Spring-2016
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assignments at nominal price of Rs.125 each.
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Master of
Business Administration- MBA Semester 3
IB0010-International
Financial Management
(Book ID:
B1759)
Assignment (60 Marks)
Note: Answer
all questions must be written within 300 to 400 words each. Each Question
carries 10 marks 6 X 10=60
Q1. Explain the difference between International Financial
Management and Domestic Financial Management? Discuss the goals of international
financial management?
Answer. Domestic companies tend to
restrict their operations to the country of origin, while multinational corporations operate in more than two countries.
Companies expand globally for many reasons, mostly to obtain new markets,
cheaper resources and reduction in operational costs, all of which
significantly affect financial management. These benefits also increase the
risks faced by multinational corporations. Multinational financial management
differs from domestic financial management in six essential ways.
Q2.
Explain the advantages and disadvantages of fixed and floating rates systems?
Discuss foreign exchange transactions?
Answer.
Advantages:
1.
Price stability: This advantage has been viewed as one
of the virtues of the metallic standard. Price stability implies that changes
in prices are small, gradual, and expected. One of the most important factors
that can affect price stability is monetary policy.
2.
No need for international management of exchange rates: Unlike
fixed exchange rates based on a metallic standard, floating exchange rates
don’t require an international manager such as the International
Q3. Explain the concept of Swap.
Write down its features and various types of interest rate swap.
Introduction
of Swap-2
Features of
swap-4
Various
types of interest rate swap-4
Answer. In finance, a swap is a derivative in which counterparties exchange cash flows of
one party's financial instrument for those of the other party's financial
instrument. The benefits in question depend on the type of financial
instruments involved. For example, in the case of a swap involving two bonds,
the benefits in question can be the periodic interest (coupon) payments
associated with such bonds.
Q4. Elaborate on meaning of foreign
exchange exposure. Explain the types of foreign exposure.
Answer. Foreign Exchange Exposure refers to the risk associated with
the foreign exchange rates that change frequently and can have an adverse
effect on the financial transactions denominated in some foreign currency
rather than the domestic currency of the company.
In other
words, the firm’s risk that its future cash flows get affected by the change in
the value of the foreign currency, in which it has maintained its books of
accounts (balance sheet), due to the volatility of the foreign exchange rates
is termed as foreign exchange exposure.
Q5. Write short notes on:
Ø International Credit Markets
Ø International Bond Markets
Answer. (a) 'Credit Market'
1. The broad
market for companies looking to raise funds through debt issuance. The credit
market encompasses investment-grade bonds and junk bonds, as well as short-term
commercial paper.
2. The
market for debt offerings as seen by investors of bonds, notes and securitized
obligations such as mortgage pools and collateralized debt obligations (CDOs).
Q6. Country risk is the risk of
investing in a country, where a change in the business environment adversely
affects the profit or the value of the assets in a specific country. Explain
the country risk factors and assessment of risk factors.
Introduction
of country risk factors-5
Explanation
of assessment of risk factors-5
Answer. Many investors choose to place a
portion of their portfolios in foreign securities. This decision involves an
analysis of various mutual funds, exchange traded funds (ETFs), or stock and
bond offerings. However, investors often neglect an important first step in the
process of international investing. When done properly, the decision to invest
overseas begins with determining the riskiness of the investment climate in the
country under consideration. Country
risk refers to the economic, political and business risks that are unique
to a specific country, and that might result in unexpected investment losses.
Spring-2016
Get solved
assignments at nominal price of Rs.125 each.
Mail us at: subjects4u@gmail.com or contact at
09882243490
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