International Banking & Foreign Exchange Management- NMIMS University MBA Solved assignments latest

 

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International Banking & Foreign Exchange Management

June 2023 Examination

 

 

Q 1) You are an intern with XYZ Indian bank. You are supposed to submit a report on different methods used for managing foreign exchange risk, including currency hedging. Explain the role of the foreign exchange market and how it operates. (10 Marks)

Answer: Managing foreign exchange risk is a critical aspect of international business, and there are various methods that companies can use to manage this risk, including currency hedging. Here are some of the common methods used for managing foreign exchange risk:

  1. Currency Hedging: This involves using financial instruments such as forward contracts, futures contracts

 

Q 2) As per the recent news, global inflation index is rising. Discuss the impact of interest rates and inflation on the foreign exchange market.  (10 Marks)

Answer: Inflation and interest rates have a significant impact on the foreign exchange market. The relationship between the two can be complex and interdependent. The following are some of the ways in which interest rates and inflation can impact the forex market:

  1. Interest Rates and Exchange Rates

 

Q3) You are a faculty of Foreign exchange management and your students are discussing an article on exchange rate systems and their impact on international borrowing.

A. You are supposed to acquaint your students with fixed exchange rate system and floating exchange rate system. (5 Marks)

Answer: Fixed Exchange Rate System: Under this system, the exchange rate is fixed by the government or central bank of a country, and it remains constant against the currency of another country. The government or central bank intervenes in the foreign exchange market by buying or selling currencies to maintain the

 

 

B. Also elaborate the difference between a spot transaction and a forward transaction in the foreign exchange market to your students, for a deeper understanding of exchange rate transactions. (5 Marks)

Answer: Spot Transaction: A spot transaction is a type of foreign exchange transaction where two parties agree to exchange currencies at the current market rate, also known as the spot rate. The settlement of the transaction usually takes

 

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