MF0015 – International Financial Management

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Spring 2013

Master of Business Administration- MBA Semester 4

MF0015 – International Financial Management -4 Credits

(Book ID:B1759)

Assignment (60 marks)

Note: Assignment Set -1 must be written within 6-8 pages. Answer all questions.

Q1.How does International Financial Management helps in maximizing the wealth of the shareholders?10 marks(350-400 words)

Answer : Like any finance function, international finance, the finance function of a multinational firm has two functions namely, treasury and control. The treasurer is responsible for financial planning analysis, fund acquisition, investment financing, cash management, investment decision and risk management. On the other hand, controller deals with the functions related to external reporting, tax planning and management,

 

 

Q2.Explain the major accounts and sub categories of the balance of payments statement.

10 marks(350-400 words)

Answer : Introduction

“The balance of payments is merely a way of listing receipts and payments in international transactions for a nation. It shows the nation’s trading positions variations in its net position as a foreign lender or borrower and variations in its official reserve holding.”

 

Structure of Balance of Payments Accounts

The balance of payments account

 

 

 

Q3.Define what you mean by Forward Markets. Discuss the differences between futures options and spot options.4+6 marks(350-400 words)

Answer : It is statutory body set up in 1953 under Forward Contracts (Regulation) Act, 1952. The Commission consists of minimum two and maximum four members appointed by Central Government. Out of these members there will be one nominated chairman. All the exchanges have been set up under overall control of

 

 

Q4.Define cost of capital. Discuss the approaches that are employed to calculate the cost of equity capital.4+6 marks(350-400 words)

Answer : The cost of capital is a term used in the field of financial investment to refer to the cost of a company’s funds (both debt and equity), or, from an investor’s point of view “the shareholder’s required return on a portfolio company’s existing securities”.[1] It is used to evaluate new projects of a company as it is the minimum return that investors expect for providing capital to the company, thus setting a benchmark that a new project has to meet.

In cost of capital, calculating of cost of equity

 

 

 

Q5.Explain the techniques adopted by MNCs to reduce country risk.10 marks(350-400 words)

Answer : Political risk is the likelihood that political forces will cause great changes in a country’s business environment that will lower the profits of a business enterprise or prevents it from reaching other goals.  Examples of political risk include political changes that result in increased tax rates, the imposition of exchange controls that limit or block a subsidiary’s ability to repatriate profits, the imposition of price controls, and government interference in existing contracts.  In extreme cases, a foreign firm’ assets can be expropriated or social

 

 

 

Q6.Define the benefits of FDI. State the cost of FDI to the home country.5 + 5 = 10 Marks

(200 – 250 words each)

Answer : The Benefits and Costs of FDI to Home Countries

 

FDI also produces costs and benefits to the home (or source) country. Does the US economy benefit or lose from investments by its firms in foreign markets? Does the Japanese economy lose or gain from Toyota’s investment in France? Some argue that FDI is not always in the home country’s national interest and should be restricted. Others argue that the benefits far outweigh the costs and any restrictions would be contrary to

 

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call us at :- 08263069601 

            or

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