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THE INSTITUTE OF FINANCE MANAGEMENT

INSTITUTE OF FINANCE MANAGEMENT CHUO CHA USIMAMIZI WA FEDHA

BACC III , BBF III, BEF & BAIT III

2021/2022
AFU 08504: INTERNATIONAL FINANCE

TUTORIAL QUESTIONS
INTERNATIONAL FINANCE AND THE INTERNATIONAL MONETARY SYSTEM

TQ1: MANAGEMENT OF POLITICAL RISK IN FOREIGN PROJECTS

In assessing investment opportunities in a foreign country, it is important for a parent firm to
take into consideration the risk arising from the fact that the investments are located in a foreign
country. Discuss the various approaches to the management of political risk in foreign projects

TQ2: MULTINATIONAL COMPANY AND POLITICAL RISK

(a) What is meant by a Multinational Corporation (MNC)?
(b) Mention at least six (6) ways in which MNCs can lower political risks.
(c) Explain the advantages and disadvantages of each of the following ways of conducting
international business:
 Exporting
 Licensing
 Joint venture

TQ3: THE PROMINENCE OF INTERNATIONAL FINANCE

Identify the key factors that have led to the prominence of international finance as an academic
discipline and a business activity.

TQ4: INDICATORS OF INTERNATIONALIZATION OF FINANCE

Discuss the key indicators of internationalization of finance.

TQ5: THE ROLE OF THE FINANCE MANAGER

Explain the role of the financial manager in the present international environment.

TQ6: THE GOLD STANDARD AND THE BOP

Discuss the advantages and disadvantages of the gold standard and explain the mechanism which
restores the balance of payments equilibrium when it is disturbed under the gold standard.
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TQ7: THE FLEXIBLE EXCHANGE RATE REGIME

Discuss the key arguments for and against a flexible exchange rate regime. What are the criteria
for “a good” international monetary system?

TQ8: THE FIXED SYSTEM OF EXCHANGE RATE SYSTEM

Consider the case for and against fixed system of exchange rate. Why might a government wish
to see a rise in exchange rate for its currency and how might it achieve this?

TQ9: FLOATING OR FLEXIBLE EXCHANGE RATE SYSTEM

A floating or flexible exchange rate is an exchange rate which fluctuates according to market
forces. What are the main advantage and disadvantages of a floating or flexible exchange rate
system?

TQ10: THE IMF: PILOT QUESTION

Outline the principal functions of the IMF and explain the factors that have limited the role of the
IMF as a source of international finance.

TQ11: [THE BRETTON WOODS SYSTEM]

How did the Bretton Woods System differ from the Gold Standard? Why design the new system
around the U.S. dollar rather than the gold or silver?

TQ12: FUNCTIONS OF THE IMF

Outline the principal functions of the IMF and explain the factors that have limited the role of the
IMF as a source of international finance.