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June 20th, 2014, 04:24 PM
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ICFAI University MBA International Management I Exam Question Papers
Here I am looking for the previous year question paper of ICFAI University MBA International Management I Exam, can you please provide me the same??? As you are looking for the previous year question paper of ICFAI University MBA International Management I Exam, so here I am sharing the same with you 1. The phenomenon of a particular country simultaneously importing and exporting the same product is known as (a) Inter-industry trade (b) Intra-industry trade (c) Inter-commodity trade (d) Intra-commodity trade (e) Cross country trade. 2. The following is not an example of fixed exchange rate system (a) Currency board system (b) Target zone arrangement (c) Crawling peg system (d) Monetary union (e) Bretton Woods system. 3. The term risk-free arbitrage refers to the process of (a) Buying one currency and selling another currency at the same time in the same market or across different markets (b) Buying and selling the same currency at the same time in the same market (c) Buying and selling the same currency at the same time in the same market or across different markets (d) Buying or selling the same currency at the same time in the same market or across different markets without commitment of any capital or risk (e) Buying or selling the same currency at the same time in the same market or across different markets using money market. 4. A letter of credit which allows the Issuing bank to make payment to the beneficiary in installments is known as (a) Red clause L/c (b) Green clause L/c (c) Revolving L/c (d) Transferable L/c (e) Deferred L/c. 5. Consider the following information: One-year interest in U.K is 5% p.a. One-year interest in India is 8% p.a The spot exchange rate is Rs.83.84/£. If the interest rate parity holds good what would be the 6-month forward exchange rate? (a) Rs.81.51/£ (b) Rs.82.63/£ (c) Rs.85.07/£ (d) Rs.85.18/£ (e) Rs.85.24/£. 6. Triffins Paradox is associated with (a) Purchasing power parity (b) Interest rate parity (c) Forecasting of exchange rates (d) Computation of trade deficit (e) Collapse of Bretton Woods system. 7. In which of the following statements/returns the details of export bills which remain outstanding beyond the due i.exedate for payment are to be furnished to RBI? (a) XOS statements (b) BEF statements (c) R-returns (d) ENC statements (e) GR forms. 8. Which of the following would most likely cause a nation’s currency to depreciate? (a) An increase in the nation’s domestic inflation rate (b) A decrease in domestic real interest rates (c) A decrease in the nation’s domestic inflation rate (d) An increase in inflation rate of the nation’s trading partners (e) A decrease in money supply in the domestic economy. 9. Which of the following are the privately placed bonds issued and offered to different market segments that consist of institutional investors, including banks in the Japanese markets? (a) Samurai bond (b) Shogun bond (c) Shibosai bond (d) Yankee bond (e) Bulldog bond. 10.M/s. Bharat Overseas Corporation is a star trading house engaged in exports and imports. On April 30, 2008, the company who has an import worth $200,000, booked a two month forward contract for the import transaction at Rs.41.64/$. On June 14, 2008 the company requested the bank to extend the contract for delivery on July 31, 2008. The following are the on going market rates and the forward premium: June 14, 2008 Spot 41.02/04 June 09/11 July 36/38 August 54/56 Forward rate for the import transaction given by the bank on 14.06.08 (after ignoring margin) was (a) Rs.41.38 (b) Rs.41.40 (c) Rs.41.42 (d) Rs.41.56 (e) Rs.42.02. 11.The difference between the time when a new product is introduced in the country and the time when the consumers in the other country require it, is called (a) Imitation lag (b) Supply lag (c) Technology lag (d) Demand lag (e) Production lag. 12.Which of the following international institutions endeavors to finance the projects which may not be financially profitable in developing countries? (a) International Bank for Reconstruction and Development (b) International Finance Corporation (c) International Development Association (d) International Monetary Fund (e) UNESCO. 13.Which of the following statements is false in respect of exports under exchange control regulations? (a) Export proceeds have to be realized on due date or within six months from the date of shipment whichever is earlier (b) Exporters having a good track record may be permitted to open foreign currency accounts with banks abroad for crediting the export proceeds (c) Every exporter is required to obtain an Importer-Exporter Code Number from the Director General of Foreign Trade (d) Export proceeds cannot be received in foreign currency notes (e) Exporter is required to submit shipping documents to authorized dealer within 21 days from the date of shipment. 14.Which of the following policies does not help a country to correct its current account deficit? (a) Subsidizing the exports (b) Letting the exchange rate depreciate (c) Free foreign grants (d) Expanding aggregate demand (e) Taxing imports. 15.Which of the following statements is/are true about ‘leading and lagging technique’? I. It is an internal hedging technique. II. Leading involves making payment before it is due. III. Lagging means postponing a payment beyond its’ due date. IV. A company may lead the payment in a currency that is likely to appreciate. V. A company may lag the payment that is likely to depreciate. (a) Only (I) above (b) Both (II) and (III) above (c) Both (IV) and (V) above (d) (II), (III), (IV) and (V) above (e) All (I), (II), (III), (IV) and (V) above. 16.Which of the following serves as an evidence that the goods have actually been imported into India for the remittance sent in foreign currency by an Authorized Dealer (AD)? (a) Bill of Lading (b) Bill of Entry (c) Air Way Bill (d) Combined Transport Bill of Lading (e) House Airway Bill. 17.If a country follows floating exchange rate system, which of the following statements is not true? (a) The exchange rates between the currencies are variable (b) The exchange rates are determined by the demand and supply for the currencies in the international market (c) International trade in goods and services facilitates the movement of currencies between the countries (d) If the country is facing a deficit or surplus the exchange rates get automatically adjusted and this leads to a correction of imbalance (e) The exchange rates are determined as a result of pegging to either some common commodity or currency. 18.The relationship between the spot and forward exchange rates between a pair of currencies is brought about principally through (a) The Fisher effect (b) Purchasing power parity (c) Covered interest rate arbitrage (d) Uncovered interest rate arbitrage (e) Interest rate parity. 19.Consider the following: Rs/Can$ Spot : 41.19/41.21 Interest rates (1 year) Rs. : 6.00% - 6.50% p.a. Can$: 3.50% - 3.75% p.a. What should be the 1-year forward bid rate of dollar to prevent arbitrage? 3(a) ≤ Rs.42.21 (b) ≤ Rs.42.40 (c) ≥ Rs.42.30 (d) ≤ Rs.45.85 (e) ≤ Rs.44.78. 20.Expropriation refers to (a) Government restraining repatriation of profits (b) Government taking over without paying compensation (c) Government taking over by paying compensation (d) Government restraining future investments by foreign investors in home country (e) Government treating a country as enemy country. 21.In which of the following cases of International Commercial Terms (INCOTERMS), the seller has to make payment of freight charges for transportation of goods to buyer (a) EXW (Ex Works) (b) FAS (Free Alongside Ship) (c) DES (Delivered Ex Ship) (d) FCA (Free Carrier) (e) FOB (Free on Board). 22.Payment to a foreign technical consultant for professional services rendered by him is recorded under which of following heads of Balance of payments (BOP) statement? (a) Merchandise (b) Miscellaneous (c) Unilateral transfers (d) Official reserves account (e) Errors and Omissions. 23.An import quota is (a) A tax on imported goods (b) A ban not to import such goods (c) A flat duty on imports (d) A limit on the number of units that can be imported (e) A tariff barrier. 24.Dendanske Bank, Copenhagen is maintaining a Pound Sterling account with Marine Midland Bank, London. Dendanske Bank while corresponding with Marine Midland Bank, London, refers this ‘Pound Sterling’ account as (a) Nostro account (b) Loro account (c) Vostro account (d) Shadow account (e) Mirror account. 25.Consider the following rates quoted in forex market: Rs./$ : 42.66/68 $/£ : 1.9484/86 The synthetic quotes of Rs./£ are (a) 83.12/17 (b) 83.13/39 (c) 83.15/18 (d) 83.18/24 (e) 83.21/27. 26.The capital inflow of a country is influenced by I. Return on investment. II. Risk exposed. III. Political stability. IV. Stage of the economic cycle. V. Movement of exchange rate. (a) Both (I) and (II) above (b) (I), (II) and (III) above (c) (I), (II), (III) and (IV) above (d) (I), (II), (III) and (V) above (e) All (I), (II), (III), (IV) and (V) above. 27.Which of the following states that the real interest rates are equal across different countries? (a) Purchasing power parity (b) Interest rate parity (c) International Fisher effect (d) Fisher open condition (e) Marshall-Lerner condition. 28.The mechanism of protecting the domestic economic activity from external disturbances is called (a) Price specie flow mechanism (b) Sterilization (c) Deneutralization (d) Perfectionism (e) Economic adjustment mechanism. 29.Forward spread means (a) The spread between two forward rates of different maturities (b) The spread between two option forward rates (c) The spread between outright forward rate and option forward rate (d) The spread between two forward rates (e) The spread between forward rate and spot rate. 30.When some foreign countries subsidize their exports, the importing country may impose a duty, which is called as (a) Anti-dumping duty (b) Specific duty (c) Ad-valorem duty (d) Countervailing duty (e) Compound duty. END OF SECTION A 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. Bombay Swadeshi Silk Exports (P) Ltd., Mumbai, imports raw silk from China and exports silk sarees, fabrics and scarves to east Asian and European countries. Imports are invoiced in US dollars and exports are invoiced in euro currency. The company has receivables of €500,000 and payables of $200,000 three months from now. The Vice-President (Finance) Mr. Khemchand Bhatia, obtained the following exchange rates quotations from the market and is considering to cover the exposures either through the forward market or money market. Exchange rates Rs./Euro Rs./$ Spot 62.96/98 40.06/08 Three month forward 63.24/26 40.30/32 The current interest rates (per annum) are as under Maturity Rupee (%) Euro (%) $ (%) 3 months 6.00/8.00 4.50/4.70 2.50/2.70 You are required to advise Mr. Khemchand Bhatia as to which alternative should be better for covering both the payables and receivables. (10marks) 52. A Multi National Corporation based in Australia has identified surplus funds to the tune of Aus$5 million for three months. The Vice-President (Finance) has collected the following information from his banker to invest in any currency including home currency to earn more interest without exposing the investment to exchange risk. For this purpose he proposes to cover the foreign exchange exposures through forward market. Aus$/$ Spot 1.0841/44 3 months 54/56 €/$ Spot 0.6338/41 3 months 11/13 Can$/$ Spot 0.9886/93 3 months 02/04 3 months interest rates (p.a.) Aus$ : 2.40%-2.80% € : 4.20%-4.50% Can$ : 3.60%-4.00% You are required to determine the currency in which the company should invest to earn more interest on the surplus funds. (10marks) Caselet 1 Read the caselet carefully and answer the following questions: 3. “The asset demand for gold is traditionally associated with the view that gold provides as effective hedge against inflation and other forms of uncertainty”. Discuss the various reasons that lead to the spurt in the demand of gold. ( 8 marks) 4. Enumerate the factors that are driving up the gold prices in the current scenario. ( 7 marks) The demand for gold comes from two different sources first is the ‘use demand’ where it is used directly in the production of jewellery and the second is the ‘asset demand’ for gold as an investment. The first approach models variation in the price of gold as a result of changes in the macroeconomic variables, such as exchange rates, interest rates, world income and political shocks. The second approach focuses on speculative-versus-rationality factors behind the gold price movements. The third approach examines gold as a hedge against inflation with particular emphasis on short-run and long-run relationships between gold and the general price level. In the recent past, decoupling seems to have been happening between the exchange rates and gold prices with the dollar losing its shine as the world’s reserve currency and the absence of any other currency that has the potential to take its place. Given this scenario, gold is emerging as an asset worth owning and hence unabated demand will continue as long as the uncertainty on the exchange rate front continues. Easy monetary policies by central banks have created global cash glut and a credit bubble. This mammoth global monetary growth has led to easy cash availability in the market place which has a tendency to bid up prices for goods, services and housing thus resulting in severe inflationary pressures. India is the world’s largest consumer of gold jewelry. In India, gold is ranked just below bank deposits as a savings and investment vehicle. Internationally, despite the mayhem in the stock markets, by January end, gold prices rose and reached a new all-time high of $924 an ounce in the London spot market. The gold price at the close of January was above $920 per ounce. In line with international price movements, gold prices in India rose and in February, reached Rs. 11,895 on the bullion market. However, “the combination of record prices and high volatility is a deterrent to jewelry buying by both the trade and consumers. This form of demand may not therefore be strong in the first quarter of 2008 and may remain under pressure while prices remain volatile.” 61 Caselet 2 Read the caselet carefully and answer the following questions: 5. ‘Depreciating dollar is perhaps bad news not only for the US but also to rest of the world’. Discuss the various reasons for depreciation of dollar against the other currencies. ( 8 marks) 6. ‘The collapse of the dollar may put the global economy in a slump’. Discuss the probable impact of depreciating dollar on the emerging economies like India and China. ( 7 marks) The dollar has depreciated against other major currencies. After the Federal Reserve announced the reduction in interest rates, the dollar fell even further, to a level not seen since 1997. The falling dollar could be an outcome of trade account and current account deficits run by the US in the past. Since then, from its peak in 2002 and October 2007, the dollar has fallen approximately 28% in nominal terms and about 25% in real-terms. A weak dollar is not a novel concern. This gradual decline of the US dollar could lead to the discarding of huge dollar reserves held by countries worldwide. In addition to this, the risk of US recession or other factors that could also cause a loss of confidence in the dollar, pose major risks to this scenario. A dollar crisis will be very damaging for the global economy, making the expected slowdown much deeper and long-lasting. Some of the countries want to explore other growing economies for investment opportunities. The slowdown of US economy is compelling investors to look for better returns elsewhere causing the outflow of dollars from the US. Net private capital inflows into the US have weakened sharply since August 2007. This downward trend of dollar and current account adjustment had also happened in the 1980s. The downward pressure of dollar is causing an imbalance in the world economy. Fed’s new Chairman Ben Bernanke hinted at a rise in inflation levels, resulting in slackening of the US economy. Due to excess capacity available in the world economy, it is difficult to avoid the impending crisis. The excess capacity in the world is also due to wrong policy action of many governments which bailed out their financial institutions by expanding their credits. Their currency always flowed into the US in search of a safe investment option, these are signs of change that may further weaken the dollar. Many economists are forecasting that the dollar will fall against the yen and the euro for the next couple of years and it is inevitable. If the same trend continues at the same pace, the dollar will lose its sheen in the international finance segment. It will have serious repercussions for the US economy and the world economy at large. 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. Exporters are to be provided adequate credit at competitive interest rates in order to ensure steady export growth. Explain in detail about the pre-shipment finance. ( 10 marks) 78. Write short notes on: a. International Cartels. ( 5 marks) b. Imitation Gap Theory of International trade. ( 5 marks) END OF SECTION C END OF QUESTION PAPER 8Suggested Answers International Management – I (MB3G2IB) : October 2008 Section A : Basic Concepts Answer Reason 1. B The phenomenon of a particular country simultaneously importing and exporting the same product is known as intra-industry trade. 2. C Under crawling peg system, while the value of a currency is fixed in terms of a reference currency, this peg itself keeps changing in accordance with the underlying economic fundamentals whereby market forces play a role in the determination of the exchange rate 3. D The term risk-free arbitrage refers to the process of buying or selling the same currency at the same time in the same market or across different markets without commitment of any capital or risk 4. E A letter of credit which allows the issuing bank to make payments in installments is known as ‘Deferred L/C’. 5. C Spot rate Rs./£ = 83.84 6-month forward rate = 0.08 83.84 1 2 0.05 1 2 = Rs.85.07/£ 6. E Triffins paradox is associated with collapse of Bretton Woods system. 7. A The details of export bills which remain outstanding beyond the due date for payment are to be furnished to RBI in XOS statements. 8. A Option in (a) would most likely cause a nation’s currency to depreciate. 9. C Shibosai Bonds are privately placed bonds issued in the Japanese markets. Shibosai bonds are offered to a different market segment that consists of institutional investors, including banks. • Samurai bonds are issued by non-Japanese borrowers in the domestic Japanese markets. • Dollar denominated bonds issued in the US domestic markets by non-US companies are known as ‘Yankee bond’. • Bulldog bonds are sterling denominated foreign bonds which are raised in the U.K. domestic securities market. • Yankee bonds are US dollar denominated issues by foreign borrowers usually foreign governments or entities, supra-nationals and highly rated corporate borrowers in the US markets. • ‘Shogun Bonds ‘are publicly floated bonds in Japanese market in foreign currency by non-Japanese borrowers. 10.C Forward rate given by the bank for import transaction on 14.06.08 = 41.04 + 0.38 = Rs.41.42/$. 11.D The difference between the time a new product is introduced in the country and the time when the consumers in the other country require it, is called Demand lag. 12.C International Development Association endeavors to finance the projects in developing countries which may not be financially profitable, but indirectly may have a positive effect on the concerned economy. 13.D Export proceeds may also be paid by foreign currency notes/foreign currency travelers cheques by the buyer on his visit to the country. All other options are true. 14.D Expanding aggregate demand do not help a country correct its current account deficit. Hence option 9(d) is said to be the correct answer. 15.E It is an internal hedging technique (I) .Leading involves making payment before it is due (II) .Lagging means postponing a payment which is already due (III). A company may lead the payment in a currency that is likely to appreciate (IV). A company may lag the payment that is likely to depreciate (V). 16.B Bill of Entry serves as evidence that the goods have actually been imported into India for the remittance sent in foreign currency by the ADs. Options in (a), (c), (d) and (e) are documents of title to the goods and these documents are issued by carrier agents. 17.E Under fixed exchange rate system, the value of a currency in terms of another is fixed. The fixed exchange rates result from countries pegging their currencies to either some common commodity or to some particular currency. Statements (a), (b), (c) and (d) represent the characteristics of floating exchange rate system. 18.C The relationship between the spot and forward exchange rates between a pair of currencies is brought about principally through covered interest arbitrage. The fisher effect says that the real interest rates are equal across different countries. Purchasing power parity says that the exchange rate between two countries currencies is determined by the respective price levels in the two countries. Correct answer is (c). 19.B Assume we borrow Rs. 100 for 1 year We should pay after 1 year (100) (1+0.065) = Rs.106.50 If we convert Rs. 100 into Canadian dollars for investment we obtain 100/41.21 = Can$2.4266 If we invest $ 2.4266 for 1 year @ 3.5% p.a., the investment would yield (2.4266) (1+0.035) Can$ 2.5115 after one year To prevent arbitrage, Rs.106.50 ≥ Can$ 2.5115 Fb Fb ≤ Rs. 42.40/Can$ 20.C Expropriation refers to Government taking over by paying compensation 21.C In the case of delivered ex-ship contract, the seller has to make payment of freight changes for transportation of goods to buyer. In all other cases of options a, b, d, and e the buyer has to bear the freight changes. 22.B Payment made to a foreign technical consultation for professional services rendered by him will appear as a debit item under the head ‘Miscellaneous’. 23.D An import quota is a limit on the number of units that can be imported. 24.A Dendanske Bank, Copenhagen is having an account with Marine Midland Bank, London. When Dendanske Bank, Copenhagen refers to this account, while corresponding with Marine Midland Bank, London, it would refer to this account as Nostro account. Nostro account means “our account with you”. 25.A Rs./£ bid = Rs./$ bid x $/£ = 42.66x 1.9484 = Rs.83.12/£ Rs./ £ ask = Rs./$ ask x $/£ ask = 42.68 x 1.9486 =Rs.83.17/£ Rs./ £ synthetic quote = 83.12/83.17. 26.E The capital inflow of a country is influenced by return on investment, risk exposed, political stability, stage of the economic cycle and movement of exchange rate. 27.D Fisher open condition states that the real interest rates are equal across different countries. 28.B The mechanism of protecting the domestic economic activity from external disturbances is called ‘sterlization’. It is also known as neutralization. 29.E Forward spread means the spread between forward rate and spot rate. Other options in (a), (b), (c) and (d) are not correct. 1030.D When some foreign producer is found selling his product at a price which will not fetch him his cost even, anti-dumping duty may be levied which is different from the countervailing duty imposed on goods which have been subsidized by the foreign country. Specific duty is a flat duty based on the number of units regardless of the value of goods. Ad valorem duty is expressed a percentage of the value of goods. A compound duty is a combination of specific and ad valorem duty. 11Section B : Problems/Caselets 1.a. Payable of US$ 200,000 after 3 months (i) Cover through forward market Rupee outflow = 200,000 × 40.32 = Rs.8,064,000 (ii) Cover through money market Borrow rupee, convert it into US$ at spot rate and invest for 3 months. US dollars to be invested = 200,000 0.0250 1 4 = $198,757.764≈ 198,758 This amount with interest which is $ 2,000,000 after 3 months is used to settle the payable Amount to be borrowed now in rupees 198,758 X 40.08 = Rs.79,66,220.64 say Rs.79,66,221 Amount to be repaid with interest = 79,66,221 0.08 1 4 ≈ Rs.81,25,545 We see that outflow under forward cover is less than the money market cover. Therefore the company must cover the exposure through the forward cover. b. Receivables of Euro500,000 after 3 months i. Cover through forward market Rupee inflow = 500,000 × 63.24 = Rs.3,16,20,000 ii. Cover through money market Borrow € 500,000 for 3 months convert into rupee and invest for 3 months € to be borrowed = 500, 000 0.047 1 4 = 49,41,93.23 ≈ 4,94,193 Rupee inflow at spot rate = 4,94,193 X 62.96 = Rs.3,11,144,391.28 Rupee inflow after 3 months with interest at 6% = .3,11,144,391.28 0.06 1 4 = Rs.31,581,107.15 Rupee inflow is less under money market cover than forward cover. The company must use forward market cover to have more inflow of rupees for the receivable. Rest of the Questions are attached in below file which is free of cost Last edited by Neelurk; March 26th, 2020 at 09:11 AM. |
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