ST. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)
END SEMESTER EXAMINATION –SEPT/OCT.2015
MIB – III SEMESTER
P211301: INTERNATIONAL FINANCIAL MANAGEMENT
Duration: 3 Hours Max. Marks: 100
SECTION – A
I.	Answer any SEVEN questions. Each carries 5 marks. (7×5=35)
	1.	If the euro’s spot rate is $1.03 and its one year forward rate has a forward premium of 2%, the one year forward rate is? If the euro’s one year forward rate is quoted at $1.00and the euro’s spot rate is quoted at $1.03 the euro’s forward premium is?
	2.	What are the forms of exchange rate fluctuations?
	3.	Explain the methods used to adjust the evaluation for risk with examples.
	4.	Explain the process of remitting subsidiary earnings to the parent with the help of a diagram.
	5.	What are the key factors that are important for firm’s decision to invest overseas?
	6.	Suppose Boeing imports Jet engines produced by Rolls Royce for $30 million and that Boeing makes payment by transferring the funds to a New York bank account kept by Rolls Royce. Suppose that Ford acquires Jaguar, a British car manufacturer for &750 million, and that Jaguar deposits the money in Barclays Bank in London which in turn uses the sum to purchase US treasury notes. Give debit and credit entries as appearing in BOP.
	7.	Explain The theory of comparative advantage The imperfect market theory The product life cycle theory
	8.	What is netting. Explain its use in an international scenario.
	9.	What are tax havens?
	10.	Briefly explain the components of balance of payments.
SECTION – B
II.	Answer any THREE questions. Each carries 15 marks. (3×15=45)
	11.	What is multinational capital budgeting. Explain the factors to consider in multinational capital budgeting.
	12.	You are just one week young in your job as a treasury executive in al leading laptop trader/supplier in India. Earlier your company was sourcing assembled laptops from China, but with the incentives provided in the Budget of 2015 by the Finance Minister of India, your company is planning to enter assembly /manufacturing market in India. Now your company is planning to source components and sub assembles from Taiwanese firms. This will involve a lot of foreign exchange trading and contracts. Since you are from a leading business school in India, you CFO has asked you to make a presentation to the top management on various possibilities relating to forex market in India. What is all that you would like to tell the top management so as to establish your credibility?
	13.	What is letter of credit? Who are the parties involved in issuing LOC. Explain the utilization and issuing LOC with diagrams.
	14.	What is country risk analysis? Explain the methods in incorporating country risk in capital budgeting? What are the types of country risk assessment
	15.	What is International cash management? Explain centralized cash management and the flow of cash for an MNC with the help of a diagram. What are the techniques of optimizing cash flow?
SECTION – C
III.	Case Study (1×20=20)
	16.	You are back to you office after a long holiday in Caribbean islands with your family members. This was a gift for your outstanding performance last year. Your predictions about exchange rate and interest rate were bang on target. This forecast helped your company to save over a hundred million dollars. Your CEO wants you to replicate this performance this fiscal. Business situation Your company is the largest cloth manufacturer in the world in your segment. You are planning forays into the branded garments segment. You are planning forays into the branded garments segment. Since you want to keep transportation costs at their minimum you are planning to set up manufacturing bases in all major markets. Thins global – Act local is your mantra, as well. Plant and Machinery It is expected that your three plants will be set up in Mexico, Brazil and Australia. These plants will have about the same capacity and are likely to cost about USD ten million each. The construction period could be anywhere from two to five years, depending on the support received from local government officials. This investment could easily make your company the second largest manufacturer of cloth in that segment. Ownership Your company has a choice of either setting up a 100% subsidiary or a joint venture with one of the local companies Local issues There are local political parties who can make life difficult in Brazil. However in Mexico and Australia you are likely to sail smoothly Cash flow There are no credible estimates for cash flow because the local markets are an uncharted territory for you. All you know is : you goods will be priced in local currency Capital On this front, you have multiple choices Raising domestic equity in rupee terms Mix of debt and equity in rupee terms USD denominated bond issue Raising local currency debt Question: Should your company make this investment? If yes, then which will be the best route to Maximization of profits Minimizing risk Finding the optimal mix of profits and risk What all information do you need to arrive at these answers? How will you structure your analysis?

Latest Govt Job & Exam Updates:

St. Joseph’s College of Commerce M.I.B. 2015 III Sem International Financial Management Question Paper PDF Download

View Full List ...