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

(a) Rise, its exports would increase and its imports would reduce

(b) Rise, its exports would reduce and its imports would increase

(c) Fall, its exports would increase and its imports would reduce

(d) Fall, its exports would reduce and its imports would increase

(e) Be stable.
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29.
The Transaction exposure of a firm can be managed by

(a) Exposure netting (b) Market selection

(c) Pricing strategy (d) Input sourcing

(e) Raising productivity.
< ans >

30.
The international exchange value of the U.S. dollar is determined by:

(a) The rate of inflation in the United States

(b) The number of dollars printed by the U.S. government

(c) The international demand and supply for dollars

(d) The monetary value of gold held at Fort Knox, Kentucky

(e) The value of SDRs held with IMF.
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END OF part A









part B : issues (50 Marks)

This part consists of ques. with serial number one – 6.

ans all ques..

Marks are indicated against every ques..

Detailed workings should form part of your ans.

Do not spend more than 110 - 120 minutes on part B.

1. On August 1, 2005, Bank of India entered in to a three-month forward contract for sell of ¥ two million. The three-month forward quotation on that day was Rs./100¥ = 39.06/39.10. The delivery date for the transaction was November 1, 2005. On September 1, 2005, the client approached the bank for sell of Yen under the contract on the identical day. The subsequent rates prevailed on that day:

Spot Rs./100¥ = 39.26/39.30

Forward rate for delivery on November 1, 2005 (Rs./100¥) = 39.56/39.62

Interest on outlay of funds is at 12% p.a. and interest on inflow of funds at 10% p.a.

You are needed to discuss how the bank will cover its position and compute the amount to be collected from/paid to the customer due to early delivery.

(8 marks) < ans >

2. Consider the subsequent information:

Earning:   Approval pending.