30.11.

2020

ANKARA YILDIRIM BEYAZIT UNIVERSITY

DEPARTMENT OF FINANCE AND BANKING
BF401 INTERNATIONAL FINANCE
MIDTERM EXAM

EXAM RULES!!!

 The exam will start at 09:30am.

 The exam will finish at 10:30am.

 The students should upload their answer files into AYBUZEM until 10:35am.

 The students should write the answers by handwriting.

 The students can upload any file (JPEG, PDF etc.) and there is no page limit.

 In problems, please show how you compute each of the items.

QUESTIONS

1) (25pt) Discuss the agency problem for ABC Corp. which has its parent company that
makes most major decisions for its foreign subsidiaries, or XYZ Corp. which uses a
decentralized approach.

2) (20 pt) Suppose that the spot rate of Euro is $1.20. Assume that the expected spot rate one
year from now is $1.25. Calculate the appreciation in percentage.

3) (15 pt) What is the reason of a bank willing to participate in syndicated Eurocredit loans?

4) (15 pt) What is LIBOR and how is it used in the Eurocredit market?

5) (25 pt) ABC Bank expects the exchange rate of Euro to depreciate from its current value
of $1.20 to $1.15 in 30 days. How can the bank speculate on this exchange rate and get a
profit? Write each activity stepwise.

Good Luck!
Prof. Dr. Nildağ Başak Ceylan