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DRIVE Spring 2015
PROGRAM-MBADS (SEM
4/SEM 6)
MBAFLEX/ MBAN2 (SEM
4)PGDFMN (SEM 2)
SUBJECT CODE & NAME-IB0010
& INTERNATIONAL FINANCIAL MANAGEMENT
BK ID-B1759
CREDIT & MARKS-4
Credits, 60 marks
Q1. Discuss the goals
of international financial management. 10
Answer: Goals of International Financial management: Effective financial management is not limited to the
application of the latest business techniques or functioning more efficiently
but includes maximization of wealth meaning that it aims to offer profit to the
shareholder, the owners of the businesses and to ensure that they gain benefits
from the business decisions that have been made. So, the goal of international
financial management is to increase the wealth of shareholders
Q2. In
foreign exchange market many types of transactions take place. Discuss the
meaning and role of forward, future and options market.
(Forward
market, Future, options) 3, 3, 4
Answer:
Forward
Market
In the
forward market, contracts are made to buy and sell currencies for future d0elivery,
say, after a fortnight, one month, two months and so on. The rate of exchange
for the transaction is agreed upon on the very day the deal is finalized.
The rate
of exchange for the transaction is agreed upon on the very day the deal is
finalized. The forward rates with varying maturity are quoted in the newspapers
and those rates form the basis of the contract. Both parties have to abide by
the contract at the exchange rate mentioned therein irrespective of whether the
spot rate on
Q3.Thousands of years
back the concept of bartering between parties was prevalent, when the concept
of money had not evolved. Explain on counter trade with examples
(Introduction of
counter trade, Explanation of Different forms of counter trade, Examples) 3, 5,
2
Answer.
Counter trade
When
the concept of money had not evolved. A person could give say 100 bags of wheat
and get wood or coal, a certain quantity for cooking. These bartering contracts
were between individuals or small kingdoms. Bartering exists today also but at
different level. For example, Iran may give 100
Q4.There is different
techniques of exposure management. One is the Managing Transaction Exposure and
the other one is the managing operating exposure, so you have to explain on
both Managing Transaction Exposure and Managing Operating Exposure.
(Explanation of Managing
transaction exposure, Explanation of Managing operating exposure) 5, 5
Answer.
Managing transaction
exposure
Transaction exposure calculates gains or losses
which occur after the current financial compulsions according to terms of
reference are resolved. Taken that the deal would lead to a future inflow or
outflow of foreign currency cash, any unprecedented alterations in rate of
exchange amid the period in which transaction is entered and the time taken for
it to settle in cash would guide to a change in
Q5. There is a country risk involved every time an
MNC operates in a different country. Discuss the two approaches to country risk
management.
(2 approaches) 10
Answer:
Approaches to country risk management
There are two approaches to country risk management.
1. Defensive approach: In this approach, the company tries to
protect its interest by finding those aspects of the company that are beyond
the reach of the host government. This reduces the firm’s dependence on the
host country and the government of the host country. The important strategies
in the functional areas of the company are discussed as follows:
Q6.Write short note on:
a)
American Depository Receipts(ADR)
b)
Portfolio
(Explanation
of ADR, Explanation of portfolio)
5, 5
Answer.
American Depository
Receipts (ADR):
It represents ownership
in the shares of a non-US company and trades in the American stock markets.
ADRs enable American investors to buy shares in foreign company without any
issue of cross-border and cross-currency transactions. ADRs carry price in
American dollar, pay dividend in the same currency and can be traded like any
other share of US-based companies. Each ADR is
Get fully solved assignment. Buy online from website
online store
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plz drop a mail with your sub code
we will revert you within 2-3 hour or immediate
Charges rs 125/subject and rs 700/semester only.
if urgent
then call us on 08791490301, 08273413412
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