Is international working capital management
International Financial Management
Q1. Maintenance margin money denotes the minimum level to which the margin is allowed to fall in the sequel of loss, if the balance drops below this, one has to deposit,
a. Initial margin amount
b. Variation margin amount
c. Maintenance margin amount
d. Initial as well as variation margin amount.
Q2. The two kind of swap in the forward market are
a. Forward swap and reverse swap.
b. Reverse swap and option swap.
c. Forward and option less swap.
d. Forward swap and option swap.
Q3. International Fisher Effect or generalized version of the Fisher effect is a combination of
a. PPP theory and Fisher’s open proposition.
b. Fisher’s open and closed proposition.
c. PPP theory and Fisher’s closed proposition.
d. None of the above.
Q4. Exchange rates are quoted as ‘direct’ and ‘indirect’ ,if the direct quote of a country ‘X’ (currency unit ‘a’) with country ‘Y’ (currency unit ‘b’), is “ a 50/ b 20” then the indirect quote will be
a. b 2.5/ a 1
b. b 0.4/ a 1
c. b 10/ a 1
d. Cannot be calculated.
Q5. If the investors are risk neutral ie forward prices are equal to the expected spot prices at delivery then the covariance of marginal rate of substitution and the exchange rate of contract at delivery is
a. Always unity
d. Between Zero and unity
Q6. In cylinder or tunnel option, the correct option is
a. If the spot rate is lower than the lower strike rate then buyer has to pay lower spot rate.
b. If the spot rate is lower than the lower strike rate then buyer has to pay lower strike rate.
c. If the spot rate is higher than the higher strike rate then buyer has to pay lower strike rate.
d. If the spot rate is higher than the higher strike rate then buyer has to pay higher strike rate.
Q7. The concept of parallel loan says
a. Amount of the loan moves out of the county but it serves the purpose of internal loan also.
b. Amount of the loan moves out of the county but it serves the purpose of cross border loan.
c. Amount of the loan moves within the county and it serves the purpose of external loan only.
d. Amount of the loan moves within the county but it serves the purpose of cross border loan.
Q8. According to one of the earliest theory proposed by Hymer on the imperfect market
a. Multinational firm is a typical imperfect market.
b. Multinational firm is a perfect market
c. One should not look for control if want the maximum profit
Q9. If the NVP(net present value) from parent’s perspective and from the subsidiary’s perspective are positive and negative respectively then
a. Project can not be accepted
b. Project shall be accepted
c. Project may be accepted but it is doubtful how far useful for parent unit.
d. Project may be accepted but chance of loss in host country currency will be there.
Q10. If ‘A’ and ‘B’ are the price elasticity of demand for import and export respectively then devaluation helps to improve current account balance, only if
a. 2A + B is greater than 1.
b. A – B is equal to 0.
c. A+B is greater than 1.
d. A + B is lesser than 0.
Q1. Write a note on ‘Fixed Parity System’ for exchange rates.
Q2. What are Direct & Indirect Quotes of exchange rates?
Q3. What is ‘Forward Market Hedging’?
Q4. How could ‘Optimization of Portfolio’ be achieved?
Q5. Mention the loss borne by the US exporter in the sequel of appreciation of dollar.
Q6. What strategy the Indian importer needs to follow to hedge the exchange rate risk?
Q7. Describe the network of ABN AMRO Bank in India.
Q8. What role does it play for global cash management?
Q9. Crawling peg is the compromise between fixed exchange rate and floating exchange rate discuss.
Q10. Is international working capital management more complex than the domestic working
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