Executive Certificate in Treasury Managem ent
November 2008 Complete Exam Pack
30 MINUTES INSTRUCTIONS ANSWER TWO QUESTIONES QUESTION ONE What is relationship marketing? What factors have popularized the practice of Relationship Marketing? (25 Marks) QUESTION TWO What are the core values of beliefs in Relationship Marketing? (25 Marks) QUESTIONE THREE List and explain at least five factors or variables that are key in building and maintaining business relationships in Relationship Marketing (25 Marks) QUESTION FOUR Using real – life examples.EXECUTIVE CERTIFICATE IN TREASURY MANAGEMENT FINAL EXAMINATIONS 22 NOVEMBER 2008 TIME: 9-12 NOON ====================================================== MODULE ONE: RELATIONSHIP MARKETING ======================================================
DURATION 1. discuss the five main Relationship Marketing strategies (25 Marks)
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============================================================= MODULE TWO: LIQUIDITY AND INTERSK MANAGEMENT =============================================================== DURATION 1: 30 MINUTES INSTRUCTION ANSWER ALL QUESTIONS QUESTION ONE A) B) C) D) Explain the meaning of liquidity risk (3 Marks) Explain why it is important to manage liquidity risk (4 Marks) Identify any seven factors that give rise to liquidity risk. (4 Marks) END OF EXAMINATION= GOOD LUCK
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. (7 Marks) Identify methods that can be used to measure and manage liquidity risk (11 Marks) QUESTION TWO (25 Marks) A) B) C) Explain the meaning of interest rates risk (2 Marks) Identify seven sources of interest rate risk (7 Marks) Explain each of the following interest rate risk measurement techniques i) ii) iii) iv) D) Repricing schedules ( 3 Marks) Gap Analysis (3 Marks) Duration (3 Marks) Simulation Approaches (3 Marks)
Identify and explain briefly the strategies that can be adopted in order to control interest rate risk.
QUESTION ONE A) Explain each of the following terms: ii) iii) iv) v) vi) Bid Rate (1 Mark) Offer Rate (1 Mark) Transaction Exposure (1 Mark) Translation Exposure (1 Mark) Economic Exposure (1 Mark)
B) Explain the difference between the following: i) ii) iii) iv) v) vi) Page 4 of 12 Direct quote and indirect quote (4 Marks) Sport Rate and Forward Rate (4 Marks) Futures and Forwards (4 Marks) Base Currency and Variable currency (4 Marks) Leads and Lags (4 Marks)
. THEY SHOULD BE AS BRIEF AS POSSIBLE WHERE DIAGRAMS. THEY SHOULD BE CLEARLY LABELED WHERE CALCULATIONS ARE PERFOMED. CHARTS OR GRAPHS ARE REQUIRED.EXECUTIVE CERTIFICATE IN TREASURY MANAGEMENT FINAL EXAMINATIONS 22 NOVEMBER 2008 TIME: 2-5 PM
MODULE THREE: FOREIGN EXCHANGE STRATEGIES DURATION 1 30 MINUTES
INSTRUCTIONS • • • •
ANSWER ALL QUESTIONS WHERE EXPLANATIONS ARE REQUIRED. FINAL ASWERES SHOULD BE EXPRESSED CORRECT TO 2 DECIMAL PLACES.
buys goods from New Zealand which cost NZ$ 100 000.4876 10. What is the sterling income? ( 4 Marks) A UK company has to repay a loan of 2 million Swiss francs. 0800 ?(4 Marks)
(Ignore bank commission charges. 2. What will this cost in sterling ?(4 Marks)
B ABC LTD. 6439 2.6449 2. the Sterling/ New Zealand dollar exchange rate is 3. if the sport rate at the time when the goods are paid for has moved to: 1. 3. 0002
What would be the cost to a UK company of buying Hong Kong dollars to make a payment of HK $250 000 to a supplier? (4 Marks) A UK company receives a payment of E 70 000 from a customer and converts this to sterling. 0950? (4 Marks) 4. The goods are resold in the UK for ₤32 000. 9976 Offer 1. a UK company. 5650-3.5800. At the time of import purchase.QUESTIONE TWO (25 Marks) A) Use the exchange rate in the table given below to answer the questions that follow: Bid Sterling / Euro Sterling / Swiss Franc Sterling/ Hong Kong dollar i) ii) iii) 1. 0650 – 4.4898 11. REQUIRED What would the actual profit be.) END OF QUESTION PAPER = GOOD LUCK=
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.0800 – 3.
e. A put option. You buy 100 put options on Willdale at $150 each. 3. What are you hopping will happen to the price of Willdale shares?( 5 marks) b.( 5 marks) d. What are you hopping will happen to the Colcom share price?( 5 marks) b. not drawn to scale.( 5 marks each). b. A forward contract. The exercise price of your options is $3 500. What do you do if the share price turns out to be $2 400. Colcom is currently trading at $300 per share. d. Illustrate your answers in (b) and (c) on a diagram. f. a. =END OF EXAMINATION=
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. Illustrate your answers in (b) and (c) on a diagram. What will you do if the share price turns out be $3 600?( 5 marks) c. An American option. c. a.============================================================== MODULE FOUR: DERIVATIVE MARKETS ============================================================== DURATION 1. a. 1. Briefly explain the features of each of the following securities. with a maturity of 30 days. You buy 100 call options on Colcom at $10 each. 4. The exercise price of your options is $350. What do you do if the share price turns out to be $250 on the maturity date? (5 marks) c.(5 marks). A call option.30 Minutes
INSTRUCTIONS TO CANDIDATES: ATTEMPT ALL QUESTIONS.( 5 marks). What do you do if the share price turns out to be $400 on the maturity date?(5 marks) d. Explain the meaning of the term “derivative security”( 5 marks) 2. not drawn to scale. A European option. Willdale shares are currently trading at $4 000 each. A futures contract. with a maturity of 30 days.
These shares were offered to the public on the following terms: On application: $ 25 per share On collection: $ 45 per share (including $20 premium) First and final call: the balance for 141 000 shares. The directors rejected applications for 21 000 shares and allotted shares to the remaining applicants on the basis of shares for every 6 applied for. Required: Record the above transactions in the ledger book of PJ Public Limited Company QUESTION TWO (25 Marks) a) Outline what you consider to be six major stages of the Accounting cycle and briefly explain each of these stages (12 Marks) b) The following items are extracted from the Balance Sheet of ABC Public Limited Company at 31 December 2001: Issued share capital Page 7 of 12
. (15 Marks) B) PJ Public Limited Company was formed with an authorized share capital of 100 000 ordinary shares of $ 100 each at $ 120.EXECUTIVE CERTIFICATE IN TREASURY MANAGEMENT FINAL EXAMINATIONS 23 NOVEMBER 2008 TIME: 9-12 NOOM
MODULE FIVE: ACCOUNTING FOR TREASURY TRANSECTIONS
DURATION 1:30 MINUTES INSTRUCTIONS ANSWER ALL QUESTIONS QUESTION ONE (25 Marks) A) I identify the major stages of an issue of shares to the public and then explain the double entry required to record all these stages on the ledger.
250 000 Ordering shares of the $100 Each fully paid 75 000. On 1 January 2002. Required To present the relevant ledger accounts to record the above transactions. 6 per cent redeemable preference shares Share premium Revenue reserve The preference shares were originally issued at a premium of 14 per cent. the application money for 4000 shares being returned. payable 40 per cent on application and the balance on allotment. GOOD LUCK=
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. the company made the following resolutions: i)
25 000 000 7 500 000 5 00 000 7 000 000 40 000 000
To issue 50 000 ordinary shares of $ 100 each at a premium of 10 percent. the issue is to be made to finance in part the redemption of preference shares. =END OF EXAMINATION.
To redeem the preference shares at premium cost To make a bonus issue of one ordinary share for every ordinary shares.
These actions were dully taken by the company consecutively in the order shown Applications were received for 54 000 ordinary shares.
2008 you deposit $45 000 into an account that pays simple interest of 22%. and the yield on a note with a face value of $100 000 which is due in 73 days and can be discounted at a discount rate of 33%. the discounted value. How much will you have in your account after 10 years? ( 5 marks) Page 9 of 12
. Calculate the dealer’s spread on the following Treasury Bill: ( 10 marks) Maturity Bid Asked Face value : : : : 62 days.76% pa compounded daily. 2008? (5 marks) c. Distinguish between the money market and the capital market and describe the securities that are traded in each of these markets. Determine the discount. Calculate the sum accumulated at the end of 3 years. How much will you have when you withdraw the money on 8 August.27%.34% 36. 4 months and 17 days on a deposit of $20 000 and an interest rate of 18. You deposit $10 000 into an account that earns interest at 4. What is the consideration ( issue price) of the security?( 5 marks) f. 43.22% $10 000
d. a.( 5 marks) b. On 26 March.(20 marks). A discount security with a tenor of 92 days and a nominal value of $10 000 is issued at a discount of 46% pa.MODULE SIX: FINANCIAL MARKETS AND TREASURY MATHEMATICS
=============================================================== DURATION 1:30 Minutes INSRUCTIONS TO CANDIDATES : ATTEMPT ALL QUESTIONS Section A. Section B. ( 10 marks) e.
( 10 marks)
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.56% pa compounded monthly for 15 years. Find the present value of an annuity of $5 000 per month when the interest rate is 3.g. The money is invested to earn 123% pa compounded monthly. How much will you have in your fund after 3 years?( 10 marks) h. You invest $10 000 at the end of each month into a pension fund.
75%. What is the consideration and equivalent yield? (11 Marks) List and describe at least seven money market instruments (14)
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.EXECUTIVE CERTIFICATE IN TREASURY MANAGEMENT FINAL EXAMINATIONS 23 NOVEMBER 2008 TIME: 2-5 PM
MODULE SEVEN: MONEY MARKETS TRADING TRSTEGIES =============================================================== INSTRUCTIONS ANSWRE ALL QUESTIONES DURATION QUESTIONE ONE Describe the internal and external analysis that treasury needs to conduct periodically and its purpose a) b) c) d) (1 Mark) Discuss the common strategies Explain innovation and strategy dealers must be cognizant (6 Marks) (6 Marks) (6 Marks) (6 Makes) 1. 90 day BA quoted at a discount rate of 8.30 MINUTES
Describe and discuss the typical Reserve Bank strategies that money market List and describe the money market trading strategies
QUESTION TWO a) b) A man purchases a $ 1000 000.
QUESTIONE THREE Identify and explain the features that influence individual’s values/ ethics.
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. Use Zimbabwean examples to report your answer. QUESTIONETWO Evaluate the relevance of the utilitarian approach in addressing ethical practices in Treasury. Use Zimbabwean examples to support your answer. QUESTION ONE Discuss the factors that have given rise to the need for ethical practices in Treasury.=============================================================== MODULE EIGHT: TREASURY ETHICS =============================================================== DURATION 1: 30 MINUTES INSTRUCTIONS ANSWER ANY TWO QUESTIONS EACH QUESTION CARRIES 25 MARKS.