251424MG
Roll No………………………..
Course Code: 251424MG
Course: INTERNATIONAL FINANCIAL MANAGEMENT
Examination: APRIL-MAY 2024
Time Allowed: 3 Hours Maximum Marks: 80
Minimum Marks: 32
Note: Attempt all questions. Part (A) of each question is compulsory
and carries 2 marks; attempt any one part from part (B) and (C)
carrying 14 marks each.
Q1 A What is International Finance? What is its 2
importance?
B Define Balance of payment? What are its 14
elements? What is the main cause of disequilibrium
in Balance of Payments of developing countries?
C Discuss the evolution, nature and scope of 14
International financial management?
Q2 A Explain currency spot transaction. 2
B A trader has 1,00,000 Malaysian Ringgit. What will 14
be his arbitrage gains if he observes the following
quotations in the Forex market –
MYR/NZD : 2.7565/2.7598
NZD/USD : 1.5347/1.5385
MYR/USD : 4.2157/4.2177
C Today is June 22, you see following quotation- 14
USD/INR : 83.56/83.64
SPOT END JUNE : 2/3
SPOT END JULY : 5/7
SPOT END AUG : 11/15
SPOT END SEPT : 19/25
Find the outright quotes for 18 July and 25 August.
Page 1 of 2
251424MG
Q3 A Explain Interest rate Parity theory. 2
B “Countries with higher nominal interest rates 14
experience higher rates of inflation, which will result
in currency depreciation against other currencies” Is
this true for International Fisher Effect? Explain.
C What is the difference between absolute and relative 14
Purchasing Power Parity, Explain.
Q4 A What are the features of currency futures contract? 2
B What are currency futures? How do they differ from 14
spot and forwards? How can they be used to hedge
the currency exposure?
C Today is March 1, A UK firm is planning to import 14
goods worth USD 5 million from US. The payment is
due in June. The current spot is USD/GBP 0.6343
and June futures are at 0.6309. On June 1, the spot
rate turns out to be 0.6299 and futures price is
0.6371. Will the futures hedge work? (contract size
1,00,000 USD)
Q5 A Differentiate between European and American 2
Option.
B What are the types of currency options? What are 14
their features? When can they be exercised?
C The current CHF/USD spot is 0.6675. The following 14
call options on CHF are available. When will you
exercise? Calculate the net gain.
Strike Premium
0.6000 0.075
0.6500 0.030
0.6800 0.010
0.7000 0.005
0.7500 0.002
Page 2 of 2
251424MG
Roll No………………………..
Course Code: 251424MG
Course: INTERNATIONAL FINANCIAL MANAGEMENT
Examination: APRIL-MAY 2024
Time Allowed: 3 Hours Maximum Marks: 80
Minimum Marks: 32
Note: Attempt all questions. Part (A) of each question is compulsory
and carries 2 marks; attempt any one part from part (B) and (C)
carrying 14 marks each.
Q1 A What is International Finance? What is its 2
importance?
B Define Balance of payment? What are its 14
elements? What is the main cause of disequilibrium
in Balance of Payments of developing countries?
C Discuss the evolution, nature and scope of 14
International financial management?
Q2 A Explain currency spot transaction. 2
B A trader has 1,00,000 Malaysian Ringgit. What will 14
be his arbitrage gains if he observes the following
quotations in the Forex market –
MYR/NZD : 2.7565/2.7598
NZD/USD : 1.5347/1.5385
MYR/USD : 4.2157/4.2177
C Today is June 22, you see following quotation- 14
USD/INR : 83.56/83.64
SPOT END JUNE : 2/3
SPOT END JULY : 5/7
SPOT END AUG : 11/15
SPOT END SEPT : 19/25
Find the outright quotes for 18 July and 25 August.
Page 1 of 2
251424MG
Q3 A Explain Interest rate Parity theory. 2
B “Countries with higher nominal interest rates 14
experience higher rates of inflation, which will result
in currency depreciation against other currencies” Is
this true for International Fisher Effect? Explain.
C What is the difference between absolute and relative 14
Purchasing Power Parity, Explain.
Q4 A What are the features of currency futures contract? 2
B What are currency futures? How do they differ from 14
spot and forwards? How can they be used to hedge
the currency exposure?
C Today is March 1, A UK firm is planning to import 14
goods worth USD 5 million from US. The payment is
due in June. The current spot is USD/GBP 0.6343
and June futures are at 0.6309. On June 1, the spot
rate turns out to be 0.6299 and futures price is
0.6371. Will the futures hedge work? (contract size
1,00,000 USD)
Q5 A Differentiate between European and American 2
Option.
B What are the types of currency options? What are 14
their features? When can they be exercised?
C The current CHF/USD spot is 0.6675. The following 14
call options on CHF are available. When will you
exercise? Calculate the net gain.
Strike Premium
0.6000 0.075
0.6500 0.030
0.6800 0.010
0.7000 0.005
0.7500 0.002
Page 2 of 2