IMPORTANT QUESTIONS WITH ANSWERS - IGNOU : MCOM : IBO 6 - INTERNATIONAL BUSINESS FINANCE

IMPORTANT QUESTIONS & ANSWERS

IGNOU MCOM

IBO 6 - INTERNATIONAL BUSINESS FINANCE

UNIT - 1

1. Is a floating-rate system move inflationary than a fixed rate system? Explain. 

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2. What are Special Drawing Rights (SDR) ?

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3.  What were the basic weaknesses of the Bretton Woods System?

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4. Comment on the following statement : "A system of floating exchange rate fails when governments ignore the verdict of the exchange markets."

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UNIT - 2 

1. What is Euro market? Explain the reasons of its existence. 

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2. What are Euro Bonds? What are its characteristics?

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3. a) How are GDRs priced? b) What are the characteristics of GDRs ? 

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UNIT - 3

1. Explain the international money transfer mechanism. 

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2. Define a loan syndicate. Explain the syndication process. 

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3. Discuss the meaning and purpose of different money market instruments. 

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UNIT - 4

1. Distinguish between Balance of Trade & Balance of Payments with the help of specific illustrations .

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2. Examine the relative merits of  Foreign Direct Investment [FDI], foreign Portfolio Investment [FPI] and short term Investments.

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3. "Devaluation is the most effective remedy for correcting and adverse BOP Situation". Critically Examine this statement with the help of appropriate illustrations.

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UNIT - 5

1. What are foreign exchange markets? What is their most important function ? How is this function performed?

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UNIT - 7

1. What tire the different types of currency risks?

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2. What are the basic differences between forward and future contracts? 

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3. Distinguish with examples, between currency swaps and interest rate swaps. 

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4. What is an option ? How is it different from other derivative? 

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5. Write a brief note on currency derivatives market in India. 

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UNIT - 8

1. What you do mean by transaction exposure? Describe various techniques available to manage transaction exposure both in the short term as well as the long term.

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2. "Interest rate parity and leading /lagging are related to forward contracts" Discuss and illustrate. 

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3. Illustrate with the help of an example how futures may be a good hedging technique. Also explain why futures may not be a perfect hedge sometimes.

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UNIT - 9

1. Distinguish between translation and transaction exposure? 

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2. Discuss various translation methods in vogue? 

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3. What hedging strategies would you employ in order to manage translation and economic exposures? How do these strategies differ from those usually employed to manage transaction exposures? 

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4. What are the factors determining centralization /decentralization of exchange risk management.

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UNIT - 10

1. Can a binational corporation be called transnational corporation ? Explain clearly. 

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2. Distinguish between 'Primary Holding Company' and 'Intermediate Holding Company'. 

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3. What is the difference between 'Amalgamation' and 'Merger'? 

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4. What is the most important rationale of Foreign Direct Investment ? What is its greatest danger ?

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   UNIT - 11

1. List out important differences between domestic and international projects.

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2. Explain the various non-DCF and DCF techniques of project appraisal. Which of the technique is best and why?   

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UNIT - 12

1.Define cost of equity. If risk perceptions change what happens to cost of equity? 

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2. Explain the CAPM rnodel in relation to cost of capital. 

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UNIT - 13

1. Explain the various ways of assessing and managing political risk by multinational corporation. 

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2. How does tax policy effect foreign investment? Do accounting practices of countries have any influence on it? 

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3. Discuss the possible issues in the taxation of business investment abroad. 

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4. What are the reasons for making investment abroad by Multinational Corporations?

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UNIT - 14

1. "The degree of development of financial markets in any country does affect the capital structure pattern of domestic companies." Explain with suitable examples. 

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2. How do sources of long term external finance for multinationals differ from those of domestic companies?

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3. What factors influence the design of world-wide corporate capital structure? Briefly describe. 

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UNIT - 15

1. What are the objectives of international cash management? Which of the gains from centralization of cash management are related to foreign exchange transaction costs? 

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2. What are the advantages of centralized cash management? How can pooling provide benefits for international cash management? How does liquidity preference affect international cash management decisions? 

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UNIT - 16

2. Discuss letter of credit.

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3. Explain the characteristics of a Bankers Acceptance. 

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4. Documentary credits are synonymous with international trade. Discuss. 

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5. What is forfaiting ? Explain the procedures of forfaiting. How does it benefit the exporter ?

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UNIT - 17

1 What is the importance of project export to our country? 

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2 Describe the regulatory frame work of project export financing in India. 

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3 What are the main sources of project export finance. 

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