| INTERNATIONAL FINANCE | |||
| TY BMSÂ Â SEMESTER VIÂ Â Â PRELIMS 2014 – B | |||
| DURATIONÂ 2 HOURSÂ Â Â Â TOTAL MARKSÂ 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 | ||
| Â INR 8 million for a temperory period of 6 months. | |||
| INR Interest rate: 4 %p.a | |||
| Currency:Â Â Â Â Â Â Â Â Â Â Â Â Â Spot rate:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Interest rate:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 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) | ||
Wilson College International Finance Prelims Question Paper 2014
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