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4th August 2014, 07:52 AM
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ICFAI University MBA International Management previous year question papers
Will you please share with me the ICFAI University MBA International Management previous year question papers?
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4th August 2014, 08:38 AM
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Re: ICFAI University MBA International Management previous year question papers
As you want to get the ICFAI University MBA International Management previous year question papers so here it is for you: Some content of the file has been given here: 1. As per exchange control regulations, licenses are issued for import of goods into India for ______ value. (a) FOB (b) C&F (c) CIF (d) FOB value plus 21.125% (e) Cost plus 20%. 2. Which of the following is not an external hedging technique? (a) Forwards (b) Exposure netting (c) Futures (d) Options (e) Money markets. 3. The system in which the exchange rates are determined by the demand and supply position for the currencies in the foreign exchange market is known as (a) Target zone arrangement system (b) Crawling peg system (c) Fixed exchange rate system (d) Floating exchange rate system (e) Currency board system. 4. Dumping means (a) Destroying the goods to create scarcity (b) Throwing the goods into the sea to create scarcity (c) Donating the goods to least developed countries as charity (d) Selling the goods at actual cost (e) Selling the goods below the cost. 5. An exporter requested his banker to quote a rate for his receivable of $10,000. The banker agrees to quote the rate relying on the inter bank rate for dollar that is Rs.48.75/77$ by loading a margin of 0.15% on the rate. The rate quoted by the banker is (a) Rs.48.68/$ (b) Rs.48.70/$ (c) Rs.48.82/$ (d) Rs.48.84/$ (e) Rs.48.83/$. 6. Which form of purchasing power parity refers to the Law of One Price? (a) Numerical form (b) Relative form (c) Accounting form (d) Absolute form (e) Expectations form. i. e x e 7. Under which of the following International Commercial Terms (INCOTERMS), the seller places the goods at his premises at the disposal of the buyer or any other named place, say factory, warehouse etc? (a) Cost and Freight (CFR) (b) Carriage paid to (CPT) (c) Ex works (EXW) (d) Free carrier (FCA) (e) Free on Board (FOB). 8. For compilation of Balance of Payment(BoP) India follows the principles laid down by the I. The Income Tax Act. II. The Foreign Trade (Development and Regulation) Act. III. The IMF manual. IV. The Foreign Exchange Management Act. (a) Only (I) above (b) Only (II) above (c) Only (III) above (d) Both (I) and (IV) above (e) Both (II) and (IV) above. 9. Which of the following statements is true when a country has a current account surplus in its balance of payment account? (a) Country is not a net lender to the rest of the world (b) Country would need not borrow from outside to build-up its productive capabilities in order to achieve high rates of growth (c) Country is living above its means (d) It is not beneficial for a developing country (e) Country is consuming as much as it is producing. 10.Consider the following rates quoted in Chennai forex market: Rs./€ : 62.36/38 €/£ : 1.1761/63 The synthetic quotes of Rs./€ are (a) 73.34/73.38 (b) 53.02/53.03 (c) 0.0301/0.0313 (d) 53.80/53.84 (e) 73.75/73.78. 11.If there are no barriers to trade among the member countries and the external barriers for non-members are also common, then this form of trading block falls under (a) Free trade area (b) Common Market (c) Customs Union (d) Economic Union (e) Autarky. 12.Which of the following is false about a forward contract in foreign exchange? (a) A forward contract can be either outright forward or option forward (b) It is an agreement where the parties agree to buy or sell a currency at a future date (c) The future date should be beyond one month from the date of contract (d) The price of the currency is fixed at the time of contract (e) The terms of delivery and payments are also fixed at the time of contract. 13.Bank of Misr (BOM), Cairo is having an euro currency account with Commerz Bank, Frankfurt. When Citizens Bank of Canada, Vancouver refers to this account of BOM, while corresponding with Commerz Bank, Frankfurt, it would refer as (a) Shadow account (b) Vostro account (c) Nostro account (d) Loro account (e) Mirror account. 14.Economic exposure can be managed by which of the following techniques? I. Forwards. II. Futures. III. Market Selection. IV. Product Mix. (a) Both (I) and (II) above (b) Both (I) and (III) above (c) Both (I) and (IV) above (d) Both (II) and (III) above (e) Both (III) and (IV) above. 15.Consider the following: One year euro interest rate is 5% (compounded quarterly) One year dollar interest rate is 3% (compounded quarterly) The Spot exchange rate is $1.2788/€. According to interest rate parity, the 6 months forward exchange rate is (a) $1.2725/€ (b) $1.2915/€ (c) $1.2824/€ (d) $1.2919/€ (e) $1.3077/€. 16.As per the exchange control regulations, an exporter is required to submit all the shipping documents evidencing export to an authorized dealer within (a) 3 days from the date of shipment (b) 7 days from the date of shipment (c) 15 days from the date of shipment (d) 21 days from the date of shipment (e) 30 days from the date of shipment. 17.The letter of credit which can be cancelled by the issuing bank at the request of the applicant without the consent of the beneficiary is called (a) Deferred Payment letter of credit (b) Transferable letter of credit (c) Non-transferable letter of credit (d) Revolving letter of credit (e) Revocable letter of credit. 18.Which of the following advances is a pre-shipment credit? (a) Advances against receivables from the Government of India (b) Advances against retention money relating to exports (c) Advances against approved deemed exports (d) Packing credit (e) Advance against export bills. 19.Which of the following statements is true in case of a direct quote? (a) Exchange margin is to be added to the bid rate and ask rate (b) Exchange margin is to be added to the bid rate and deducted from the ask rate (c) Exchange margin is to be deducted from the bid rate and the ask rate (d) Exchange margin is to be deducted from the bid rate and added to the ask rate (e) Exchange margin is to be added to the bid rate only. 20.Consider the following rates: Rs./$ Spot 45.98/45.99 3 months 22/21 The annualized percentage discount on dollar for 3 months will be (a) 1.57% (b) 1.24% (c) 1.73% (d) 1.74% (e) 1.87%. 21.Which of the following theories states that new products are developed as a result of technological innovations and trade patterns are determined by the market structure and the phase in a new product’s life? (a) Theory of Comparative Advantage (b) Theory of Absolute Advantage (c) Imitation Gap Theory (d) International Product Life Cycle Theory (e) Heckscher-Ohlin Model. 22.The exposure that arises from the need to convert values of assets and liabilities denominated in a foreign currency into the domestic currency is called (a) Transaction exposure (b) Transformation exposure (c) Translation exposure (d) Operating exposure (e) Financial exposure. 23.When ‘Suzuki’ a Japanese company is floating USD denominated bonds in New York, the bond is known as (a) Samurai bond (b) Shogun bond (c) Shibosai bond (d) Yankee bond (e) Geisha bond. 24.In balance of payments statement, short term inflows and outflows of capital are recorded in (a) Current account (b) Capital account (c) Official reserves account (d) Errors and omissions account (e) Transfer payments account. 25.An Indian company based in Mumbai needs short term funds of Rs.50 million for a period of 3 months. The company collected the following information from its banker Spot :Rs/$ : 45.90/92 3 months forward : 15/17 paise If the company decides to borrow dollar for the purpose, the amount of dollars required to borrow is (a) $10,88,850 (b) $10,89,325 (c) $10,85,776 (d) $10,84,834 (e) $10,85,305. 26.Which of the following is not correct? (a) Important function of the IMF is to provide reserve credit to the member countries facing temporary balance of payment problem (b) Oil facility is a type of IMF lending (c) International Development Association (IDA) endeavors to finance those projects in developing countries, which may not be financially profitable (d) International Finance Corporation (IFC) insists on government guarantee for financing projects (e) IFC helps the development of private sector in different countries. 27.Which of the following is true under a currency board system? (a) The interest rates are automatically set by the market mechanism (b) When there is a higher demand for the anchor currency, the reserves with the currency board gets enhanced (c) Lending to either the government or the domestic banks by the currency board is allowed (d) The board can act as the lender of the last resort (e) Exchange rates are unstable. 28.Which of the following statements is not true as per the exchange control regulations governing imports? (a) Normally remittances against imports shall be completed within 6 months from the date of shipment (b) Foreign exchange for import payment can be sold to persons in Nepal or Bhutan (c) Goods imported from Nepal or Bhutan against Letter of Credit (LC), payment will be made in Indian Rupees and LC will be treated as Domestic LC (d) Authorized dealers can deliver the import documents to the holders of letter of authority (e) An importer shall hold an Import-Export Code Number allotted by Director General of Foreign Trade. 29.If a country has a Balance of Payments surplus and the Central Bank is following floating exchange rate system, then the foreign exchange rate for its currency would (a) Rise, its exports would increase and its imports would decrease (b) Rise, its exports would decrease and its imports would increase (c) Fall, its exports would increase and its imports would decrease (d) Fall, its exports would decrease and its imports would increase (e) Be stable. 30.Under which of the following facilities IMF extends help to prevent countries, suffering due to price shocks? (a) Extended Facility (b) Standby arrangement (c) Buffer Stock Financing Facility (d) Compensating Financing Facility (e) Supplementary Financing Facility. Section B : Problems/Caselets (50 Marks) • This section consists of questions with serial number 1 – 6. • Answer all questions. • Marks are indicated against each question. • Detailed workings/explanations should form part of your answer. • Do not spend more than 110 - 120 minutes on Section B. 1. Ayur Pharmaceuticals, Kottakal, a Kerala firm has exported drugs valuing US$100,000 to Nigeria on 01-10-2008 on the condition that the importer undertakes to pay the bill within180 days from the date of shipment. The importer confirmed that the payment would be made on 31st March, 2009, 180th day from the date of shipment. The bank charges interest @8.5% on export bills discounted from customers. The exchange rates and interest rates prevailing on 01-10-2008 are as under Exchange rates Spot Rs./$ 48.60/62 6 months forward 48.90/92 Interest rates Mumbai Rs. 8% - 9% New York $ 3% - 4% The exporter needs rupee funds immediately to execute another export order. You are required to determine which of the following options ensure maximum inflow of rupee without exposing the company to exchange risk: a. Forward cover. ( 3 marks ) b. Money market cover. ( 5 marks ) 2. A Multinational Dairy products manufacturing company in Copenhagen, Denmark, proposes to invest its surplus funds of DKr 20 million for six months. The Treasury Manager has collected the following information from his banker to invest in euro and Pound Sterling currencies including that of home currency to earn more interest income. The company does not want to expose the investment to exchange risk, for that the company will take cover in the forward market. Spot DKr/US$ 4.7960/4.7966 US$/£ 1.9639/ 1.9642 6 months forward DKr/US$ 4.8436/ 4.8442 US$/£ 1.9495/1.9497 6 months interest rates (p.a.) US $ : 3.20% – 3.50% DKr : 5.40% – 5.60% £ : 6.20% – 6.50% You are required to determine the currency in which the company should invest to have more returns. ( 12marks) Caselet 1 Read the caselet carefully and answer the following questions: 3. The US economy is suffering from recession on one hand, whereas the emerging Asian economies are reeling under inflation on the other hand. In this context, explain the probable impact of ‘Global Inflation’ on the US and other Asian economies. ( 7 marks) 4. Elucidate the measures taken by the monetary authorities to contain the inflation in India. ( 8 marks) The US economy is a powerful force in world trade. A slowdown is bound to generate global ripples. For years, the US has been importing deflation to its shores from surplus labor markets such as India and China. Now that indigenous inflation has risen in those markets, the economic utility has changed. US economy is expected to grow at 0.50% in 2008 as compared to 2.20% in 2007. Asia (including Japan) and European growth will also slow as result of US recession. Asian growth is expected to grow at 6.20% in 2008 (from 7.40% in 2007) while European economic growth is expected to decline sharply, by 1.25 percentage points to 1.50% in 2008. India and Chinese GDP growth rates will fall marginally by 0.50% in 2008 (from 2007 growth). Japan and Australian growth rates will also slowdown in 2008. The earlier theory of Asia and other emerging nation growth being delinked from a US recession has failed. In fact, Asia and other emerging nations have been affected by a US led recession. Global inflation has risen mainly due to unstoppable rise in crude oil prices and sharp rise in food prices. Global central banks have to choose between inflation and growth. The US Federal Reserve has chosen growth while the European Central Bank, the Reserve Bank of India, Chinese Central Bank and other central banks have give preference to inflation in their monetary policy decisions. Inflation rise may not overheat the global economy in the short-term. In the long-term, crude oil prices will be the key. As and when crude oil prices fall sharply for a sustained period of time, global economy will overheat. If US economy moves away from recession, India and Chinese growth rates will soar and global growth rates will rise sharply which could overheat the global economy. Everything will depend on how the quickly the world emerges from the energy price shock and food price shock it is experiencing. The US recession has not had a major impact on commodities consumption outside of the US, and rather, the big fear seems to be inflation, more specifically, rising energy and food prices. Emerging market economies, where spiraling food and energy prices make up a larger component of the CPI, are most at risk of `overheating' and might use tighter monetary policy as a balance. However, the world economy is not out of the woods yet. The full effect of the US recession could make for a period of much slower growth for the world economy in the coming few years. Oil and fuel prices have found new plateaus. They're not likely to return to their previous levels unless there's a significant shift in supply and/or a diminution in demand. It's hard to grow an economy nowadays without relying upon oil. Longterm fundamentals are bullish due to supply constraints and ever rising demand. There is lack of new discovery in crude oil. In the previous decade, inflation arose mostly because of domestic factors (supply usually outstripped by demand), but now the situation is different. Today's inflation is wrought largely by global forces. Imbalances in the global economy have led many countries, to engage in `competitive devaluation' of their currencies to gain access to markets like the US. Central banks foster accumulation of foreign exchange, notably the US dollar at the expense of home currencies. This artificial undervaluation of currencies has been a significant contributor to increased global liquidity. Caselet 2 Read the caselet carefully and answer the following questions: 5. “Capital account convertibility (CAC) is widely regarded as one of the hallmarks of a developed economy”. In the light of above statement, discuss the basic tenets required for successful implementation of safe CAC. ( 7 marks) 6. ‘Following the East Asian crisis, even the most ardent votaries of CAC in the World Bank and the IMF realized that the dangers of going in for CAC ….’ In the light of the above statement, briefly discuss the arguments against the fuller convertibility of rupee. ( 8 marks) In simple language Capital account convertibility (CAC) means that it allows anyone to freely move from local currency into foreign currency and back. Current account convertibility allows free inflows and outflows for all purposes other than for capital purposes such as investments and loans. In other words, it allows residents to make and receive trade-related payments – receive dollars (or any other foreign currency) for export of goods and services and pay dollars for import of goods and services, make sundry remittances, access foreign currency for travel, studies abroad, medical treatment and gifts etc. In India, current account convertibility was established with the acceptance of the obligations under Article VIII of the IMF’s Articles of Agreement in August 1994. Contrary to general belief, CAC can coexist with restrictions other than on external payments. It does not preclude the imposition of any monetary/fiscal measures relating to forex transactions that may be warranted from a prudential point of view. CAC is widely regarded as one of the hallmarks of a developed economy. It is also seen as a major comfort factor for overseas investors since they know that anytime they change their mind they will be able to re-convert local currency back into foreign currency and take out their money. In a bid to attract foreign investment, many developing countries went in for CAC in the 80s not realizing that free mobility of capital leaves countries open to both sudden and huge inflows as well as outflows, both of which can be potentially destabilizing. More important, that unless you have the institutions, particularly financial institutions, capable of dealing with such huge flows countries may just not be able to cope as was demonstrated by the East Asian crisis of the late nineties. The East Asian experience made the monetary authorities to move slowly but cautiously towards CAC with priority being accorded to fiscal consolidation and financial sector reform above all else. In India, the Tarapore committee had laid down a three-year road-map ending 1999- 2000 for CAC. It also cautioned that this time-frame could be speeded up or delayed depending on the success achieved in establishing certain pre-conditions-primarily fiscal consolidation, strengthening of the financial system and a low rate of inflation. Convertibility of capital for non-residents has been a basic tenet of India’s foreign investment policy all along, subject of course to fairly cumbersome administrative procedures. It is only residents – both individuals as well as corporates – who continue to be subject to capital controls. However, as part of the liberalization process the government has over the years been relaxing these controls. Thus, a few years ago, residents were allowed to invest through the mutual fund route and corporates to invest in companies abroad but within fairly conservative limits. Buoyed by the very comfortable build-up of forex reserves, the strong GDP growth figures and the fact that progressive relaxations on current account transactions have not lead to any flight of capital, the government announced further relaxations on the kind and quantum of investments that can be made by residents abroad. Section C : Applied Theory (20 Marks) • This section consists of questions with serial number 7 - 8. • Answer all questions. • Marks are indicated against each question. • Do not spend more than 25 - 30 minutes on Section C. 7. Multinational companies will have multiple divisions in different countries. Each of the division is exposed to different cash positions, receivables and payables in different currencies. What is the technique used by the MNCs for a better cash management? Discuss its advantages and disadvantages in brief. ( 10 marks) 8. Write short notes on: a. The mechanism of Letter of Credit and the limitations of Letter of Credit. ( 5 marks) b. Post-shipment credit. ( 5 marks) Suggested Answers Section A : Basic Concepts Answer Reason 1. C Import licenses for import of goods are issued for CIF value. 2. B External hedging techniques are the ones which do not form part of the day-to-day activities .Viewed against the above, exposure netting being done on a continous basis is an internal technique whereas all others form external techniques in which external parties are involved. 3. D The exchange rates under floating exchange rate system are determined by the demand and supply position for the currencies in the foreign exchange market. 4. E Dumping means selling the goods below the cost. 5. A The banker who considers the bid rate of Rs.48.75, loads a margin of 0.15% on the rate. The margin of 0.15% is deducted from the bid rate. 48.75 Less: Margin at 0.15% 0.07 Rs.48.68 The rate quoted by the banker is Rs.48.68. 6. D Absolute form of purchasing power parity refers to the law of One Price. 7. C Ex Works means that the seller has delivered if he places the goods at the disposal of the buyer at the seller’s premises or any other named place (works, factory, warehouse, etc.) 8. C For BOP compilation India follows the principles laid down by the IMF manual. 9. D A current account surplus implies that a country is not consuming as much it is producing, or in other words, is living below its means. While this type situation is may be beneficial to a developed country, a developing country already facing scarcity of resources can hardly afford not to consume what it is capable of producing. Instead, a developing country would need to borrow from outside to buildup it productive capabilities in order to achieve high rates growth. Hence, option (d) is true and correct answer. All other statements are false. 10. A (Rs./£)bid = (Rs./€)bid (€/£)bid = 62.361.1761= 73.34 (Rs./Euro)ask = (Rs./€)ask (Rs./€)ask = 62.381.1763 =73.38 Rs./Euro = 73.34/38 11. C If there are no barriers to trade among the member countries and the external barriers for non-members are also common, then this form of trading block falls under customs union. 12. C In outright forward contracts the future date can be any date beyond two business days (spot). 13. D Bank of Misr (BOM), Cairo is having an euro currency account with Commerz Bank, Frankfut. When Citizens Bank of Canada, Vancouver refers to this account of BOM, while corresponding with Commerz Bank, Frankfurt, it would refer as Loro account. Loro account means “their account with you”. 14. E Economic exposure can be managed by the techniques, market selection and product mix. 15. B 2 0.03 1 4 2 1 0.05 1 1.2788 S 4 = $1.2915/€. 16. D An exporter has to submit all the shipping documents evidencing export, to an Authorized Dealer within 21 days from the date of shipment. 17. E A revocable letter of credit is one which can be canceled or revoked by the issuing bank at the request of the applicant without the consent of the beneficiary. 18. D Packing credit is a Pre-shipment credit. Pre-shipment credit is given to the exporter to purchase/process the raw materials and export the finished goods. Credit extended to the exporters, prior to the shipment of goods is called Pre-shipment credit Postshipment credit is the credit given to the exporter after the shipment of goods. All options under (a), (b) (c) and (e) are the examples of post shipment credit. Hence the correct answer is (d). 19. D In the case of direct quote, the principle followed is “Buy low – sell high”. Hence the exchange margin is to be deducted from the bid rate and added to the ask rate. 20. E The annualized percentage discount on dollar for 3 months = mid mid mid Forward(A/B) -Spot(A/B) Spot(A/B) = 45.76 45.78 45.98 45.99 2 2 45.98 45.99 2 = 45.770 45.985 12 100 45.985 3 = 1.87% 21. D International Product Life Cycle (IPLC) theory, given by Vernon, explain the various stages in the life of a new product and the resultant international trade. The important principles of this theory are: • New products are developed as a result of technological innovations. • Trade patterns are determined by the market structure and the phase in a new product’s life. 22. C The exposure that arises from the need to convert values of assets and liabilities denominated in a foreign currency into the domestic currency is called translation exposure. 23. D Dollar denominated bonds issued in the US domestic markets by non-US companies are known as ‘Yankee bond’. 24. B Though the outflows or inflows of capital are short term, they are still recorded in the capital account. 25. B 50000000 45.90 = $10,89,325. 26. D Statements in options (a), (b), (c) and (e) are correct. It is incorrect that IFC insists on government guarantee for financing projects. In fact IFC does not insist on government guarantee. Correct answer is (d). 27. A In the currency board system, the board does not have any discretionary powers over the monetary policy; the interest rates are automatically set by the market mechanism. Options (b), (c), (d) and (e) are not true. 28. B Foreign exchange for import payment can be sold to by Authorized Dealer only to persons resident in India. For this purpose, persons, companies or other organizations resident in Nepal and Bhutan should be treated as Non-resident. All other options are true. 29. B If a country has a balance of payments surplus and the Central Bank is following floating exchange rate system, then the foreign exchange rate for its currency would rise. As a result of this exports would decrease and its imports would increase. 30. C Buffer Stock Financing Facility introduced in 1969, this scheme provides for countries receiving financial assistance from IMF in order to purchase approved primary products. This help is extended to prevent countries from suffering due to price shocks. For more detailed information I am uploading PDF files which are free to download: |
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