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INTERNATIONAL FINANCE |
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TY BMSÂ Â SEMESTER VIÂ Â Â PRELIMS 2014 – B |
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DURATIONÂ 2 HOURSÂ Â Â Â TOTAL MARKSÂ 60 |
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SECTION I IS COMPULSORY. ANSWER ANY THREE QUESTIONS FROM SECTION II. |
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SECTION 1 |
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| Q1. |
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EXPLAIN THE FOLLOWING CONCEPTS: |
(15 MARKS) |
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1 |
Autonomous and Accomodating transactions |
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2 |
Pips and Points |
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3 |
Intervention Points |
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4 |
Money Changers |
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5 |
Tax Havens |
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| Q2. |
a) |
Spot 1 USD = CAD 1.1238 |
(5 MARKS) |
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60 days forward 1 USD = CAD 1.1283 |
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CAD interest rate = 3.6 % p.a. |
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USD interest rate = 3.00 % p.a. |
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Calculate Covered interest arbitrage |
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b) |
Analyse the following report and answer the questions given thereunder: |
(10 MARKS) |
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The Indian Economy has been on a roll over the past decade proving to the |
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world that it has developed into a very resilient economy capable of withstanding |
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both internal and external economic shocks. The speed of recovery of the economy |
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after the recession has shown that local consumption is strong and the need for |
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economic stimulus has passed. |
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The Partial Capital account convertibility has prevented flight of domestic capital |
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and infact the large investment flows received as FPI have appreciated the INR. |
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The mature reaction of the market to various changes taking place has reduced the |
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need for intervention. The market therefore has been able to find its own |
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equilibrium. |
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1) |
What is economic recession? Discuss. |
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2) |
Define convertibility in the concext of INR |
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3) |
What is FPI? What is the ‘Hot money’ feature associated with it? |
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4) |
Elaborate on Central Bank Intervention. |
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SECTION II |
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| Q3. |
a) |
Distinguish between Direct and Indirect exchange rates |
( 5 MARKS) |
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b) |
Describe the process of Loan Syndication |
( 5 MARKS) |
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| Q4. |
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Describe in detail the steps involved in the issue of GDR’s |
(10 MARKS) |
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| Q5. |
a) |
CAD / INR 32.7850 – 00 |
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100 INR / CAD 3.0425 – 50 |
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Calculate geographical arbitrage. |
(5 MARKS) |
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b) |
73 days forward USD / CAD 1.1363 |
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CAD interest rate: 3.6250 % p.a. |
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USD interest rate; 2.8750 % p.a. |
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Calculate spot USD / CAD rate. |
(5 MARKS) |
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| Q6. |
a) |
Spot GBP / AUD 1.8755 – 65 |
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GBP Interest rates: 3.20 – 3.45 %p.a |
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AUD Interest rates: 2.65 – 2.90 %p.a |
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Calculate 60 days forward quotation and Swap points. |
( 5 MARKS) |
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b) |
Given the following options establish which currency would be used to invest |
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 INR 8 million for a temperory period of 6 months. |
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INR Interest rate: 4 %p.a |
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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: |
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USD                         44.7535 – 85                      2.25 %p.a            45.1500 – 50 |
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GBP                         78.7275 – 00                      3.50 %p.a            78.9400 – 50 |
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CHF                         38.3525 – 55                      1.50 %p.a            38.8375 – 25 |
( 5 MARKS) |
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