
(b)
How does a firm hedge with a forward contract? Explain with example.
07
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This post was last modified on 19 February 2020