2nd
set
Solved
assignments for Rs.150 each
08627023490
Fall-2013
Master of
Business Administration - MBA Semester 4
MF0016–Treasury
Management-4 Credits
(Book ID:
B1814)
Assignment
(60 Marks)
Note: Answers
for 10 marks questions should be approximately of 400 words. Each question is
followed by evaluation scheme. Each Question carries 10 marks 6 X 10=60.
Q1. Consider you are the chief
financial officer of a software company. How would you oversee the company’s
Treasury function? Discuss how you formulate the treasury policy.
Answer. The treasurer’s functions can
in principle be classified as follows:
Ø Core functions (functions which can
be found in every company)
Ø Marginal functions (activities which
are extremely company-specific and/or only form part of the treasury in
selected cases), as well as
Ø Functions, marginal sectors and
interfaces to other organizational units or tasks which, whilst being important
to the treasury, do not normally form part of the treasurer’s role.
Q2. The interest rate offered on
Certificate of Deposits varies from bank to bank. Refer some of the public
sector and private sector banks and analyze the factors affecting the interest
rates.
Answer. A certificate of deposit (CD)
is a time deposit, a
financial product commonly sold in the United States by banks, thrift
institutions, and credit unions. A savings certificate entitling the bearer to
receive interest. A CD bears a maturity date, a specified fixed interest rate
and can be issued in any denomination. CDs are generally issued by commercial
banks and are insured by the FDIC. The term of a CD generally ranges from one
month to five years.
CDs are
similar to savings accounts in that they are insured and thus virtually risk
free; they are
Q3. Explain in detail the process
incorporated by any financial services company that operates in commodity
market transactions. Classify the risks associated.
Answer. Transaction process in
Commodity market:
Step 1: Buyer sends a Letter of Intent (LOI) to the Seller’s
Mandate address.
Step 2: Seller
produces a corporate offer to the Buyer with details for the commodity
transaction.
Q4. Explain the different types of
liquidity risks. Explain the framework for measuring and managing the liquidity
risks.
Answer. In finance, liquidity risk is the risk that a given security or asset cannot be
traded quickly enough in the market to prevent a loss (or make the required
profit). Liquidity risk can be caused by a wide variety of economic conditions,
but in general, it occurs when one party (an investor or a bank) can’t sell a
particular asset on the open market because there’s no other party able or
willing to trade for it.
Q5. Compare and contrast the different
types of foreign exchange risks of a multinational corporation (MNC) based in
India.
Answer. Foreign exchange risk (also known as exchange rate risk or
currency risk) is a financial risk posed by an exposure to unanticipated
changes in the exchange rate between two currencies. Investors and
multinational businesses exporting or importing goods and services or making
foreign investments throughout the global economy are faced with an exchange
rate risk which can have severe financial consequences if not managed
appropriately.
The
following are the major risk factors in FX trading:
Ø Exchange Rate Risk
Ø Interest Rate Risk
Q6. Briefly explain at least three
actions relating to treasury that have changed substantially with
globalization. Visit a bank and analyze the various treasury products offered
by the bank to its customers. Identify which of these are suitable for a large
company with cash to invest, and why.
Answer. Latest developments:
A number of
important trends in treasury management represent a continuation of former
trends are thus considered evolutionary, while others represent major changes
and are considered revolutionary. Electronic Commerce and globalization are
examples of evolutionary trends, while recent legislation such Sarbanes-Oxley and
the Check Clearing for the 21st Century Act (“Check 21”) represents
revolutionary trends.
2nd
set
Solved
Assignments for Rs.150 each
08627023490
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