This document provides information about an assignment for an MBA course on international financial management. It gives the course code, credits, marks and instructions for answering the questions. The assignment is divided into two sets with three questions each. The questions cover topics like globalization, foreign exchange markets, swaps, measuring economic exposure, tools for managing foreign exchange risk, the adjusted present value model and forced disinvestment. Students are instructed to send their semester and specialization details to a provided email address or call a phone number for fully solved assignments.

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ASSIGNMENT
DRIVE FALL 2018
PROGRAM MBA
SEMESTER 4
SUBJECT CODE & NAME FIN 401 - INTERNATIONAL FINANCIAL MANAGEMENT
BK ID B1759
CREDITS 2, 4
MARKS 30
Note – The Assignment is divided into 2 sets. You have to answer all questions in both sets.
Average score of both assignments scored by you will be considered as your IA score. Kindly note
that answers for 10 marks questions should be approximately of 400 words.
SET I
Question.1. Explain Globalization, Advantages of Globalization and
Disadvantages of Globalization.
Answer:By the term globalisation we mean opening up of the economy for world market by
attaining international competitiveness. Thus the globalisation of the economy simply indicates
interaction of the country relating to production, trading and financial transactions with the
developed industrialized countries of the world.
Accordingly, the term globalisation has four parameters:
Question.2. In foreign exchange market many types of transactions
take place. Discuss the meaning and role of forward, future and
options market.
Answer:A derivative is an instrument whose value is derived from the value of one or more basic
variables called bases (underlying asset, index, or reference rate) in a contractual manner. The
underlyingassetcanbe equity,commodity,forex or any other asset. The major financial derivative
products are Forwards, Futures, Options and

2. Question.3. Explain Swap, its features and types of Swap.
Answer:Aninterestrate swapisa contractual agreement between two counterparties to exchange
cash flows on particular dates in the future. There are two types of legs (or series of cash flows). A
fixedrate payermakesaseriesof fixedpaymentsandat the outsetof the swap,these cashflowsare
known.A floatingrate payermakesa seriesof paymentsthatdependonthe future level of interest
rates(a quotedindex likeLIBORforexample)andatthe outsetof the swap,most or all of these cash
flows are not known. In general, a swap
SET II
Question. 1. Explain in detail the types of exposure and measuring
economic exposure
Answer:Economic exposure is a type of foreign exchange exposure caused by the effect of
unexpected currency fluctuations on a company’s future cash flows, foreign investments and
earnings.
Economic exposure, also known as operating exposure, can have a substantial impact on a
company’smarketvalue,since ithasfar-reachingeffectsandis long-term in nature. Companies can
hedge against unexpected currency fluctuations by investing in foreign exchange (FX) markets.
Unlike transaction exposure and translation exposure (the two other types of currency exposure),
economic exposure is difficult to measure
Question.2. Elaborate on the tools of foreign exchange risk
management and techniques of exposure management.
Answer:Manyfirmsare exposedto foreignexchange risk - i.e.theirwealthisaffectedbymovements
inexchange rates - and will seektomanage theirriskexposure.Thispage looksatthe differenttypes
of foreign exchange risk and introduces methods for hedging that risk.
Types of foreign exchange risk
Transaction risk
Question.3. Write short note on:
a. Adjusted present value model (APV model)
Answer:The adjusted present value is the net present value (NPV) of a project or company if
financed solely by equity plus the present value (PV) of any financing benefits, which are the
additional effectsof debt.Bytakingintoaccountfinancingbenefits,APV includes tax shields such as
those provided by deductible interest.

3. To calculate the adjustedpresentvalueistofirstcalculate the netpresentvalue (NPV) of the project
or company without debt. Then, the NPV is adjusted to include the benefits of financing. Main
benefits of this approach are often tax shields
b. Forced Disinvestment
Answer:Forced Disinvestment or Disinvestment is the action of an organization or government
sellingorliquidatinganassetorsubsidiary.Absentthe sale of an asset, disinvestment also refers to
capital expenditure reductions,whichcanfacilitate the re-allocationof resourcestomore productive
areas within an organization or government-
Dear students get fully solved assignments
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