Dear students, get fully solved assignments of
NMIMS University for December 2020 batch.
Do send your query at:
Call us at: 08263069601
NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course: International Finance
Internal Assignment Applicable for
September 2020 Examination
Assignment Marks: 30
Ques. 1. Elaborate ‘Hedging and Speculation
are important functions of derivatives’. Distinguish between exchange traded
derivatives and over the counter derivatives.
Answer: Hedging
and speculation- Important functions of derivatives
Hedging
Hedging the foreign currency is a risk
reducing strategy that helps everyone involved with foreign currencies. The
major issue with foreign currency is that exchange rates vary and are volatile.
This unstableness can transform into heavy losses if adverse changes occur in exchange
rates between the transaction date and the actual date of receipt or payment.
Foreign currency hedging targets to eliminate currency risk. The four major
hedging techniques are at times referred to as contractual hedges or
market-based hedges. They are future hedges, forward hedges, money market
hedges and currency option hedges. These are also generally referred as
external strategies dealing with external parties.
Ques. 2. Elaborate on the various channels
through which a company can mobilize equity capital from the international
market.
Answer: International
Equity Markets
Equity markets are seen as an avenue by a
large number of investors both individual and institutional as an investment
source. Securities market includes the distribution of new issues of securities
by new or existing companies as well as the purchase and sale of old securities
in the stock exchange markets. A company always prefers equity to debt because
debt servicing is a compulsory commitment. Equity markets encourage savings
among the nationals and increases the efficiency of capital allocation by
channelling the savings into productive investments.
Participants of securities market
Ques. 3. A country’s Balance of Payment
includes two components – Current account, Capital and financial account.
Current account measures the value of all goods and services imported and
exported during a given financial year. Current Account Deficit (CAD) arises when
the value of imported goods and services exceeds the value of exported goods
and services. As on June 30, 2020 RBI reported India’s current account deficit
has been reduced to 0.9% of the GDP in 2019-20 as compared to 2.1% in FY
2018-19 due to curtailed imports.
a. Differentiate between Current account and
Capital account.
b. What measures can be taken to reduce the
disequilibrium in the balance of payments’ position?
Answer: a) Difference between current account and capital account
Current account: The current account of the balance
of payments refers to the monetary value of all exports and imports of
merchandise and invisibles. All international flows associated with
transactions in goods and services, investment income, and unilateral transfers
are included in this account. It is divided into merchandise trade balance, the
service balance and the balance on unilateral transfers. All the entries that
are made in these accounts are of current value and they do not give rise to
any future claim. A surplus in the current account represents an inflow of
funds while a deficit represents an outflow of funds.
The detail of these three sub-categories is
Dear students, get fully solved assignments of
NMIMS University for December 2020 batch.
Do send your query at:
Call us at: 08263069601
No comments:
Post a Comment
Note: only a member of this blog may post a comment.