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Finance Management

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Finance Management
| | | | | | | | | | | | | | | | | | | | 1 | An American Mutual Fund company invested USD 2,000,000 in BSE on 31.12.2007 when the BSE sensex was 20,000 points. On 31.03.2008, the company observed that its portfolio depreciated by 23% when the BSE sensex touched 16,000 points. If the company decided to withdraw the investment from India, what would be the net increase or decrease in their investment in terms of dollar? | | | | | | | | | | | | $/Rs spot rates are quoted as: | | | | | | | | | On 31.12.2007 | : 48.30/.35 | | | | | | | On 31.03.2008 | : 47.05/10 | | | | | | | | | | | | | | | | | Amount invested (in $) | | | 2000000 | | | | | | Amount invested in Rupees on 31.12.2007 | 96600000 | | | | | | | | | | | | | | | | Amount after portfolio depreciated | | 74382000 | | | | | | Depreciated amount in $ on 31.03.2008 | | 1579236 | | | | | | | | | | | | | | | | Net Decrease in investment | | | $420,764 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2 | Assume you are a bank and have a German exporter who exports to London and would like to sell pounds against Euros. The following market rates prevail: | | | | | | | | | | | | Euro/$ | | 1.3265/66 | | | | | | | £/$ | | 1.5209/12 | | | | | | | | | | | | | | | | | If your customer wants a cross rate for pound in Euro terms from you, what rate will you quote assuming you want a spread of 0.0020 on the quote. | | | | | | | | | | | | Selling rate of Euro/ Dollar | | | 1.3266 | | | | | | Buying rate of Pound/ Dollar | | | 1.5209 | | | | | | | | | | | | | | | | Cross rate for Pound in Euro terms | | 1.1465 | | | | | | For a spread of 0.0020 | | | | | | | | | Euro / Pound | | | |
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