Solapur University Question Paper
MBA – II (Semester – IV) Examination, 2014
Group B : Financial Management (Paper – V) (Old)
INTERNATIONAL FINANCE (Paper – XXX)
Day and Date : Saturday, 21-6-2014 Total Marks : 70
Time : 11.00 a.m. to 2.00 p.m.
Instructions: 1) Question No. 1 and 7 are compulsory.
2) Attempt any two questions from Q. No. 2 to Q. No. 4.
3) Attempt any one question from Q. No. 5 and Q. No. 6.
1. A) State whether the following statements are True or False :
1) In future market standardized contracts are available.
2) Holder of a call option acquires a right but not an obligation to sell a certain
quantity of foreign currency at a predetermined strike price.
3) An exporter would cover itself for his receivables, if he fears the appreciation
of the currency in which he will be getting his receivables.
4) Purchasing power parity theory considers the inflation rate as the base for
deciding the exchange rate between two currencies. 4
B) Give full forms :
1) IBRD
2) EMU
3) IMF
4) SDR
5) GDR
6) DTAT 6
Seat
No.
SLR-XY – 72 -2-
C) Describe in one sentence :
1) Cross Rate
2) Ask Price
3) Put option
4) Currency at Discount. 4
2. Write short note on (any two) :
1) Convertibility
2) IMF
3) Suppliers credit. 14
3. Discuss the India’s financial sector reforms post globalisation. 14
4. Identify the route that can give maximum arbitrage gain from the following data –
Rs. 45.2302 – Rs. 45. 2403 = 1$ in New Delhi
$ 2.0231 – $ 2.0289 = 1 £ in Newyork
£ 1.0100 – £ 1.0180 = Rs. 100 in London. 14
5. An Indian importer has to pay L 3,00,000 after two months. He fears an appreciation
of Pound sterling. The following data is given spot Rate – Rs. 80.00/L
2 months interest Rate –
India – 10% P.a.
UK – 7% P.a.
What the importer should do ? 14
6. Write short note on (any two) :
1) NASDAC
2) SWAP
3) EXIM Bank. 14
-3- SLR-XY – 72
7. Alpha Ltd. is planning for importing a new machine.
Cost of New Machine is US $ 20,00,000
Scrap value after 6 years US $ 2,00,000
Life of Machine – 6 years
Terms of Payment – $ 4,00,000 down payment
$ 8,00,000 after 1 year
$ 8,00,000 after 2 years
Exchange Rate – spot – 1$ = Rs. 45
Expected rate after 1 year = 1$ = Rs. 46
Expected rate after 2 years = 1$ = Rs. 47
Expected rate after 6 years 1$ = Rs. 49
Expected CFAT every year is Rs. 180 Lacs.
Assuming 10% discounting factor, you are required to suggest whether to purchase
or not the new machine.
P/V factor Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
at 10% 0.909 0.826 0.751 0.683 0.621 0.564 14
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MBA – II (Semester – IV) Examination, 2014
Group B : Financial Management (Paper – V) (Old)
INTERNATIONAL FINANCE (Paper – XXX)
Day and Date : Saturday, 21-6-2014 Total Marks : 70
Time : 11.00 a.m. to 2.00 p.m.
Instructions: 1) Question No. 1 and 7 are compulsory.
2) Attempt any two questions from Q. No. 2 to Q. No. 4.
3) Attempt any one question from Q. No. 5 and Q. No. 6.
1. A) State whether the following statements are True or False :
1) In future market standardized contracts are available.
2) Holder of a call option acquires a right but not an obligation to sell a certain
quantity of foreign currency at a predetermined strike price.
3) An exporter would cover itself for his receivables, if he fears the appreciation
of the currency in which he will be getting his receivables.
4) Purchasing power parity theory considers the inflation rate as the base for
deciding the exchange rate between two currencies. 4
B) Give full forms :
1) IBRD
2) EMU
3) IMF
4) SDR
5) GDR
6) DTAT 6
Seat
No.
SLR-XY – 72 -2-
C) Describe in one sentence :
1) Cross Rate
2) Ask Price
3) Put option
4) Currency at Discount. 4
2. Write short note on (any two) :
1) Convertibility
2) IMF
3) Suppliers credit. 14
3. Discuss the India’s financial sector reforms post globalisation. 14
4. Identify the route that can give maximum arbitrage gain from the following data –
Rs. 45.2302 – Rs. 45. 2403 = 1$ in New Delhi
$ 2.0231 – $ 2.0289 = 1 £ in Newyork
£ 1.0100 – £ 1.0180 = Rs. 100 in London. 14
5. An Indian importer has to pay L 3,00,000 after two months. He fears an appreciation
of Pound sterling. The following data is given spot Rate – Rs. 80.00/L
2 months interest Rate –
India – 10% P.a.
UK – 7% P.a.
What the importer should do ? 14
6. Write short note on (any two) :
1) NASDAC
2) SWAP
3) EXIM Bank. 14
-3- SLR-XY – 72
7. Alpha Ltd. is planning for importing a new machine.
Cost of New Machine is US $ 20,00,000
Scrap value after 6 years US $ 2,00,000
Life of Machine – 6 years
Terms of Payment – $ 4,00,000 down payment
$ 8,00,000 after 1 year
$ 8,00,000 after 2 years
Exchange Rate – spot – 1$ = Rs. 45
Expected rate after 1 year = 1$ = Rs. 46
Expected rate after 2 years = 1$ = Rs. 47
Expected rate after 6 years 1$ = Rs. 49
Expected CFAT every year is Rs. 180 Lacs.
Assuming 10% discounting factor, you are required to suggest whether to purchase
or not the new machine.
P/V factor Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
at 10% 0.909 0.826 0.751 0.683 0.621 0.564 14
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