Download GTU (Gujarat Technological University) MBA (Master of Business Administration) 2018 Winter 3rs Sem 3539242 International Financial Management Ifm Previous Question Paper
Seat No.: ________ Enrolment No.___________
GUJARAT TECHNOLOGICAL UNIVERSITY
MBA ? SEMESTER 3 ? EXAMINATION ? WINTER 2018
Subject Code: 3539242 Date:10/12/2018
Subject Name: International Financial Management (IFM)
Time: 10:30am To 01:30pm Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1 (a) General Agreement on Tariffs and Trade (GATT)
(b) Flexible Exchange Rate Regime
(c) Foreign Direct Investment (FDI)
(d) Fisher Effect
(e) Basle accord
(f) Exchange Traded Funds (ETFs)
(g) Economic Exposure
14
Q.2 (a)
How would you define transaction exposure? How it is different from economic exposure?
07
(b) Do you think that a country?s government should assist private business in the
conduct of international trade through direct loans, loan guarantees and/or credit
insurance?
07
OR
(b)
Your exporter-customer has requested you to book a fixed date TT forward contract for
Swiss Francs 5,00,000 in respect of an export bill due for payment 180 days from the date
of the contract. Assuming you cover yourself by sale of Swiss Franc in London Market for
the corresponding delivery date when the exchange rates for Swiss Francs were as under:
Spot USD 1 = CHF 1.6120/6165
One month 60/58
Three months 165/160
Six months 330/320
And US dollars are quoted in the local interbank market as under:
Spot USD 1 = Rs. 48.4025/4175
One month forward 48.6550/6725
Three months forward 48.8550/8750
Six months forward 49.2550/2800
Calculate the exchange rate and the rupee amount payable to the customer bearing in mind
the following:
1. An exchange margin of 0.08% is required.
2. Rupee equivalent to be nearest to the whole rupee.
07
Q.3 (a) What are the common contract terms used in the international trade? Explain the
significance of these terms as far as they affect the buyer and the seller.
07
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Page 1 of 3
Seat No.: ________ Enrolment No.___________
GUJARAT TECHNOLOGICAL UNIVERSITY
MBA ? SEMESTER 3 ? EXAMINATION ? WINTER 2018
Subject Code: 3539242 Date:10/12/2018
Subject Name: International Financial Management (IFM)
Time: 10:30am To 01:30pm Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1 (a) General Agreement on Tariffs and Trade (GATT)
(b) Flexible Exchange Rate Regime
(c) Foreign Direct Investment (FDI)
(d) Fisher Effect
(e) Basle accord
(f) Exchange Traded Funds (ETFs)
(g) Economic Exposure
14
Q.2 (a)
How would you define transaction exposure? How it is different from economic exposure?
07
(b) Do you think that a country?s government should assist private business in the
conduct of international trade through direct loans, loan guarantees and/or credit
insurance?
07
OR
(b)
Your exporter-customer has requested you to book a fixed date TT forward contract for
Swiss Francs 5,00,000 in respect of an export bill due for payment 180 days from the date
of the contract. Assuming you cover yourself by sale of Swiss Franc in London Market for
the corresponding delivery date when the exchange rates for Swiss Francs were as under:
Spot USD 1 = CHF 1.6120/6165
One month 60/58
Three months 165/160
Six months 330/320
And US dollars are quoted in the local interbank market as under:
Spot USD 1 = Rs. 48.4025/4175
One month forward 48.6550/6725
Three months forward 48.8550/8750
Six months forward 49.2550/2800
Calculate the exchange rate and the rupee amount payable to the customer bearing in mind
the following:
1. An exchange margin of 0.08% is required.
2. Rupee equivalent to be nearest to the whole rupee.
07
Q.3 (a) What are the common contract terms used in the international trade? Explain the
significance of these terms as far as they affect the buyer and the seller.
07
Page 2 of 3
(b)
On 15
th
January you booked a forward sale contract for USD 2,50,000 for your import
customer delivery 15
th
February at Rs. 49.3450. On the due date the customer requests
cancellation of the contract. Assuming US dollars were quoted in the local interbank
exchange market as under on the date of cancellation:
Spot = USD 1 = Rs. 49.2900/2975
Spot/March = 3000/3100
Spot/April = 6000/6100
Exchange margin required by you is 0.10%. what will be the cancellation charges payable
by the customer, if nay?
07
OR
Q.3 (a)
Discuss the three major trends that have prevailed in international business during last two
decades.
07
(b) Your forex dealer had entered into a cross currency deal and had sold USD
5,00,000 against Swiss Francs at USD 1 = CHF 1.4400 for spot delivery. However,
later during the day, the market became volatile and the dealer in compliance with
his top management?s guidelines had to square up the position by purchasing USD
5,00,000 against CHF at the on-going arte. Assuming the spot rates are as under:
USD 1 = Rs. 49.4300/4500
USD 1 = CHF 1.4440/4450
What will be the gain or loss in the transaction? Your answer should be in rupees.
Ignore brokerage.
07
Q.4 (a) Discuss the scheme of ECGC. 07
(b) General Motors exports cars to Spain, but the strong dollar against the euro hurts
sales of GM cars in Spain. In the Spanish market, GM faces competition form
Italian and French car markets such as Fiat and Renault whose operating currencies
are in Euro. What kind of measures would you recommend so that GM can
maintain its market share in Spain?
07
OR
Q.4 (a) Describe the Role of Multinational Firms in global business scenario.
07
(b)
Explain the basic differences between the operation of a currency forward market and a
futures market.
07
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Page 1 of 3
Seat No.: ________ Enrolment No.___________
GUJARAT TECHNOLOGICAL UNIVERSITY
MBA ? SEMESTER 3 ? EXAMINATION ? WINTER 2018
Subject Code: 3539242 Date:10/12/2018
Subject Name: International Financial Management (IFM)
Time: 10:30am To 01:30pm Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1 (a) General Agreement on Tariffs and Trade (GATT)
(b) Flexible Exchange Rate Regime
(c) Foreign Direct Investment (FDI)
(d) Fisher Effect
(e) Basle accord
(f) Exchange Traded Funds (ETFs)
(g) Economic Exposure
14
Q.2 (a)
How would you define transaction exposure? How it is different from economic exposure?
07
(b) Do you think that a country?s government should assist private business in the
conduct of international trade through direct loans, loan guarantees and/or credit
insurance?
07
OR
(b)
Your exporter-customer has requested you to book a fixed date TT forward contract for
Swiss Francs 5,00,000 in respect of an export bill due for payment 180 days from the date
of the contract. Assuming you cover yourself by sale of Swiss Franc in London Market for
the corresponding delivery date when the exchange rates for Swiss Francs were as under:
Spot USD 1 = CHF 1.6120/6165
One month 60/58
Three months 165/160
Six months 330/320
And US dollars are quoted in the local interbank market as under:
Spot USD 1 = Rs. 48.4025/4175
One month forward 48.6550/6725
Three months forward 48.8550/8750
Six months forward 49.2550/2800
Calculate the exchange rate and the rupee amount payable to the customer bearing in mind
the following:
1. An exchange margin of 0.08% is required.
2. Rupee equivalent to be nearest to the whole rupee.
07
Q.3 (a) What are the common contract terms used in the international trade? Explain the
significance of these terms as far as they affect the buyer and the seller.
07
Page 2 of 3
(b)
On 15
th
January you booked a forward sale contract for USD 2,50,000 for your import
customer delivery 15
th
February at Rs. 49.3450. On the due date the customer requests
cancellation of the contract. Assuming US dollars were quoted in the local interbank
exchange market as under on the date of cancellation:
Spot = USD 1 = Rs. 49.2900/2975
Spot/March = 3000/3100
Spot/April = 6000/6100
Exchange margin required by you is 0.10%. what will be the cancellation charges payable
by the customer, if nay?
07
OR
Q.3 (a)
Discuss the three major trends that have prevailed in international business during last two
decades.
07
(b) Your forex dealer had entered into a cross currency deal and had sold USD
5,00,000 against Swiss Francs at USD 1 = CHF 1.4400 for spot delivery. However,
later during the day, the market became volatile and the dealer in compliance with
his top management?s guidelines had to square up the position by purchasing USD
5,00,000 against CHF at the on-going arte. Assuming the spot rates are as under:
USD 1 = Rs. 49.4300/4500
USD 1 = CHF 1.4440/4450
What will be the gain or loss in the transaction? Your answer should be in rupees.
Ignore brokerage.
07
Q.4 (a) Discuss the scheme of ECGC. 07
(b) General Motors exports cars to Spain, but the strong dollar against the euro hurts
sales of GM cars in Spain. In the Spanish market, GM faces competition form
Italian and French car markets such as Fiat and Renault whose operating currencies
are in Euro. What kind of measures would you recommend so that GM can
maintain its market share in Spain?
07
OR
Q.4 (a) Describe the Role of Multinational Firms in global business scenario.
07
(b)
Explain the basic differences between the operation of a currency forward market and a
futures market.
07
Page 3 of 3
Q.5
You take charge as the Chief of the International division of your bank on 5
th
August 2018.
On taking stock of the division, you find that some of the bills negotiated have not been
paid for by the opening banks for a long time. When you demand explanation, a note is put
up as follows:
Sr.
No
Name of party Amount Date of
negotiation
Reasons
1 M/s ABC USD 50,000 10.5.2017 Opening bank refuses payment
quoting as discrepancy: ?bill of
exchange is dated 8.5.2017
while invoice is dates 9.5.2017
2 M/s DEF EUR 45,000 18.8.2017 The consignment consists of
onions to UAE. The health
authorities at Dubai refused
permission of entry of
shipment as cholera has broken
at Nasik, the place of origin of
onions. The importer refuses to
honour the bill on presentation.
3 M/s GHI USD 80,000 9.6.2017 The bill covers export of
scientific instruments from
Mumbai to Bahrain per SS
Jwala. However on receipt of
shipping documents, it was
found that SS Jwala had
neither touched Mumbai nor
Bahrain and all documents
including bill of landing had
been forged.
(a) Examine the validity of the contentions of the issuing bank/opener in each case
refusing to pay.
(b) As a negotiating bank, was there any negligence on the part of your bank in each
of the cases?
OR
(a) What precautions your bank should have taken while negotiating each of the above
bills?
(b) What responsibility lies on your customers in each of the above cases?
14
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This post was last modified on 19 February 2020