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ICFAI University
Oehradun

MBA Program: Class of 2009
Terminal Examinations

Caselets, Situational Analysis / Applications of concepts . TotalC to B answered multiple Part in only SL is 2}iCODE consists for analysis. A B30 SINGLEANSWERBOOKLET. instructions concepts in &C TimeAtimebe & Cof 30 be in OMR sheet COURSEto602 separately.understanding of Analytical answering Part B consists for Problems testing, Conceptual which test your and Application, basic for Ability, the Both Part allottedwill answering QUESTIONFI Understanding allocated of case answered part isprovided answering choice questions minutes.hours. Detailed BOOKLET you OMR NO. 43 Course Code I Program AFTER IIIInternational Finance & Trade VI. V. II. subject. BOOKLETsheetEXAMINATION ISI OVER are givenI on OMRTHE and also overleaf. I. I III. VII. IV. HE QUESTION Course II I I Semester I I I I I· II Note: Part Part 8 & C: A:

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4322()

omprises of Part A, Part 8 & C:
© ICFAI University - 2007

I

SLFI 602 1FT43 I 0908

TOTALMARKS: 30 1.

Part A : Basic conceptsMAXIMUM

TIME: 30 Minutes

approach assumes that the purchasing power parity holds good. a. monetary b. demand - supply c. portfolio balance d. asset e. liability

4.

Which of tl-1e following is not an appropriate hedging strategy for a likely devaluation of a currency? a. reduce the level of cash b. tighten credit term to decrease account receivables c. reduce borrowing in the currency d. delay account payables e. sell the currency forward

2.

The foreign defined as

Exchange Risk

IS

a. variance of the domestic currency value of an asset, liability or operating income that is attributable to unanticipated changes in exchange rates b. variance of the foreign currency value of an asset, liability or operating income that is attributable to unanticipated changes in exchange rates c. variance of the domestic currency value of an asset, liability or operating income that is attributable to anticipated changes in exchange rates d: variance of the foreign currency value of an asset, liability or income that is operating attributable to anticipated changes in exchange rates e. sensitivity of changes in the real domestic currency value of assets, liabilities, or operating incomes to unanticipated changes in exchange rates 3. The firm producing and selling in domestic market may face following risk when the economy is opened a. the transaction risk b. the translation risk c. operating risk d. both (a) and (b) above e. firm does not face any risk

5.

Which of the following is not an external hedging technique? a. forwards' b. currency of invoicing c. futures d. options e. currency swaps

6.

Hedging through currency invoicing results in a. the exporter and importer covering the exposure b. the exporter covering the exposure c. the importer covering the exposure d. either exporter or covering the exposure importer

e. neither the exporter nor the importer covering the exposure 7. In case of forward cover, the cost of hedging is a. the annualized forward premium b. the difference between the forward rate and expected spot rate c. the difference between the forward rate and current spot rate d. the difference between the forward rate and actual spot rate prevailing on the date of maturity

3 of 10

SLFI 602 1FT 43 10908

e. zero since it does not involve any payment on the date of contract

a. b. c. d. e.

international capital perfectly integrated purchasing good power

markets parity

are holds are

8.

Discount rate used in APV for calculating the present value of interest tax shields on incremental debt is a. home country risk free rate b. host country risk free rate c. home rate country market borrowing 12.

international capital markets not perfectly integrated both (a) and (b) above both (b) and (c) above

The key issue in international management is a. b. c. d.

cash to

d. host country market borrowing rate e. host country...
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