MF0016-TREASURY MANAGEMENT

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ASSIGNMENT

DRIVE	SPRING 2104
PROGRAM	MBADS – (SEM 4/SEM 6) / MBAN2 / MBAFLEX – (SEM 4) / PGDFMN – (SEM 2)
SUBJECT CODE & NAME	MF0016-TREASURY MANAGEMENT
SEMESTER	4
BK ID	B1814
CREDITS	4
MARKS	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 Consider you are the chief financial officer of a software company. How would you oversee the company’s Treasury function? Discuss how you formulate the treasury policy.

Answer : The CFO's job is a very complex one. We have only scratched the surface of the many things this executive is responsible for. One thing is certain: a great CFO will usually differ from a good CFO by the way that he or she is able to project the long-term financial picture of the company and by how the company thrives based on his or her analyses. If i am at the position of CFO i will have responsibility towards maintenance of the treasury and there will be a well defined treasury policy .

Q. 2 The interest rate offered on Certificate of Deposits varies from bank to bank. Refer some of the public sector and private sector banks and analyse the factors affecting the interest rates.

Answer : Certificate of Deposits  :

A certificate of deposit (CD) is a time deposit, a financial product commonly sold in the United States by banks, thrift institutions, and credit unions.

3 Assume you are the Treasurer of a Company. How would you implement and maintain effective liquidity practices in your company?

Answer :  Liquidity management is not just about gaining visibility over a company's cash positions. This article examines what lies beyond visibility and how to get there.

The challenging economic environment has driven businesses to enhance efficiency and control over their liquidity. While many corporates have rightly been focusing on gaining end-to-end visibility over the company's cash, this is just the first step. As new technologies emerge, regulations change and banks introduce new services, corporates are presented with greater opportunities to access quality information and leverage new techniques to

4 Analyse the techniques for measuring Interest Rate Risk. Explain the concept of asset-liability rate sensitivity and strategies for controlling Interest Rate Risk

Analyse the techniques for measuring Interest Rate Risk

Explain the concept of asset-liability rate sensitivity and strategies

Answer :  The Full Valuation Approach

The full valuation approach to measuring the interest rate risk is to re-value the bond or portfolio for a given interest-rate change scenario. This rate change can be parallel or non-parallel. It is also referred to as a scenario analysis because it involves the way in which your exposure will change as a result of certain interest rate scenarios. For example, an investor may evaluate the portfolio based on an increase in rates of 50, 100 and 200 basis points. Each bond is valued and then the total value of the portfolio is computed under the various scenarios.

5 Assume you are a treasurer of a company and you are faced with two situations. Explain how would you solve these problems.

The cases could be

a) large loan repayment coinciding with delay in receipt of a large trade receivable;

b) and locking up customer advances in payment towards fixed assets.

Use of money market instruments

Interactions with the customers

Answer : Corporate treasury refers to treasury activities which are carried out in companies which use financial products to support their main business; usually a trading business. This is in contrast to treasury activities which take place in banks

Q. 6 Briefly explain at least three actions relating to treasury that have changed substantially with globalization. Visit a bank and analyse the various treasury products offered by the bank to its customers. Identify which of these are suitable for a large company with cash to invest, and why.

Answer : Latest developments in Treasury :

1. Centralization of treasury activities:

It offers companies the ability to achieve higher efficiencies, greater transparency and access to real time information across a broad geographic area, multiple time zones, and many entities. There are different phases in the centralization of treasury management from the decentralized treasury towards fully centralized cash and treasury management.

2. Total Working Capital Management:

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Send your semester & Specialization name to our mail id :

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Call us at : 08263069601

(Prefer mailing. Call in emergency )