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ASSIGNMENT
DRIVE
PROGRAM
SUBJECT CODE & NAME
SEMESTER
BK ID
CREDITS
MARKS
WINTER 2013
MBADS – (SEM 4/SEM 6) / MBAN2 / MBAFLEX – (SEM 4) /
PGDFMN – (SEM 2)
MF0015 - INTERNATIONAL FINANCIAL MANAGEMENT
4
B1759
4
60
Note: Answer all questions. Kindly note that answers for 10 marks questions should be
approximately of 400 words. Each question is followed by evaluation scheme.
Q.1 Give the meaning forward markets. Explain its features, arbitrage in forward markets, forward
markets hedging and speculation in forward markets.
Ans: Meaning of forward markets:
Market dealing in commodities, currencies, and securities for future (forward) delivery at prices
agreed-upon today (date of making the contract). In commodity and currency markets, forward
trading is used as a means of hedging against sharp fluctuations in their prices. An over-the-counter
marketplace that sets the price of a financial instrument or asset for future delivery. Contracts
entered into in the forward market are binding on the parties involved. Forward markets are used
for trading a range of instruments including currencies and interest rates, as well as assets such as
commodities and securities
Q.2 Explain the interest rate parity theory and purchasing power parity with examples.
Ans: Interest rate parity theory with examples:
Interest Rate Parity (IPR) theory is used to analyze the relationship between at the spot rate and a
corresponding forward (future) rate of currencies. The IPR theory states interest rate differentials
between two different currencies will be reflected in the premium or discount for the forward
exchange rate on the foreign currency if there is no arbitrage - the activity of buying shares or
currency in one financial market and selling it at a profit in

2. Q.3 Explain the cash concentration strategies and cash management structures.
Ans: Cash concentration strategies:
Concentration is sometimes a neglected part of cash management because a firm tend to think that
when the cash is in their banking system, the battle is over. but there is a significant managerial
decisions that must still be made to insure that cash is moved efficiently in accounts where it can be
benefited the firm. It is useful to gather these balances from lockbox bank into central bank account.
The process of collecting fund is called cash concentration
The parent MNC has cash distributed in all its subsidiaries spread across the globe. Once the
payments are received from customers, the firm has to make a decision to ensure that cash is
moved efficiently to a central place where it will benefit the parent company the most. The process
of collecting funds at a central place is called concentration strategy.
Q.4 A particular method is used depending upon the circumstances and the legal accounting
procedures adopted in a particular country. Explain all the translation methods.
Ans: Four methods of foreign currency translation have been used in recent years:
1.Current/Noncurrent Method:
The current/noncurrent method of foreign currency translation was generally accepted in the United
States from the 1930s until 1975, when FASB 8 became effective. The underlying principle of this
method is that assets and liabilities should be translated based on their maturity. Current assets and
liabilities, which by definition have a maturity of one year or less, are converted at the current
exchange rate. Noncurrent assets and liabilities
Q.5 International credit markets are the forum where companies and governments can obtain
credit. Bring out your understanding on international credit markets and explain the two very
important aspects of international credit market. Refer and give one example.
Ans: Introduction of international credit market:
One of the forms of the movement of monetary and material means in international economic
relations. It is based on the temporary provision of financial and commodity resources by a creditor
to a borrower on condition of repayment at a set time and with interest. International credit is
closely linked to the formation and development of the world capitalist and world socialist economic
systems. The essence, forms, and functions of international credit are determined by the
socioeconomic conditions under which it is applied. The broad
Q.6 Explain the principles of taxation and double taxation. Give some important points on tax
havens and its types.

3. Ans : Explanation on principles of taxation:
Basic concepts by which a government is meant to be guided in designing and implementing an
equitable taxation regime. These include:
(1) Adequacy: taxes should be just-enough to generate revenue required for provision of essential
public services.
(2) Broad Basing: taxes should be spread over as wide as possible section of the population, or
sectors of economy, to minimize the individual tax burden.
(3) Compatibility: taxes should be coordinated to ensure tax
Dear students get fully solved assignments
Send your semester & Specialization name to our mail id :
help.mbaassignments@gmail.com
or
call us at : 08263069601