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

Reason: The Heckscher - Ohlin Model developed by Eli Heckscher and Bertil Ohlin, explores the possibility of 2 nations operating at the identical level of efficiency, benefiting by trading with every other. The labour-rich country is more likely to produce labour-intensive goods and the country rich in capital will most probably produce capital intensive goods.
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4.
Answer: (d)

Reason: Sec. 46 of FEMA.1999 empowers Central Government to make rules to carry out the provision of the Act , whereas Sec. 47 empowers RBI to make regulations to carry out of the provisions of the Act and rules made there under from time to time. Hence, RBI is an administrative authority designated under the FEMA.
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5.
ans (e)

Reason: In respect of exports by air freight and post parcel which are covered by certificates issued by ADs confirming that the transaction does not involved any foreign exchange, the GR/PP forms procedure has been waived. Waiver will be permitted given the subsequent conditions are fulfilled AD is convinced that the transaction does not involve any foreign exchange flow/Value of shipment is not more than Rs.25,000. Export of goods on lease basis is not exempt from export declaration form.
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6.
Answer: (d)

Reason: “Delivered Duty Paid” means that the seller fulfills his obligation to deliver when the goods have been made available at the named place in the country of importation. The seller has to bear the risks and costs , including duties, taxes and other charges payable upon importation. While EXW ( ex works) term represents the minimum obligation for the seller, DDP represents the maximum obligation.
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7.
ans (d)

Reason: Quantum of loan will not normally exceed FOB value of goods or domestic market value of goods whichever is lower. However, there are certain exception to this Packaing credit may be granted up to the domestic cost of goods even if it is higher than the FOB value, given the goods are covered by export incentives of Govt. of India and availability of Export Production Finance Guarantee offered by ECGC.
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8.
ans (d)

Reason: As the nominal foreign currency interest would have to be paid in the absence of concessionary loan, that rate should be used as the discount rate for calculating the current value of repayments of concessional loan.
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9.
Answer: (e)

Reason: A currency is stated to be at premium against the other currency if it is more expensive in the forward market than in the spot market. As the 3m and 6m $ quotations are higher than the spot rates which shows the $ is at a premium for 3m and 6m.

Earning:   Approval pending.