August/Fall 2012

Master of Business Administration - MBA Semester 4 Subject Code MF0015 Subject Name International Financial Management 4 Credits
(Book ID: B1316)

Assignment Set- 1 (60 Marks)

Note: Each question carries 10 Marks. Answer all the questions.

Q.1 What is meant by BOP? How are capital account convertibility and current account

convertibility different? What is the current scenario in India? Q.2 What is arbitrage? Explain with the help of suitable example a two-way and a three

way arbitrage. Q3. You are given the following information: Spot EUR/USD : 0.7940/0.8007 Three months swap: 25/35 Calculate three month EUR/USD rate.

Spot USD/GBP: 1.8215/1.8240

Q.4 Q.5

Explain various methods of Capital budgeting of MNCs. a. What are depository receipts? b. Boeing commercial Airplane Co. manufactures all its planes in United States and

prices them in dollars, even the 50% of its sales destined for overseas markets. Assess Boeings currency risk. How can it cope with this risk? Q.6 Distinguish between Eurobond and foreign bonds? What are the unique

characteristics of Eurobond markets?

August/Fall 2012

Master of Business Administration - MBA Semester 4 Subject Code MF0015 Subject Name International Financial Management 4 Credits
(Book ID: B1316)

Assignment Set- 2 (60 Marks)

Note: Each question carries 10 Marks. Answer all the questions.

Q.1 What do you mean by optimum capital structure? What factors affect cost of capital

across nations? Q.2 What is sub-prime lending? Explain the drivers of sub-prime lending? Explain briefly

the different exchange rate regime that is prevalent today. Q.3 What is covered interest rate arbitrage?

Assume spot rate of = $ 1.60 180 day forward rate = $ 1.56 180 day interest rate in U.K. = 4% 180 day U.S interest rate = 3% Is covered interest arbitrage by U.S investor feasible? Q.4 Q.5 Explain double taxation avoidance agreement in detail Explain American depository receipt sponsored programme and unsponsored

programme. Q.6 Explain (a) Parallel Loans (b) Back to- Back loans