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Spring 2013
Master of Business
Administration- MBA Semester 4
MF0015 – International
Financial Management -4 Credits
(Book ID:B1759)
Assignment (60 marks)
Note: Assignment Set -1 must be written within 6-8 pages. Answer all
questions.
Q1.How does International Financial Management helps in maximizing the wealth
of the shareholders?10 marks(350-400 words)
Answer : Like any finance
function, international finance, the finance function of a multinational firm
has two functions namely, treasury and control. The treasurer is responsible
for financial planning analysis, fund acquisition, investment financing, cash
management, investment decision and risk management. On the other hand,
controller deals with the functions related to external reporting, tax planning
and management,
Q2.Explain the major accounts and sub categories of the balance of
payments statement.
10 marks(350-400 words)
Answer : Introduction
“The balance of payments is
merely a way of listing receipts and payments in international transactions for
a nation. It shows the nation’s trading positions variations in its net
position as a foreign lender or borrower and variations in its official reserve
holding.”
Structure of Balance of Payments Accounts
The balance of payments account
Q3.Define what you mean by Forward Markets. Discuss the differences
between futures options and spot options.4+6 marks(350-400 words)
Answer : It is statutory body set
up in 1953 under Forward Contracts (Regulation) Act, 1952. The Commission
consists of minimum two and maximum four members appointed by Central
Government. Out of these members there will be one nominated chairman. All the
exchanges have been set up under overall control of
Q4.Define cost of capital. Discuss the approaches that are employed to
calculate the cost of equity capital.4+6 marks(350-400 words)
Answer : The cost of capital is a
term used in the field of financial investment to refer to the cost of a
company's funds (both debt and equity), or, from an investor's point of view
"the shareholder's required return on a portfolio company's existing
securities".[1] It is used to evaluate new projects of a company as it is
the minimum return that investors expect for providing capital to the company,
thus setting a benchmark that a new project has to meet.
In cost of capital, calculating of cost of equity
Q5.Explain the techniques adopted by MNCs to reduce country risk.10
marks(350-400 words)
Answer : Political risk is the
likelihood that political forces will cause great changes in a country’s
business environment that will lower the profits of a business enterprise or
prevents it from reaching other goals.
Examples of political risk include political changes that result in
increased tax rates, the imposition of exchange controls that limit or block a
subsidiary's ability to repatriate profits, the imposition of price controls,
and government interference in existing contracts. In extreme cases, a foreign firm’ assets can
be expropriated or social
Q6.Define the benefits of FDI. State the cost of FDI to the home
country.5 + 5 = 10 Marks
(200 - 250 words each)
Answer : The Benefits and Costs of FDI to Home Countries
FDI also produces costs and
benefits to the home (or source) country. Does the US economy benefit or lose
from investments by its firms in foreign markets? Does the Japanese economy
lose or gain from Toyota's investment in France? Some argue that FDI is not
always in the home country's national interest and should be restricted. Others
argue that the benefits far outweigh the costs and any restrictions would be contrary
to
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