International Financial Institutions And Markets

St. Joseph’s College of Commerce M.I.B. 2011 II Sem International Financial Institutions And Markets Question Paper PDF Download

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St. Joseph’s College of Commerce (Autonomous)

End Semester Examination- April 2011

MIB – II Semester

INTERNATIONAL FINANCIAL INSTITUTIONS AND MARKETS

Duration:  3 Hours                                                                                         Max. Marks: 100

Section – A

  1. Answer ALL the questions in one or two sentences.                                (10×2=20)
  2. Who are the major participants in a financial system?
  3. What is a Mortgage Backed Security?
  4. What is a European quote?
  5. What is three- point arbitrage?
  6. What is a certificate of deposit?
  7. What is a junk bond?
  8. What is Ginnae Mae?
  9. What is CDO?
  10. What is an ADR?
  11. What is hedging?

Section – B

  1. Answer any FOUR questions (4×5=20)
  1. Suppose a company has issued 1975 lakh shares of which 900 shares are promoters’ holdings and its closing price on BSE on say May 10, 2009 was INR 350 per share. , The market capitalization on May 9th 2009 was 354420 lakhs. The index value on the same day was 5620 points. How will the index on May 10th be calculated? Explain the method employed to calculate the index.
  2. Write a note on Exchange Traded Funds?
  1. In London a dealer quotes:

GBP/CHF Spot 3.5250/55

GBP/JPY Spot 180.80/181.30

 

What do you expect the CHF/JPY rate to be in Geneva? Suppose that in Geneva you get a quote CHF/JPY Spot 51.1530/ 51.2550, is there an arbitrage opportunity?

 

  1. What is a bond? Consider a INR 1000 par value bond, carrying a coupon rate of 9%, maturing after 8 years. The bond is currently selling for INR 800. What is the YTM on this bond?
  2. Write a note on the role of IMF.

 

  1. What are the alternatives for banks to grow their international operations in a phased manner?

 

Section – C

 

  • Answer any THREE of the following questions.                   (3×15 = 45)
  1. On 27th December 2008, Gitanjali Jewellers required State Bank of India to remit FFR 300,000 to France in payment of import of diamonds under an irrevocable LC. However due to the bank’s strike, State Bank of India could remit only on 4th January 2009. Interbank rates were as follows:
PLACE 27th December 2008 4th January 2009
Delhi                    (INR/USD)

USD per INR 100

 4.10/4.15 4.07/4.12
London               (GBP/USD) 2.7250/60 2.7175/85
Paris                     (GBP/FFR) 4.9575/90 4.9380/ 90

 

State Bank of India wishes to retain an exchange margin of 0.125%.  How much does Gitanjali Jewellers stand to gain or lose due to the delay?

  1. What are the various methods of classification of Mutual Funds?
  2. What are the different types of orders one may place while trading in shares?
  3. What is a letter of credit? Explain its working in the light of it being a product offered by international banks.
  4. Suppose Mr X wants to open a multiplex and is in need of funds for the same. To raise funds, Mr X can sell his future cash flows (cash flows arising from sale of movie tickets and food items in the future) in the form of securities to raise money. In the light of the above example explain the process of securitization.

Section – D

  1. Case study – Compulsory Question.                                   (15 marks)

 

  1. Mr Patil has retired after what can be called a very fulfilling career with a leading engineering company. His only daughter is married and well settled in Bangalore. He owns a large house in Thane — worth about INR 80 lakh (INR 8 million), but he has limited savings (including PPF and EPF) of INR 10 lakh (INR 1 million) to generate any major income. He is not expecting any pension either. His worry now is to pay for his modest monthly expenses of INR 20,000. The only option he had earlier was to rent his house and move to a smaller house himself or to sell his house altogether and invest the proceeds to earn a higher monthly income. Either way, in his old age, he will be forced to look around for accommodation and keep on worrying about the rising rents — not a very happy prospect.

Is there a better way out for him?

 

 

 

St. Joseph’s College of Commerce M.I.B. 2011 II Sem International Financial Institutions And Markets Question Paper PDF Download

by

St. Joseph’s College of Commerce (Autonomous)

End Semester Examination- April 2011

MIB – II Semester

INTERNATIONAL FINANCIAL INSTITUTIONS AND MARKETS

Duration:  3 Hours                                                                                         Max. Marks: 100

Section – A

  1. Answer ALL the questions in one or two sentences.                                (10×2=20)
  2. Who are the major participants in a financial system?
  3. What is a Mortgage Backed Security?
  4. What is a European quote?
  5. What is three- point arbitrage?
  6. What is a certificate of deposit?
  7. What is a junk bond?
  8. What is Ginnae Mae?
  9. What is CDO?
  10. What is an ADR?
  11. What is hedging?

Section – B

  1. Answer any FOUR questions (4×5=20)
  1. Suppose a company has issued 1975 lakh shares of which 900 shares are promoters’ holdings and its closing price on BSE on say May 10, 2009 was INR 350 per share. , The market capitalization on May 9th 2009 was 354420 lakhs. The index value on the same day was 5620 points. How will the index on May 10th be calculated? Explain the method employed to calculate the index.
  2. Write a note on Exchange Traded Funds?
  1. In London a dealer quotes:

GBP/CHF Spot 3.5250/55

GBP/JPY Spot 180.80/181.30

 

What do you expect the CHF/JPY rate to be in Geneva? Suppose that in Geneva you get a quote CHF/JPY Spot 51.1530/ 51.2550, is there an arbitrage opportunity?

 

  1. What is a bond? Consider a INR 1000 par value bond, carrying a coupon rate of 9%, maturing after 8 years. The bond is currently selling for INR 800. What is the YTM on this bond?
  2. Write a note on the role of IMF.

 

  1. What are the alternatives for banks to grow their international operations in a phased manner?

 

Section – C

 

  • Answer any THREE of the following questions.                   (3×15 = 45)
  1. On 27th December 2008, Gitanjali Jewellers required State Bank of India to remit FFR 300,000 to France in payment of import of diamonds under an irrevocable LC. However due to the bank’s strike, State Bank of India could remit only on 4th January 2009. Interbank rates were as follows:
PLACE 27th December 2008 4th January 2009
Delhi                    (INR/USD)

USD per INR 100

 4.10/4.15 4.07/4.12
London               (GBP/USD) 2.7250/60 2.7175/85
Paris                     (GBP/FFR) 4.9575/90 4.9380/ 90

 

State Bank of India wishes to retain an exchange margin of 0.125%.  How much does Gitanjali Jewellers stand to gain or lose due to the delay?

  1. What are the various methods of classification of Mutual Funds?
  2. What are the different types of orders one may place while trading in shares?
  3. What is a letter of credit? Explain its working in the light of it being a product offered by international banks.
  4. Suppose Mr X wants to open a multiplex and is in need of funds for the same. To raise funds, Mr X can sell his future cash flows (cash flows arising from sale of movie tickets and food items in the future) in the form of securities to raise money. In the light of the above example explain the process of securitization.

Section – D

  1. Case study – Compulsory Question.                                   (15 marks)

 

  1. Mr Patil has retired after what can be called a very fulfilling career with a leading engineering company. His only daughter is married and well settled in Bangalore. He owns a large house in Thane — worth about INR 80 lakh (INR 8 million), but he has limited savings (including PPF and EPF) of INR 10 lakh (INR 1 million) to generate any major income. He is not expecting any pension either. His worry now is to pay for his modest monthly expenses of INR 20,000. The only option he had earlier was to rent his house and move to a smaller house himself or to sell his house altogether and invest the proceeds to earn a higher monthly income. Either way, in his old age, he will be forced to look around for accommodation and keep on worrying about the rising rents — not a very happy prospect.

Is there a better way out for him?

 

 

 

St. Joseph’s College of Commerce M.I.B. 2012 II Sem International Financial Institutions And Markets Question Paper PDF Download

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St. Joseph’s College of Commerce (Autonomous)

End Semester Examination- April 2012

MIB –II Semester

 INTERNATIONAL FINANCIAL INSTITUTIONS AND MARKETS

Duration:  3 Hours                                                                                        Max. Marks: 100

Section – A

  1. Answer ANY SEVEN                                            (7×5=35)
  1. A bank issued a demand draft on Montreal for Canadian dollar 50,000 at CAD/INR 29.4850. However, after a few days the purchaser of the draft requested the bank to cancel it & repay the rupee equivalent to him. Assuming CAD is quoted in the Singapore Foreign Exchange market as USD/CAD 1.4541/4561 and in the interbank market USD/INR is 42.5275/5350, how much the customer will gain or lose on cancellation of the draft? Exchange margin on TT buying is 0.08%.
  2. A trader writes a December put option with a strike price of $30. The price of the option is $4. Under what circumstances does the trader make a gain? What is the difference between entering into a long forward contract when the forward price is $50 and taking a long position in a call option with a strike price of $50?
  3. What are the quotation conventions adopted by ACI?
  4. Write a note on money market instruments.
  5. If the spot rate is USD/INR 45.50/45.55 and one month swap points are given as 20/30, how is the forward rate calculated and why is this mechanism followed? GBP/USD Spot: 1.5677/1.5685 and GBP/USD 1 month Forward: 1.5575/1.5585. Calculate the forward premium/discount. What does the result indicate?
  6. Write a note on products offered by International Banks.
  7. What is the importance of IMF in today’s economy?
  8. What are mortgage backed securities?
  9. Distinguish between forwards & futures.
  10. What are the different kind of bonds?

Section – B

  1. Answer any THREE (3×15=45)
  1. (a) Explain the buying & selling of options vs. underlying asset diagrammatically. What are American and European options?

(b) Today is April 3rd. Spot USD/INR:48.75/78

Spot April end: 5/8

Spot May end: 12/17

Spot June end: 20/30.

Find the quote on June 20th.

 

  1. (a) You are planning a trip to Europe and Japan and want to change USD into Euros and yen. Your bank provides the following quotes:
  Bid Ask
Euros USD 1.194 USD 1.245
Yen USD 0.009245 USD 0.00967

What is the bank’s bid ask spreads? How much would you lose if you converted USD 500 into Euros and USD 500 into yen and then back to USD?

  • What is a bond? Consider an 8-year 12%coupon bond with a par value of Rs 100 on which interest is payable semi -annually. The required return is 14%. What is the value of this bond?

 

  1. Mr Gupta has retired after what can be called a very fulfilling career with a leading engineering company. His only daughter is married and well settled in US. He owns a large house in Pune — worth about INR 80 lakh (INR 8 million), but he has limited savings (including PPF and EPF) of INR 10 lakh (INR 1 million) to generate any major income. He is not expecting any pension either. His worry now is to pay for his modest monthly expenses of INR 15,000. The only option he had earlier was to rent his house and move to a smaller house himself or to sell his house altogether and invest the proceeds to earn a higher monthly income. Either way, in his old age, he will be forced to look around for accommodation and keep on worrying about the rising rents — not a very happy prospect.

Is there a better way out for him?

  1. What is a letter of credit? Explain its working in the light of it being a product offered by international banks.
  2. On 27th December 2008,  Gitanjali Jewellers required State Bank of India to remit FFR 300,000 to France in payment of import of diamonds under an irrevocable LC. However due to the bank’s strike, State Bank of India could remit only on 4th January 2009. Interbank rates were as follows:
PLACE 27th December 2008 4th January 2009
Delhi                    (INR/USD)

USD per INR 100

 4.10/4.15 4.07/4.12
London               (GBP/USD) 2.7250/60 2.7175/85
Paris                     (GBP/FFR) 4.9575/90 4.9380/ 90

 

State Bank of India wishes to retain an exchange margin of 0.125%.  How much does Gitanjali Jewellers stand to gain or lose due to the delay?

 

 

 

 

Section – C

  1.  Compulsory Question.                                                             (20 marks)

CASE STUDY

Suppose Mr Patel wants to open a shopping complex and is in need of funds for the same. To raise funds, Mr X can sell his future cash flows (cash flows arising from sale of movie tickets and food items in the future) in the form of securities to raise money. In the light of the above example explain the process of securitization.

 

 

St. Joseph’s College of Commerce M.I.B. 2013 II Sem International Financial Institutions And Markets Question Paper PDF Download

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ST. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)
END SEMESTER EXAMINATION- MARCH/APRIL 2013
MIB – II SEMESTER
INTERNATIONAL FINANCIAL INSTITUTIONS AND MARETS
Duration: 3 Hours Max. Marks: 100
Section – A
I) Answer ANY SEVEN questions. (7X5=35)
1. “The interbank market uses quotation conventions adopted by ACI.” What are these conventions?
2. With reference to International Banking, explain Foreign Exchange risk.
3. “The RBI’s decision to cut rates will help revive investment in the economy,” Montek Singh Ahluwalia, Deputy Chairman of the Planning Commission, said, adding that the economy was beginning to bottom out after a long slowdown. He was referring to the Repo rate and CRR. Explain how?
4. India has a BBB- rating from S&P, the lowest investment grade among the BRIC group of large emerging economies and one notch above “junk” status. In the light of the above, write a note on credit rating symbols and junk bonds.
5. Suppose an edible oil importer wants to import edible oil worth USD 100,000 and places his import order on July 15, 2008, with the delivery date being 4 months ahead. At the time when the contract is placed, in the spot market, one USD was worth say INR 44.50. But, suppose the Indian Rupee depreciates to INR 44.75 per USD when the payment is due in October 2008, the value of the payment for the importer goes up to INR 4,475,000 rather than INR 4,450,000. What would be his hedging strategy?

6. Explain the role of IMF as a centerpiece of world monetary order.
7. If the spot rate is USD/INR 45.50/45.55 and one month swap points are given as 20/30, how is the forward rate calculated and why is this mechanism followed? GBP/USD Spot: 1.5677/1.5685 and GBP/USD 1 month Forward: 1.5575/1.5585. Calculate the forward premium/discount. What does the result indicate?
8. Distinguish between futures and forwards.
9. Differentiate between Eurobonds and Foreign Bonds.

10. Write a note on Fannie Mae.

Section – B
II) Answer any THREE questions (3×15=45)
11. Mr Patil has retired after what can be called a very fulfilling career with a leading engineering company. His only daughter is married and well settled in Bangalore. He owns a large house in Thane — worth about INR 80 lakh (INR 8 million), but he has limited savings (including PPF and EPF) of INR 10 lakh (INR 1 million) to generate any major income. He is not expecting any pension either. His worry now is to pay for his modest monthly expenses of INR 20,000. The only option he had earlier was to rent his house and move to a smaller house himself or to sell his house altogether and invest the proceeds to earn a higher monthly income. Either way, in his old age, he will be forced to look around for accommodation and keep on worrying about the rising rents — not a very happy prospect.
Is there a better way out for him?
12. On 27th December 2008, Gitanjali Jewellers required State Bank of India to remit FFR 300,000 to France in payment of import of diamonds under an irrevocable LC. However due to the bank’s strike, State Bank of India could remit only on 4th January 2009. Interbank rates were as follows:
PLACE 27th December 2008 4th January 2009
Delhi (INR/USD)
USD per INR 100 4.10/4.15 4.07/4.12
London (GBP/USD) 2.7250/60 2.7175/85
Paris (GBP/FFR) 4.9575/90 4.9380/ 90

State Bank of India wishes to retain an exchange margin of 0.125%. How much does Gitanjali Jewellers stand to gain or lose due to the delay?
13. (a) You are planning a trip to Europe and Japan and want to change USD into Euros and yen. Your bank provides the following quotes:
Bid Ask
Euros USD 1.194 USD 1.245
Yen USD 0.009245 USD 0.00967

What is the bank’s bid ask spreads? How much would you lose if you converted USD 500 into Euros and USD 500 into yen and then back to USD?

(b) The market price of a Rs. 1000 par value bond carrying a coupon rate of 14% and maturing after 5 years is Rs. 1050. What is the YTM on this bond? What is the approximate YTM?
(8+7)

14. What is a letter of credit? Explain its working in the light of it being a product offered by international banks.

15. (a) A bank issued a demand draft on Montreal for Canadian dollar 50,000 at CAD/INR 29.4850. However, after a few days the purchaser of the draft requested the bank to cancel it & repay the rupee equivalent to him. Assuming CAD is quoted in the Singapore Foreign Exchange market as USD/CAD 1.4541/4561 and in the interbank market USD/INR is 42.5275/5350, how much the customer will gain or lose on cancellation of the draft? Exchange margin on TT buying is 0.08%.
(b ) From the following information you are required to calculate (a) ready bill buying rate, (b) 2 months forward buying rate for demand bill, (c) ready rate for 60 days usuance bill, and (d) 2 months forward buying rate for 60 days usuance bill
Interbank rate USD
Spot USD 1= INR 42.6000/ 6075
1 month 3500 / 3600
2 months 5500 / 5600
3 months 8500 / 8600
4 months 1.1500 / 1.1600
5 months 1.3500/1.3600
6 months 1.5500/ 1.6600

Transit period is 20 days. Exchange margin is 0.10%.
(8+7)
16. (a) An importer-customer of a bank wishes to book a forward contract with the bank on 2nd August 2010 for sale to him of USD 150,000 delivery November 2010.
The spot rates on 2nd August 2010 are USD / INR 42.3700 / 3800 and the swap points are:

USD/ INR Spot August 0300/0400
Spot September 1100/1300
Spot October 1900/ 2200
Spot November 2700/3100
Spot December 3500/ 4000

(b) Euro is quoted in Singapore as under:
Spot EUR 1 = USD 1.0125/150
1 month forward 0.0050/0.0075

In the interbank market USD is quoted as under:
Spot USD 1= INR 42.1250/ 1375
1 month forward 6000/ 6100

The bank is required to load an exchange margin of 0.15% in the exchange rate for TT selling and 0.20% for bill selling.
A shipping company has asked the bank to quote the bank’s spot TT selling rate for a freight remittance of EUR 150,000 to Frankfurt.
What rates will the bank quote to the customer?

Section – C
III) Case study – Compulsory Question. (15+5 marks)
17. Suppose Mr X wants to open a multiplex and is in need of funds for the same. To raise funds, Mr X can sell his future cash flows (cash flows arising from sale of movie tickets and food items in the future) in the form of securities to raise money.
In the light of the above example explain the process of securitization.

St. Joseph’s College of Commerce M.Com. 2014 II Sem International Financial Institutions And Markets Question Paper PDF Download

by

St. Joseph’s College of Commerce (Autonomous)

End Semester Examination- MARCH / April 2014

MIB – II Semester

INTERNATIONAL FINANCIAL INSTITUTIONS AND MARKETS

Duration:  3 Hours                                                                                      Max. Marks: 100

Section A

  1. Answer ANY SEVEN Each carries 5 marks.                       (7×5=35)
  1. The International Monetary Fund has been the centerpiece of the world monetary order since its creation in 1944, though its supervisory role in exchange rate arrangements has been considerably weakened after the advent of floating rates in 1973. Highlight the role of the IMF in world economic order.
  2. Write a note on Credit Risk and Settlement Risk in International Banking.
  3. To facilitate dealings in foreign exchange, a bank in India may maintain accounts with banks abroad. Similarly, some foreign banks may maintain accounts with banks in India. Give a brief description about these accounts.
  4. On 15th September a bank receives a mail transfer from its New Jersey correspondent for USD 5000 payable to its customer. The bank’s account with the correspondent bank has been credited with the amount of the mail transfer in reimbursement.

Assuming USD/INR is quoted in the local interbank market as under:

Spot USD/INR 63.2500/2700
Spot October 2200/2300

Calculate the exchange rate and the Rupee amount payable to the customer bearing in mind that the bank requires an exchange margin of 0.080% to be loaded in the rate.

  1. Reserve Bank of India Governor Raghuram Rajan raised the key repo rate on January 27th 2014, choosing once again to confound expectations while renewing focus on inflation as also the threat stemming from the weakening of the rupee amid a selloff that has rippled through emerging markets. The Indian currency recovered sharply after the policy announcement. How do such changes in the Repo rates help the economy?
  1. Bharti Airtel, the world’s fifth-largest mobile phone company by subscribers, in 2013, approached investors in the overseas bond market to raise $1 billion, nearly two years after it first planned to undertake the offering. If the Bharti issue mops up at least $500 million, the company will be the second-largest private sector borrower to tap the global bond market this year after Reliance Industries’ $800-million perpetual bond in late January 2013. Write a note on how International Bonds can help firms raise capital.

 

  1. In 2013, Deutsche Bank launched an $8.7 billion CDO in two tranches with payments ranging from 8% to 14.6%, garnering strong interest from investors, according to a January 24 story in Bloomberg News. In the U.S., firms such as Redwood Trust have started selling CDOs backed by commercial real estate for the first time since the credit crunch, Bloomberg reported in a January 14 article. Write a note on CDOs.

 

  1. Fannie Mae earned $17.2 billion in 2012, the biggest annual profit in the US mortgage giant’s history. The gain was driven by the housing recovery, which has reduced delinquencies and lifted home prices six years after the bubble burst. Examine Fannie Mae’s role in the mortgage industry.

 

  1. The current price of a stock is $ 94, and a 3-month European call option with a strike price of $95 currently sells for $4.70. An investor who feels that the price of the stock will increase is trying to decide between buying 100 shares and buying 2000 call options (=20 contracts). Both strategies involve an investment of $9,400. What advice would you give? How high does the stock price have to rise for the option strategy to be more profitable?

 

  1. Explain CRISIL’s rating process.

 

Section B

  1. Answer any THREE Each carries 15 marks.                (3×15=45)
  1. (a) On 12th February a bank’s customer has received an import bill for USD 10,000. The customer asks the bank to retire the bill to the debit of his account. Interbank rate for USD is:
Spot USD/INR 62.6500/7200
Spot/March 5000/4500

The bank requires an exchange margin of 0.15% for TT sales and 0.20% for bills selling rate. With what amount will the bank debit his account?

(b) What is the difference between entering into a long forward contract when the forward price is $50 and taking a long position in a call option with a strike price of $50?

(c) Explain the terms European quote & Indirect quote.

(5+5+5)

  1. (a) What are Depository Receipts? Explain the concept and working of ADRs and GDRs.

(b) Euro is quoted in Singapore as under:

Spot EUR / USD 1.0125 / 150
1 month forward 0.0050 / 0.0075

In the interbank market USD is quoted as under:

Spot USD/ INR 62.1250/1375
1 month forward 6000 / 6100

You are required to load an exchange margin of 0.15% in the exchange rate for TT selling and 0.20% for bill selling.

  • A shipping company has asked the bank to quote its TT selling rate for a freight remittance of EUR 150,000 to Frankfurt.
  • Another customer requires the bank to retire an import bill drawn on him for Euro 12,000.

What rates will the bank quote to the customer?                                          (7+8)

  1. What is a letter of credit? Explain its working in the light of it being a product offered by international banks.
  2. What is Securitization? How does it work?
  3. Explain the concept of Reverse Mortgage.

 

Section – C

III) Compulsory Case Study.                                                                             (20 marks)

  1. At the current time, the Sports Exports Company is willing to receive payments in British pounds for the monthly exports it sends to the United Kingdom. While all of its receivables are denominated in pounds, it has no payables in pounds or in any other foreign currency. Jim Logan, owner of the Sports Exports Company, wants to assess his firm’s exposure to exchange rate risk.
  2. a) Would you describe the exposure of the Sports Exports Company to exchange rate risk as transaction exposure?  Economic Exposure?  Translation Exposure?
  3. b) In the light of the above, distinguish between Risk & Exposure. What are the different types of Foreign Exchange Exposures & how are they managed?

 

 

 

 

 

St. Joseph’s College of Commerce M.Com. 2014 I Sem International Financial Institutions And Markets Question Paper PDF Download

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  1. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)

End Semester Examinations – OCTOBER 2014

m.com – i semester

INTERNATIONAL FINANCIAL INSTITUTIONS AND MARKETS

Duration: 3 Hours                                                                                          Max. Marks: 100

 

Section – A

  1. Answer any SEVEN    Each carries 5 marks.                   (7 x 5  = 35)

 

  1. Briefly explain the functions of IMF.
  2. What is FCCB?
  3. Calculate the arbitrage gains possible on Rs.10,00,000 from the middle rates given below. Assume there no transaction costs.

Rs. 76.200 = £1 in London          Rs.46.600 = $1 in Delhi        $1.5820 = £1

in New York

  1. What do you understand by Nostro and Vostro?
  2. Explain the following : FRA, Interest Rate cap and Interest rate floor.
  3. DLF has issued 9% Bonds @ par value of Rs.1000 each and redeemed at a premium of 10% after 10 years from the date issue. The prevailing inflation rate is 8%. Calculate the duration of bond.
  4. How does Forward contract differ from Future contract?
  5. Distinguish between Bond valuation and Bond duration
  6. On 03-11-2008 the spot rate is 1 US dollar = 45.36

The bank rates of interest in US and India are 8.5% and 4.5% respectively per annum. What would be forward rate for 3 months?

  1. State meaning of the terms LIBOR and Repo.

 

Section – B

  1. Answer any THREE Each carries 15 marks.                              (3 x 15   = 45)
  2. Mr. Johnson has bought the following options on 1st October 2014 as he predicts that the stock market will have bearish trend in the month of October 2014,

(a) TCS October call option at a strike price of Rs.500 with a premium of @ Rs.20  per share.

(b) TCS October put option at a strike price of Rs.550 with a premium of @ Rs.30 per share

Prepare the table showing tentative spot price for a period of ten trading days and net profit/loss for the same and at what tentative spot price, can call or put option be activated?

 

  1. What is ADR? Explain the types of ADR issues and issue mechanism.

 

  1. Explain the kinds of bonds that are offered in the international Bond Market?
  2. What are instruments that are issued in the International Money Market?

 

  1. Future – Long Position

Day                                               Today

Stock name                                  Infosys

Current market price                 Rs.2400 (also the purchase price)

Target                                           Rs.2500 (as per the analyst’s recommendation)

Time                                             1 week (expected time for the target to be achieved)

Lot size of Infosys                      125shares (minimum number of shares to be purchased)

Initial margin payable   15% on the contract value

Settlement date               26th October 2014 (last Thursday/ contract expiry date)

Possible scenario:

Closing price on day 1              Rs. 2375

Closing price on day 2              Rs. 2450

Closing price on day 3              Rs. 2500

Closing price on day 4              Rs. 2300

 

Prepare table showing Net profit or Loss and obligation or Marked – To Market margin at the end of each day for the period of four days.

 

Section – C

 

  1. Compulsory Case study.                                                                         (1 x 20 = 20)

 

  1. Futures Long and Short Positions

For a Future contract in Canadian dollar, the initial margin and maintenance margin prescribed by the exchange are USD 4,000 and USD 3,000 respectively. A contract is concluded at a price of USD 0.75. The settlement price in the exchange at end of four days subsequent days are as follows:

 

Day 1 USD  0.745
Day 2 USD  0.740
Day 3 USD  0.730
Day 4 USD  0.755

 

At the end of each day, the margin accounts of both the buyer and seller will be adjusted based on the settlement price for the day. Where the margin goes below the maintenance level, the buyer/ seller will be required to reimburse to bring the balance to the initial level. If the margin is more than the initial level, the member concerned is free to withdraw the excess. Tabulate the adjustments to be made in the margin money of buyer and seller assuming that the lot size of USD is 1,00,000 and opening price is USD 0.750.

 

  1. Kenwood Industries Ltd has $5,00,000 foreign loan outstanding at an interest rate at 8% p.a. The interest rate is reset every six months and interest is payable at the end of six months period on 30th September and 31st The treasurer expects that interest of 9% p.a will prevail for a period of starting from 1st April to September. He entered into a forward rate agreement for locking interest rate at 9%p.a.

 

What would be the financial implication?

  • if rate of interest is 8.2 % a.p. and

 

  • if rate of interest is set at 10 % a.p. (if LIBOR goes to 8.2% or 10%)?

 

 

St. Joseph’s College of Commerce M.I.B. 2015 II Sem International Financial Institutions And Markets Question Paper PDF Download

by
S.T. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)

END SEMESTER EXAMINATION – MARCH/april  2015

M.I.B. – II SEMESTER
P211204:INTERNATIONAL FINANCIAL INSTITUTIONS AND MARKETS
Duration: 3 Hours                                                                                             Max. Marks: 100
SECTION – A
I) Answer any SEVEN questions.  Each carries 5 marks.                               (7×5 =35)                                                                                        
  1. What is meant by Letter of credit? Why is  it used and brief about parties to Letter of credit.
  2. Calculate the inflation rate in India if the Spot rate of 1 $ = Rs 60, Forward rate 1 $ = Rs 62 and Inflation rate in US is 4 %. Also bring out the relation between exchange rate differential and inflation rate as stated by “Interest Rate Parity Theorem.
  3. What are derivatives? Write short notes about the 4 types of derivatives.
  4. Calculate the Yield to Maturity of the bond from the given data

a)Coupon rate is 12%  b) Face value = Rs 850  c) Redemption is at a premium of 15 %,  d) Current market price = Rs 795 , term = 5 years.
  5. What is direct quotation? Also write notes on bid rate and ask rate.
  6. Appreciation of foreign currency is beneficial to the importer. Elucidate the correctness of this statement with a numerical.
  7. What is a money market instrument? Explain in brief about any 2 money market instruments.
  8. What is meant by a Forward Rate Agreement? Also explain briefly the concept of caps and floors.
  9. Write a note on options and its types?

 
  10. An Indian importer imported goods worth 10,000 $ when the spot rate was      1$=Rs 60 .The importer had taken a forward cover at the forward rate of

1 $ = Rs 62. At the time of payment, 1 $ = Rs 65, is the forward hedge beneficial to the importer?
 

SECTION – B
II) Answer any THREE questions.  Each carries 15 marks.                               (3×15=45)                      
  11. What is securitization? Write notes on securitization process and what do you understand by Fannie Mae and Ginnie Mae?
  12. From the following data, calculate the value, duration and volatility of the bond

(a)Par value = Rs 750         (b) Coupon rate = 13 % paid semiannually

(c) Tenure = 4 years   (d) Expected rate of return is 2 % above the T-Bill rate.

The interest rate of T-bill is 12%
  13. Mr. A buys a European call option to deal with shares of “Infosys “with 4 months maturity and strike price of Rs 130 and premium of Rs 25. You are required to

a) Identify the breakeven point and

b) Prepare pay off profile of Mr. A and writer and plot it on a rough graph,   if the market price on the date of maturity is:

 

MP 85 90 105 115 120 130 155 169 174 183 197 200
  14. What do you understand by the term “Bond”? Explain briefly about the different types of bonds and the types of risk involved in investment in bonds.
  15. a)  Calculate 2 month spot rate of US $ if forward rate is 1 $ = Rs 62 and forward premium is 10% p.a.

b)   What do you understand by duration of a bond? Bring out the relationship between duration and term of a zero coupon bond and a coupon bond.

 

 

c) What is cross country quote and write the cross country quote for INR/GBP in the following case

USD/INR = .016 ,USD/GBP = 1.52

d)From the following quote identify the spread and calculate its percentage

1 $ = 61.05-61.058

e) Write brief note on European option and American option.

 
SECTION – C
III) Case Study                                                                                                       (20 marks)                                                                                                            
  16. a)  The spot exchange rate is 1 GBP= Rs 80. Rate of interest in Britan is 8% per annum and in India is 6% per annum. An arbitrageur would like to exploit the opportunity if any by entering into a forward contract for 2 months. Based on the following information, determine the possibility of an arbitrage and how it can be exploited.

Given the Actual Forward rate is 1 GBP = Rs 82 and the arbitrageur deals with 1000 GBP.  

                                                                                                                                                                                                                                              

b)Write a note on International Fischer’s effect.

 

c)Find the real rate of interest , if inflation rate is 5 % and nominal rate is 12%

 

d)Futures are standardised forwards. Is the statement true? Also highlight the differences between forwards and futures.

(10+3+2+5)

 

 

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St. Joseph’s College of Commerce 2016 International Financial Institutions And Markets Question Paper PDF Download

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REG NO:

St. Joseph’s College of Commerce (Autonomous)

End Semester Examinations – March / April 2016
M.Com (I.B.) – ii semester
P415 MC 203: INTERNATIONAL FINANCIAL INSTITUTIONS AND MARKETS
Duration: 3 Hours                                                                                             Max. Marks: 100
SECTION – A
I) Answer any SEVEN questions.  Each carries 5 marks.                                    (7×5=35)
  1. A 9% Rs. 100 face value Bond, having a provision for conversion at the end of 5 years into four equity shares of face value Rs. 10 each at a premium of Rs. 15 each. It is expected that the equity shares will have market value of Rs. 33 per share on the date of conversion. An investor has expected rate of return of 15% per annum: suggest him at what price he should be ready to buy this Bond.
  2. Write a short note on repo and reverse repo?
  3. What are the types of derivatives that are used in the Forex Market?
  4. Write short notes on ECB and FCCB?
  5. Write a brief note on SWIFT.
  6. What is FRA?
  7. If exchange rates in Mumbai interbank market and London market are as follows:

Interbank Mumbai

USD 1 = Rs. 41.2550/41.2650

London Market    GBP 1= USD 1.6520/1.6527,

At what rate can an importer buy GBP 1 against rupees?
  8. Explain the role and function of IMF?
  9. Explain the following Terms:  a. Direct quote b. Indirect quote

c. Bid Rate   d. Ask rate    e. Spread
  10. The current bank interest rate of US and India are 4.5% and 8.5% respectively. The present spot market rate of exchange in 1 US $ is Rs. 45.36. What would be the twelve months forward rate?
SECTION – B
II) Answer any THREE questions.  Each carries 15 marks.                                (3×15=45)
  11. Explain the types of Bonds that are offered by international bond market.
  12. Explain the types of international payment /settlement system.
  13. What is ADR and GDR? Differentiate between them.
  14. ICICI has issued 9% Bonds @ par value of Rs.1000 each and redeemed at a premium of 10% after 10 years from the date issue. The prevailing inflation rate is 8%. Calculate the duration of bond?
  15. What is meant by securitization? Explain the process/mechanism of securitization
 

 

 

 

SECTION – C
III) Case Study – Compulsory question.                                                               (1×20=20)
  16. Futures Long and Short Positions.

For a Future contract in Canadian Dollar, the initial margin prescribed by the exchange is USD 5,000. A contract is concluded at a price of USD 0.75. The settlement price in the exchange at end of Five subsequent days are as follows:

Day 1   USD 0.745

Day 2   USD 0.750

Day 3   USD 0.760

Day 4   USD 0.745

Day 5   USD 0.760

At the end of each day, the margin accounts of both the buyer and seller will be adjusted based on the settlement price for the day where the margin goes below the initial level, the buyer/ seller will be required to reimburse to bring the balance to the initial level. If the margin is more than the initial level, the member concerned is free to withdraw the excess. Draw the Table that shows Futures Long and Short Positions and their Net Profit/Loss at end of five subsequent days.

 

 

 

 

 

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