International Financial Management
EXAMINATION PAPER OF INTERNATIONAL FINANCIAL MANAGEMENT
Section A: Objective type
Part One:
1). Foreign exchange market in India is relatively very
Answer: b). Small
2). Balance of payment is a systematic record of all ___________ during a given period of time.
Answer: c). Economic Transactions
3). Merchandise trade balance, services balance & balance on unilateral transfer are the part of _________ account.
Answer: a). Current Account
4). Interest rate swaps can be explained as an agreement between ___________ parties
Answer: b). Two
5). Capital account convertibility in India evolved in August
Answer: c).1994
6). Interest rate parity is an economic concept, expressed as a basic algebraic identity that relates
Answer: b). Interest rate & exchange rate
7). The two kind of swap in the forward market are
Answer: d). Forward swap & Option Swap
8). FEMA stands for
Answer: c). Foreign Exchange Management Act
9). Exchange rate quotation methods are
Answer: c). Direct and Indirect
10). International Fisher effect or generalized version of the Fisher effect is a combination of
Answer: c). PPP theory and Fisher’s closed proposition.
Part Two:
1). Write a short note on “Interest Rate Parity System” for exchange rates.
Interest rate parity system is an economic concept, expressed as a basic algebraic identity that relates interest rates and exchange rates. Interest rate parity is one of the methods developed to explain exchange rate movements. Interest rate parity condition states that foreign exchange markets are in equilibrium when expected returns on deposits in a given period in one currency are equal to the expected returns on deposits in another currency when both the returns are measured in terms of a common currency. According to interest rate parity the difference between the interest rates paid on two currencies should be equal to the differences between the spot and forward rates.
There are
Section A: Objective type
Part One:
1). Foreign exchange market in India is relatively very
Answer: b). Small
2). Balance of payment is a systematic record of all ___________ during a given period of time.
Answer: c). Economic Transactions
3). Merchandise trade balance, services balance & balance on unilateral transfer are the part of _________ account.
Answer: a). Current Account
4). Interest rate swaps can be explained as an agreement between ___________ parties
Answer: b). Two
5). Capital account convertibility in India evolved in August
Answer: c).1994
6). Interest rate parity is an economic concept, expressed as a basic algebraic identity that relates
Answer: b). Interest rate & exchange rate
7). The two kind of swap in the forward market are
Answer: d). Forward swap & Option Swap
8). FEMA stands for
Answer: c). Foreign Exchange Management Act
9). Exchange rate quotation methods are
Answer: c). Direct and Indirect
10). International Fisher effect or generalized version of the Fisher effect is a combination of
Answer: c). PPP theory and Fisher’s closed proposition.
Part Two:
1). Write a short note on “Interest Rate Parity System” for exchange rates.
Interest rate parity system is an economic concept, expressed as a basic algebraic identity that relates interest rates and exchange rates. Interest rate parity is one of the methods developed to explain exchange rate movements. Interest rate parity condition states that foreign exchange markets are in equilibrium when expected returns on deposits in a given period in one currency are equal to the expected returns on deposits in another currency when both the returns are measured in terms of a common currency. According to interest rate parity the difference between the interest rates paid on two currencies should be equal to the differences between the spot and forward rates.
There are