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Master of Business Administration - MBA Semester 4
MF0016-Treasury Management
Assignment (60 Marks)
Note: Answer all questions must be written within 300 to 400 words each. Each Question
carries 10 marks 6 X 10=60
Q1. Give the meaning of treasury management. Explain the need for specialized handling of
treasury and benefits of treasury.
Answer. Treasury management is the planning, organising and control of funds required by a
corporate entity. Funds come in several forms: cash, bonds, currencies, financial derivatives like
futures and options etc. Treasury management covers all these and the intricacies of choosing
the right mix. According to Teigen Lee E, “Treasury is the place of deposit reserved for storing
treasures and disbursement of collected funds”. Treasury management is one of the key
responsibilities of the Chief Financial Officer (CFO) of a company.
Q2. Explain foreign exchange market. Write about all the types of foreign exchange markets.
Explain the participants in foreign exchange markets.
Answer. Foreign Exchange market (forex market) deals with purchase and sale of foreign
currencies. The bulk of the market is “over the counter” (OTC) i.e. not through an exchange which
is well regulated.
International trade and investment essentially requires foreign markets. Banks act as
intermediaries and perform currency exchange transactions by quoting purchase and selling
prices.
Q3. Write an overview of risk mitigation. Explain the processes of risk containment. Write
about the tools available for managing risks.
Answer. Risk Mitigation: It is important that an organisation is not only aware of the risks before
it impacts their bottom line, but has well-laid action plans to meet the risks and mitigate its
adverse impact.

2. The overall responsibility for risk management lies with the top management and the board of
directors of the enterprise.
Q4. What is Interest Rate Risk Management (IRRM)? Write the components and features of
IRRM. Explain the macro and micro factors affecting interest rate.
Answer. Interest Rate Risk Management (IRRM)
Interest Rate Risk is the risk
• to the earnings from an asset portfolio caused by interest rate changes
• to the economic value of interest-bearing assets because of changes in interest rates
• to costs of fixed-rate debt securities from falling bank rates
• to impact of interest rates on cost of capital used by the firm as hurdle rate for capital
investment
Q5. Explain the contents of working capital. Write down the need for working capital.
Answer. As stated above, working capital comprises the working assets of a firm. What are these
assets? Look at the items in these examples.
1. A trading business for instance may have to purchase and store products to be sold,
paying for them before they can be sold and cashed. A factory that produces and sells
products has to store raw materials and finished goods, besides having some unfinished
materials under process.
2. A company may also need to allow the customers to pay later instead of insisting on cash
at the point of delivery.
Q6. Explain the concepts and benefits of integrated treasury. Explain the advantages and
disadvantages of operating treasury.
Answer. The concept of integrated treasury works on the principle that Treasury can be a single
unifying force of a company’s activities in the money market, capital market and forex market;
and can help the company derive synergy. Synergy is a powerful advantage in business because it
brings together two or more activity domains and achieves a total effect that is greater than the
sum of all the individual domains.
Winter-2015
Get solved assignments at nominal price of Rs.125 each.

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