Institute of Chartered Financial Analysts of India (ICFAI) University 2006 Certification Finance International and Trade – I - Question Paper

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17.
ans : (e)

Reason: Transfer guarantee seeks to safeguard a bank in India that added confirmation to a foreign L/C, against losses arising out of the failure of L/C issuing bank. accurate ans is (e).
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18.
ans : (d)

Reason: As the nominal foreign currency interest would have had to be paid in the absence of concessionary loan, that rate should be used as the discount rate for claculating the current value of repayments of concessional loan.
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19.
ans : (d)

Reason: Non-trade transactions, contracts once cancelled cannot be rebooked.
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20.
ans : (d)

Reason: Expanding aggrregate demand do not help a country accurate its current acount deficit. Hence choice (d) is stated to be the accurate ans.
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21.
ans : (e)

Reason: According to the interest rate parity, the cost of money (i.e., the cost of borrowing money or the rate of return on financial investmetns), when adjected for the cost of covering foreign exchange risk, is equal across various currencies. Allthe provided equations refer to interest rate parity ranging from US $ and GBP.
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22.
ans : (e)

Reason: Post-shipment credit is basically meant for financing exports sale receivables of the exporter.
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23.
ans : (b)

Reason: The capital account monetary model is an improvement over current account monetary model as it has relaxed assumptions that there may be departures from PPP in the short run and the increase in domestic interest rates will always lead to depreciation of domestic currency.
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24.
ans : (e)

cause : The rights of writers of literary and artistic works are protected by copy right under the agreement on trade related aspects of intellectual property rights (TRIPs) of WTO for a minimum period of 50 years after the death of the writer.
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25.
ans : (c)

cause : Where the goods are to be carried by 2 or more ships or partly by ship and partly by rail, the bill of lading providing for the continuous responsibility of all the carriers is called a through bill of lading.
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26.
ans : (b)

Reason: Covered IRP does not hold good perfectly because of the subsequent reasons:

· Transaction costs

· Political risks

· Taxes

· Liquidity preference

· Capital controls.

Earning:   Approval pending.