International Finance Assignment

Roll. No: Sec:

Time: 2 Hr Date: January 2024 Max Marks:50
Part - I - Definitions or Fill in the blanks.
Part - II – Case Study/ Problem
Q. Question Marks
No.

PART – I 30x1 = 30M

1 When a company assigns the right to a patent or a trademark to another 1

company for a fee or royalty is known as ______________________.

2 An international mode of business involves a company in one country 1

making a significant investment to establish and manage manufacturing
or business operations in another country refers to _______________.
3 Difference between Greenfield vs Brownfield Investments 1

4 A project where a company provides expertise, technology, and 1

complete services to design, build, and deliver a fully operational
facility is called as ___________________________________.
5 In a fixed exchange rate regime, the value of a currency is 1
______________________ against a reference currency, and the
central bank intervenes in the foreign exchange market to maintain this
fixed value.
6 Write Three Reasons for Brexit 1
 I.

II.

INVIGILATOR EVALUATOR

7 1

India Follows ________________________ Exchange Rate system.

8 ______________________Economy is an example of Unofficial 1
Dollarization.
9 What is Marshall Agreement? 1

10 Compare Devaluation vs Deprecation of Currency with an Example 1

11 IMF and World Bank were Established during the 1

_____________________Conference
12 Define Barter System 1
13 What led to collapse of Gold Specie Standard 1

14 Gold Standard System Collapsed due to 1

I.

II.

III.
15 During the Bretton wood Conference, 1 Ounce of gold was pegged at 1
_________. Further, it was revalued at __________________________
______________________________________.
16 India has Balance of Trade Deficit due to _________________ 1

I.

II.

17 Foreign Exchange Exposure can be classified into ________________ 1

__________________; ________________________; and

___________________ Exposure
18 What is the "Spot Rate" in foreign exchange? (Tick the appropriate) 1

a) The exchange rate for future delivery of currency

b) The exchange rate for immediate delivery of currency
 c) The rate at which currencies are traded in options market
d) The rate set by central banks for international transactions
19 Which term refers to quoting the price of one unit of a foreign currency 1
in terms of the domestic currency is called as ____________ Quote
20 Quote in India: INR 271 / KWD 1

Write an indirect quote in Kuwait with respect to INR

21 Quoting the exchange rate between two major currencies without 1

involving the domestic currency refers to _____________________.

22 An example of direct Quote for USA will be ________ 1

23 Given information - 1$ = INR 48.50. 1

Convert a direct quote into indirect quote.

24 Given Information  1 CD $ = INR 43.35 - 43.66 1

Calculate Spread in terms of percentage.

25 Triangular Arbitrage?? 1
26 Compare Tranaction and Translation Exposure 1

27 Transaction Exposure can be reduced by adopting ________________ 1

28 The assumptions of law of one price are__________ 1

a) No tariffs
b) No transaction costs
c) No transportation costs
d) all the above
29 What is expropriation in the context of political risk? 1

a) The process of negotiating trade agreements between countries

b) The forced seizure of a company's assets or property by the
government
c) The risk of terrorism and political violence
d) The risk of changes in the global economic environment

30 Which of the following is an example of political risk? 1

a) Exchange rate fluctuations

b) Regulatory changes that affect business operations
c) Natural disasters
d) Changes in global economic conditions

PART – II 2x10 = 20M

1.a Given Information:

 BID Rate ASK Rate

RS/ USD 81 82

USD/ £ 1.2 1.35

Answer
 1.b Prepare Balance of Payment Format with example
5 Marks

Answer.
2.a XYZ Global Enterprises, a Mumbai-based firm, engages in international
trade with companies located in various foreign Location. The company
needs to calculate the equivalent amount in Indian Rupees for the following
four currency transactions based on the provided exchange rates:
1 USD = Rs 41.50/41.55
1 Euro = Rs 58.20/58.25
1 SGD = Rs 26.50/26.55 3 Marks
Transactions:
a) XYZ Global Enterprise Received USD 5,50,000 for Exported Goods
 to the New York
b) XYZ Global Enterprise Paid Euro 3,25,000 for Machinery Imported
from Germany

Answer
2.b Given three different forex market Information:
USD = INR 48.30 (Mumbai) 7 Marks
GBP 1 = INR 77.52 (in London)
GBP 1= USD 1.6231 (New York)
The arbitrager has US $ 100,00,000. Assuming that there is no transaction
cost. Explain whether there is any triangular arbitrage gain from the quoted
spot exchange rates.

Answer