|
|
INTERNATIONAL FINANCE |
|
|
|
TY BMS SEMESTER VI PRELIMS 2014 – B |
|
|
|
DURATION 2 HOURS TOTAL MARKS 60 |
|
|
|
SECTION I IS COMPULSORY. ANSWER ANY THREE QUESTIONS FROM SECTION II. |
|
|
|
SECTION 1 |
|
| Q1. |
|
EXPLAIN THE FOLLOWING CONCEPTS: |
(15 MARKS) |
|
|
|
|
|
1 |
Autonomous and Accomodating transactions |
|
|
2 |
Pips and Points |
|
|
3 |
Intervention Points |
|
|
4 |
Money Changers |
|
|
5 |
Tax Havens |
|
|
|
|
|
| Q2. |
a) |
Spot 1 USD = CAD 1.1238 |
(5 MARKS) |
|
|
60 days forward 1 USD = CAD 1.1283 |
|
|
|
CAD interest rate = 3.6 % p.a. |
|
|
|
USD interest rate = 3.00 % p.a. |
|
|
|
Calculate Covered interest arbitrage |
|
|
|
|
|
|
b) |
Analyse the following report and answer the questions given thereunder: |
(10 MARKS) |
|
|
|
|
|
|
The Indian Economy has been on a roll over the past decade proving to the |
|
|
|
world that it has developed into a very resilient economy capable of withstanding |
|
|
|
both internal and external economic shocks. The speed of recovery of the economy |
|
|
|
after the recession has shown that local consumption is strong and the need for |
|
|
|
economic stimulus has passed. |
|
|
|
The Partial Capital account convertibility has prevented flight of domestic capital |
|
|
|
and infact the large investment flows received as FPI have appreciated the INR. |
|
|
|
The mature reaction of the market to various changes taking place has reduced the |
|
|
|
need for intervention. The market therefore has been able to find its own |
|
|
|
equilibrium. |
|
|
|
|
|
|
1) |
What is economic recession? Discuss. |
|
|
2) |
Define convertibility in the concext of INR |
|
|
3) |
What is FPI? What is the ‘Hot money’ feature associated with it? |
|
|
4) |
Elaborate on Central Bank Intervention. |
|
|
|
|
|
|
|
SECTION II |
|
|
|
|
|
| Q3. |
a) |
Distinguish between Direct and Indirect exchange rates |
( 5 MARKS) |
|
|
|
|
|
b) |
Describe the process of Loan Syndication |
( 5 MARKS) |
|
|
|
|
| Q4. |
|
Describe in detail the steps involved in the issue of GDR’s |
(10 MARKS) |
|
|
|
|
|
|
|
|
| Q5. |
a) |
CAD / INR 32.7850 – 00 |
|
|
|
100 INR / CAD 3.0425 – 50 |
|
|
|
Calculate geographical arbitrage. |
(5 MARKS) |
|
|
|
|
|
b) |
73 days forward USD / CAD 1.1363 |
|
|
|
CAD interest rate: 3.6250 % p.a. |
|
|
|
USD interest rate; 2.8750 % p.a. |
|
|
|
Calculate spot USD / CAD rate. |
(5 MARKS) |
|
|
|
|
| Q6. |
a) |
Spot GBP / AUD 1.8755 – 65 |
|
|
|
GBP Interest rates: 3.20 – 3.45 %p.a |
|
|
|
AUD Interest rates: 2.65 – 2.90 %p.a |
|
|
|
Calculate 60 days forward quotation and Swap points. |
( 5 MARKS) |
|
|
|
|
|
b) |
Given the following options establish which currency would be used to invest |
|
|
|
INR 8 million for a temperory period of 6 months. |
|
|
|
INR Interest rate: 4 %p.a |
|
|
|
Currency: Spot rate: Interest rate: 6 month fwd rate: |
|
|
USD 44.7535 – 85 2.25 %p.a 45.1500 – 50 |
|
|
GBP 78.7275 – 00 3.50 %p.a 78.9400 – 50 |
|
|
|
CHF 38.3525 – 55 1.50 %p.a 38.8375 – 25 |
( 5 MARKS) |
One Comment