Explain the following concepts.
1) Â Fiat Currency
2) Â Correspondent Bank
3) Â Balance of Trade
4) Â Cross currency Rates
5) Â Spread / % Spread
6) Â Pips/ Points
7) Â Tom / Value tomorrow Contract / Rate
8) Â Forward Contract / Rate
9) Â Premium and Discount
10)Outright forward rates
11)Clean or Free Float
12)Dirty or Managed Float
13)Merchant rates
14)Ready rates
15)LIBOR
16)Offshore Bonds
17)Collared Bonds
18)Book-runners
19)Hot money
20)Hedge Funds
21)Authorised Dealers (AD’s)
22)Inter-bank Market
23)Translation Risk
24)Daylight limit
25)Stop-loss limit
26)American and European options
Write notes on
1) Â Arbitrage
2) Â Speculation
3) Â PPP theory
4) Â Central Bank Intervention
5) Â Market Stabilisation Scheme (MSS)
6)  List the features of offshore Financial Centres (OFC’s)
7)  Enumerate the features of GDR’s
8)  What are advantages of GDR’s to the issuing company and investors?
9) Â Management of reserves is a balancing act. What is the role of RBI in this area?
10)Convertibility of a currency is a two-edge sword, why?
11)Foreign Currency Swaps
12)Foreign currency Futures
Distinguish Between
1) Â Autonomous and Accomodating transactions.
2) Â Arbitrage and Speculation
3) Â Devaluation and Depreciation
4) Â Fixed and Flexible Exchange rate systems.
5) Â Merchant Transactions and Interbank Transactions
6) Â Euro-currency Bonds and Credits (Loans)
7) Â Euro-currency Bonds and Notes.
8) Â Forward Contracts and Futures Contracts
9) Â Futures Contracts and Option Contracts
Descriptive Questions
1) Â The Current Account of the Balance of Payments is the key to establishing foreign currency demand/supply equilibrium. Discuss.
2) Â Discuss the connectivity between exchange rates, interest rates and
commodity prices.
3) Â Enumerate the features of the Bretton Woods System and explain the reasons for its failure
4) Â Describe the operations of a foreign Exchange Dealing Room.
5) Â Define a Bond. Discuss the various types of international bonds.
6) Â Enumerate the roles of participants in the Indian Foreign Exchange market.
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