MF0015 - INTERNATIONAL FINANCIAL MANAGEMENT

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ASSIGNMENT

DRIVE	SUMMER 2016
PROGRAM	MBADS – (SEM 4/SEM 6) / MBAN2 / MBAFLEX – (SEM 4) / PGDFMN – (SEM 2)
SUBJECT CODE & NAME	MF0015 - INTERNATIONAL FINANCIAL MANAGEMENT
SEMESTER	4
BK ID	B1759
CREDITS	4
MARKS	60

Note: Answer all questions. Kindly note that answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme

Q1 Explain Globalization, Advantages of Globalization and Disadvantages of Globalization.

Answer: By the term globalisation we mean opening up of the economy for world market by attaining international competitiveness. Thus the globalisation of the economy simply indicates interaction of the country relating to production, trading and financial transactions with the developed industrialized countries of the world.

Q2 In foreign exchange market many types of transactions take place. Discuss the meaning and role of forward, future and options market.

Answer: : In finance, a forward contract or simply a forward is a non-standardized contract between two parties to buy or to sell an asset at a specified future time at a price agreed upon today, making it a type of derivative instrument. This is in contrast to a spot contract, which is an agreement to buy or sell an asset on its Spot Date, which may vary depending on the instrument, for example most of the FX contracts have Spot Date two business

Q3 Explain Swap, its features and types of Swap.

Answer: A swap is an agreement between two parties to exchange sequences of cash flows for a set period of time. Usually, at the time the contract is initiated, at least one of these series of cash flows is determined by a random or uncertain variable, such as an interest rate, foreign exchange rate, equity price or commodity price. Conceptually, one may

Q4 Explain in detail the types of exposure and measuring economic exposure

Answer: Types of Exposure

Translation Exposure

Translation exposure is also referred to as accounting exposure or balance sheet exposure. The restatement of foreign currency financial statements in terms of a reporting currency is termed translation. The exposure arises from the periodic need to report consolidated worldwide operations of a group in one reporting currency and to give some indication of the financial position of that group at those times in that currency.

Q5 Elaborate on the tools of foreign exchange risk management and techniques of exposure management.

Answer: Foreign exchange risk (also known as FX risk, exchange rate risk or currency risk) is a financial risk that exists when a financial transaction is denominated in a currency other than that of the base currency of the company. Foreign exchange risk also exists when the foreign subsidiary of a firm maintains financial statements in a currency other than the reporting currency of the consolidated entity. The risk is that there may be an adverse movement in the exchange rate of the denomination currency in relation to the base currency before the date when the transaction is completed.[1][2] Investors and businesses

Q6 Write short note on:

a. Adjusted present value model (APV model)

Answer: Adjusted Present Value Definition

Adjusted present value (APV), defined as the net present value of a project if financed solely by equity plus the present value of financing benefits, is another method for evaluating investments. It is similar to NPV. The difference is that is uses the cost of equity as the discount rate rather than WACC. And APV includes tax shields

b. Economic and political risk

Answer: Meaning and definition of economic risk

Generally speaking, economic risk can be described as the likelihood that an investment will be affected by macroeconomic conditions such as government regulation, exchange rates, or political stability, most commonly one in a foreign country. In other words, while financing a project, the risk that the output of the project will not

Dear students get fully solved assignments

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Call us at : 08263069601

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