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International Banking & Foreign Exchange Management
June 2021 Examination
Q1. ABC Ltd was a small firm and used to make goods and export it to Japan. Due to current economic condition and competition pressure in the market, firm was being forced to provide longer credit period to clients. Due to lack of capital, and delay in realization of funds from debtors it was difficult for the firm to start new production. If you are the finance manager of the firm, provide information to the firm regarding different sources through which firm can avail credit after shipping the goods and before the realization of export proceeds. (10 Marks)
Answer 1.
Introduction
ABC ltd is a firm that manufactures goods and exports it to Japan. The company is suffering through competition over the market and lack of capital, the company is facing difficulties in new production. The company is facing a lot of problems currently. The company should take proper managerial decisions for facing the competition over the market. The company should limit the credit availing
Q2. XYZ Ltd was a well-established company in India and had borrowed money from
Indian Capital Market in the form of equity. The company was planning to expand and
have its presence in foreign countries as well but was not very sure about the source of
funding from the international market. If you are the finance manager suggest any five
sources of funding to the company from the international market. (10 Marks)
Answer 2.
Introduction
Funding is critical for corporates, now no longer most effective to make investments and to expand, however additionally to function their day by day enterprise. Some corporates depend greater intensively on inner price range, whilst others depend greater intensively on outside funding. The endless requirement for price range germinates from the non-stop enterprise enlargement undertaken by corporates. Currently, the marketplace gives several
Q3. Neeta has completed her management education and has joined the International
Banking Division of the Bank. She was supposed to deal with currencies and so it was
required for her to understand the concepts of direct and indirect quote. She was little
confused between direct and indirect quote so she decided to approach his manager for
the same. If you are her manager explain:
a. Concept of Direct Quote with an example (5 Marks)
b. Concept of Indirect Quote with an example (5 Marks)
Answer 3a.
Introduction
A direct quote is a trade fee citation classified the forex market. It prices a hard and fast unit of overseas foreign money towards a variable quantity of the home foreign money. In different words, a direct quote depicts the quantity of overseas forex that may be sold for a positive unit of the home foreign money. The issuing financial institution is the only which creates a letter of credit score and takes the duty to make the bills on receipt of the files from
Answer 3b.
Introduction
An indirect quote is an alternate fee citation in the overseas alternate marketplace that charges a variable quantity of an overseas forex towards a hard and fast unit of the home foreign money. The indirect quote is likewise popularly called an amount citation. It essentially displays the amount of overseas forex wished to shop for a positive unit of the home foreign
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