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DRIVESPRING 2014
PROGRAM-MBADS (SEM
4/SEM 6) MBAFLEX/ MBAN2 (SEM 4) PGDFMN (SEM 2)
SUBJECT CODE &
NAME-MF0016 TREASURY MANAGEMENT
BK ID-B1814
CREDIT-4
MARKS-60
Q1. Consider you
are the chief financial officer of a hospital. How would you oversee the
company’s Treasury function?
(Functions) 10
Answer. Treasury Functions
Treasury functions act as a
guardian for money and other valuables. It helps in maintaining proper records
of the cash transactions in an organisation. It also provides relevant and
reliable information to the current and prospective investors in an organisation.
Q2. The interest
rate offered on Certificate of Deposits varies from bank to bank. Refer some of
the public sector and private sector banks and analyse the factors affecting
the interest rates.
(Certificate of
Deposits, Factors (3 banks)) 4, 3*2= 6
Answer.
Certificate of
Deposits
Certificate of deposit (CD) is a
short-term instrument issued by scheduled commercial banks and financial
institutions. It is a certificate issued for the amount deposited in a bank for
a specified period at a specified rate of interest. The concerned bank issues a
receipt which is both marketable and transferable by the holder. The receipts
are in bearer form and transferable by endorsement and delivery. Basically they
are a part of bank’s deposits; hence
Q3. Assume you are
the Treasurer of a Company. How would you implement and maintain effective
liquidity practices in your company?
(Explain effective
liquidity practices in your company) 10
Answer. Liquidity management is not just
about gaining visibility over a company's cash positions. This article examines
what lies beyond visibility and how to get there.
The challenging economic environment has driven
businesses to enhance efficiency and control over their liquidity. While many
corporates have rightly been focusing on gaining end-to-end visibility over the
company's cash, this is
Q4. Analyse the
techniques for measuring Interest Rate Risk. Explain the concept of
asset-liability rate sensitivity and strategies for controlling Interest Rate
Risk
(Analyse the techniques
for measuring Interest Rate Risk, Explain the concept of asset-liability rate
sensitivity and strategies)5,5
Answer.
Analysis of
techniques for measuring Interest Rate Risk
A few types of gap analysis used
for measuring interest rate risk are:
Duration gap analysis – This
method evaluates the sensitivity of the worth (market value) of financial
instruments to the changes in interest rates.
Cumulative gap analysis – It is
used to evaluate the impacts on net interest income due to the changes occurring
in interest rates.
Q5. Assume you are
a treasurer of a company and you are faced with two situations.
Explain how you
would solve these problems. The cases could be:
a) Large loan
repayment coinciding with delay in receipt of a large trade receivable;
b) And locking up
customer advances in payment towards fixed assets.
(Use of money
market instruments, Interactions with the customers) 5*2=10
Answer. Corporate
treasury refers to treasury activities which are carried out in companies which
use financial products to support their main business; usually a trading
business. This is in contrast to treasury activities which take place in banks
and financial institutions (generally providers of financial products) and in
the public sector, and to work carried out by treasury professionals acting as
advisers and consultants.
Q6. Briefly explain
at least three actions relating to treasury that have changed substantially
with globalization. Visit a bank and analyse the various treasury products
offered by the bank to its customers. Identify which of these are suitable for
a large company with cash to invest, and why.
(Latest
developments in Treasury, Treasury products of two banks)4,2*3=6
Answer.
Latest developments
in Treasury
Treasury products
of two banks
Answer:
Answer: Latest
developments in Treasury:
1.
Centralization of treasury activities: It offers companies the ability to
achieve higher efficiencies, greater transparency and access to real time
information across a broad geographic area, multiple time zones, and many
entities. There are different phases in the centralization of treasury
management from the decentralized treasury towards fully centralized cash and
treasury management.
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