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JSS MAHAVIDYAPEETHA
SRI JAYACHAMARAJENDRA COLLEGE OF ENGINEERING
MYSORE 570006
An Autonomous Institution under Visvesvaraya Technological
University, Belgaum
4TH
Semester MBA Degree
EVEN SEMESTER
JUNE
2011
Branch : MBA Name of the Paper Setter: Dr.(Mrs)Bettina .C.S
Section : CO MM ON
09MBA4F4 : INTERNATIONAL FINANCIAL MANAGEMENT
Date :
Duration of Exam : 3 hours Maximum Marks: 100
Time : 2.00 pm to 5.00 pm
Instructions to the Candidates:
1. Answers must be clear, complete, concise and comprehensive.2.
Mention the Section and corresponding Question Number boldly at the
left hand side.3. Depiction of Models must be neat and complete
Note: 1. Answers must be supported by graphs and arithmetical
illustrations whereever necessary
2. Support the answers with relevant data and country -
illustrations whereever necessary
Section A: Answer any 5 questions each carrying 3 marks 3X5 = 15
Marks
A1) Give a block diagram of the objectives of International
Expansion.
A2) Mention the pointers of a successful Joint Venture.
A3) What are the three key components of financial account?
A4) How does outsourcing affect balance of trade?
A5) Mention the location of the four Biggest Foreign Exchange
Market
A6) Mention the most frequently traded currency pairs
A7) What are Futures & Options?
A8) What is Triffin Paradox?
SET 2
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C7) Assume Aviva has contracted to sell 100 pairs of jeans per
year to Britain at $ 24 perpair to buy 200 yards of denim from
Britain in this same period for 2 per yard. Note that 2yards of
denim are required per pair and that the labour cost for each pair
is $8.
When at the time of contract, the exchange rate is S ($/) =1.5
and that the dollar is thendevalued to S ($/F) =2.0, elasticity of
demand for Aviva Jeans in Britain is -2 and that after
the contract expires Aviva raises the price of jeans to $25 per
pair.
a. Calculate the gains/losses from the devaluation on the jeans
sold and on denim boughtat the contracted prices.
b. Calculate the gains/losses from extra competitiveness of
Avivas jeans from theoperative exposure.
C8) Give reasons for the following:
a. US firms prefer to engage in Foreign Direct Investment
(FDI)in Mexico rather thanCanada
b. US firms commonly use joint ventures as a strategy to enter
Chinac. Europe is not considered as a location for FDI because of
Euros value.
