Definitions / terms / explanations / short questions based on concepts of
[6 marks]theory/practical
[ marks]Define Gresham’s Law.
[ marks]Which are the three components of BOP?
[ marks]What are indirect quotes and direct quotes for foreign currency?
[ marks](a) What is a Letter of Credit?
[6 marks]Name the factors which affect the foreign exchange rate.
[ marks]What are spread and pips?
[ marks]Explain briefly different stages of International Monetary System from past till present.
[6 marks]What are the measures to correct the dis-equilibrium in Balance of Payment?
[6 marks]What is ADR? Discuss the various investment advantages offered by ADR.
[6 marks]Briefly discuss the various types of International Banking offices.
[6 marks]Briefly define each of the major type of international bond market instruments, noting their distinguishing characteristics.
[6 marks]Discuss the reasons for International Banking.
[6 marks]Explain about the different techniques to manage Transaction Exposure.
[6 marks]Due to the integrated nature of their capital markets, investors in both the U.S. and U.K. require the same real interest rate, 2.5%, on their lending. There is a consensus in capital markets that the annual inflation rate is likely to be 3.5% in the U.S. and 1.5% in the U.K. for the next three years. The spot exchange rate is currently $1.50/£. a. Compute the nominal interest rate per annum in both the U.S. and U.K., assuming that the Fisher effect holds. b. What is your expected future spot dollar-pound exchange rate in three years from now? c. Can you infer the forward dollar-pound exchange rate for one-year maturity?
[5 marks]Explain about the parties involved in Letter of Credit.
[6 marks]Given the following information, what are the GBP/EUR currency Page 1 of against Currency bid-ask quotation? Bank American Terms European Terms Quotations Bid Ask Bid Ask British Pound 1.3200 1.3204 0.7600 0.7603 Euros 1.2100 1.2105 0.8200 0.8203
[2 marks]Bharat Steel Agency, are engaged in the manufacturing, supplying, exporting and importing of a wide range of Stainless Steel products from Brazil and Slovak Republic and exports such products to Singapore and Australia after processing. The company has receivables of SGD3,50,000 and payables of AUD2,45,000 three months from now. The following rates exchanges rates are available in the market: Exchange Rates INR / SGD INR / AUD Spot 46.9580 - 47.0080 49.6825 - 49.7025 Three Month Forward 47.0680 - 47.0880 49.7225 - 49.7425 The current rates (per annum) are as under Maturity INR (%) SGD (%) AUD (%) 3 months 7.00/8.00 3.00/3.20 5.00/5.20 The company is considering to cover the exposure either through the forward market or money market. You are required to advise the company as to which alternative should be better for covering both the payable and receivable.
[ marks]Alternative 1: Calculate the cover of exposure for Receivables by using Forward Market.
[6 marks]Alternative 2: Calculate the cover of exposure for Receivables by using Money Market. Also compare which alternative is better.
[6 marks]Alternative 1: Calculate the cover of exposure for Payables by using Forward Market.
[6 marks]Alternative 2: Calculate the cover of exposure for Payables by using Money Market. Also compare which alternative is better. Page 2 of
[2 marks]