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DRIVE winter 2016
PROGRAM MBA
SEMESTER IV
SUBJECT CODE &
NAME
MA0042/MA0047
TREASURY MANAGEMENT
1.
It is said that treasury exposure allows treasury management to various risks
in the organisation. Do you agree ? Justify your agreement/disagreement.
Treasury
management and treasury exposure
Answer:
Yes i am agree
that treasury exposure allows treasury management to various risks in the
organisation because
The high risk
environment in which treasuries operate can be linked to three reasons. First
of all treasuries are normally operating in a different market than that of the
rest of the organisation, namely the financial markets. Secondly, risks are
very visible in treasury departments due to the large amount of funds involved:
losses on foreign currency exposures or from poor
2
Explain Asset Liability Management (ALM) Information System in banks.
Analyse
the Interest sensitivity and ALM.
ALM
information system
Interest
sensitivity and ALM
Answer:
ALM
information systems
Information is the key to
the ALM process. Considering the large network of branches and the lack of an
adequate system to collect information required for
ALM which analyses
3
“Highly rated corporate borrowers in India are permitted to issue unsecured
debt-notes to meet the need of their working capital”. In the light of this statement
cite two such popular instruments and explain their essential features.
“Highly
rated corporate borrowers in India are permitted to issue unsecured debt-notes
to meet the need of their working capital”. In the light of this statement cite
two such popular instruments and explain their essential features.
Answer: Debentures
are the long-term unsecured debt instruments which are not supported by
securities. These are issued essentially by corporate for the purpose of
raising funds and
4
Compare and contrast the features of ADRs and GDRs.
Distinguish
between Depository Receipts and Participatory Notes.
What
is a Foreign Exchange Derivative ?
ADRs and GDRs
Depository
Receipts and Participatory Notes
Foreign Exchange
Derivative
Answer: The following are the features of GDRs and
ADRs:
•
These are in the nature of a certificate or receipt issued by an international depository
bank outside the country.
•
These are issued to non-resident investors.
•
These are issued against the issue of foreign currency convertible bonds or
against the issue of shares by the issuer company.
•
These are
5
Critically analyze the tools available for managing risks in a financial
institution.
Tools
available for managing risks
Answer: Tools available for managing risks
The risk
management tools forecasts the analysis and implementation of various methods
in order to mitigate risks. It includes several systems and models that enhance
correlation of risks and returns across investments and support portfolio
management process. The major tools available for risk management are:
Failure
Mode Effects Analysis (FMEA) – This tool is used for
identifying the cost of potential failures in the business operations. This
method can be applied during analysis and design phases of the business
operations which help in identifying the significant failures caused by risk.
The
6
What
are the assumptions in preparation of gap report in terms of assets,
liabilities as well as off balance sheet items ?
Assumptions
to prepare gap report in terms of Assets, Liabilities and off balance sheet
items
Answer: Assumptions in preparation of gap report
in terms of assets, liabilities and off balance sheet items
Assets
Assets are
nothing but any item of economic value owned by an individual or corporation.
Assumptions regarding a bank’s future stock of assets include their possible marketability
and use an asset as a guarantee of existing assets which could increase flow of
cash and others. To
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