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ST. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)
END SEMESTER EXAMINATION – OCTOBER 2013
M.COM – I SEMESTER
INTERNATIONAL FINANCIAL INSTITUTIONS & MARKETS
Time: 3 hrs Max. Marks:100
SECTION – A
I) Answer any SEVEN of the following questions. (7×5=35)
1. “IMF plays an important role in International Trade & Financial
Management”-in this context explain the functions of IMF
2. How are forward contracts different from Future contracts?
3. Explain: a) Types of swaps b) FRA c) Netting of Derivatives
4. Bring out the functions of financial markets.
5. Write short Notes on LOC
6. Explain Translation exposure, Transaction exposure & Economic exposure
7. A U.S investor obtains British Pounds when it is $1.50.and invests in one
year money market security that provides a yield of 5%. At the end of one
year the investor converts the proceeds back to $ @ $1.52/pound.
Calculate the Effective rate
8. “Money market have a variety of instruments”.- Elucidate
9. Explain recent measures taken by RBI to control the falling value of Rupee.
10. Find out if there is a scope for Covered Interest Arbitrage and gain/ loss if
any from the following details.
Spot rate- Chinese Yuan 6.00/$, 6 months forward rate-Chinese Yuan
6.0020/$,
6 months interest rate in U S – 5%, China – 8 %. If transaction involves $
1,000 due 6 months hence.
SECTION – B
II) Answer ANY THREE of the following (3×15=45)
11. Mr Peter, 75 years old senior citizen is currently unable to meet his
financial needs, However he owns a Residential property worth $ 1,00,000
. He is contemplating to sell the same, however he seeks your opinion to
determine whether he has any other alternative. What would be your
suggestion, explain in detail.
12. How do International Financial Institutions manage Credit Risk?
13. a) On Monday Morning an investor takes a Long position in a £ future
contract that measures on Wednesday afternoon. The strike Price is $1.70
for £ 62,000. At the close of the trading Future Prices are:
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MONDAY 1.72$
TUESDAY 1.73$
WEDNESDAY 1.71$
Determine the daily position of the investor and Net profit or Loss incurred
on settlement.
b) A hedger takes a put option in 5 Treasury Bonds future contracts at a
strike price of 98-5. Each contract is for $1,00,000 principal. When the position
is closed the price is 95-12. What is the gain or loss?
c) Suppose you buy a call option on a $ 1,00,000 TB future contract with an
exercise price of 110 for a premium of $1500. If on expiration the price is 111.
What is your profit or loss. Would you exercise your option? What is the gain
or loss of the writer after your decision?
14. Write Notes on GDR including its issue process. How are ADR different
from them.
15. You have called your foreign exchange trader and asked for quotations on
the spot, one month, three months and six months. The trader has
responded
with the following:- $0.02479/81 3/5 8/7 13/10
a. What does it mean in terms of dollars per Philippine peso
b. If you wish to buy spot Philippine peso how much would you pay in
dollars
c. If you wish to buy spot, one, three, six months dollars, how much
would you have to pay in Philippine peso
d. What is the premium /discount in one, three and six months forward
rate in annual percentage assuming you are buying Philippine peso
e. If Rs. 59.72/ $ , how much is one Philippine peso
SECTION – D
III) Case study – Compulsory question. (20 marks)
16. Amex Cards Co. are planning to acquire a New independent Office at
Mumbai for which it requires Capital and is planning to Mortgage its
future Cash Flows from its Credit Card payments in the form of securities.
In the light of this explain Securitisation.