Post Graduate Diploma in International Business Operations
Term-End Examination

Time: 3 hours
Maximum Marks: 100

1. (a) Explain the purpose and operations of European Monetary System.

(b) What are SDRs ? How are they valued ? (15+5)

2. (a) What are foreign exchange markets ? What are their functions ? Explain. (15)

(b) The spot rate for the Deutschmark in New York is $ 0.55.

(i) What should the spot price for the US dollar be in Frankfurt ?

(ii) Should the dollar be quoted at DM 1.85 in Frankfurt ? How would the market react to it ? (5)

3. What is translation exposure ? Explain the different methods of measuring translation exposure. (20)

4. What is cost of capital ? How is the weighted average cost of capital calculated ? Explain with an example and also state its significance in capital budgeting, specially for MNCs. (20)

5. How are the project exports from India financed ? Explain the policy framework and related procedure. (20)

6. What is fortfeiting ? Explain its role and significance as a method of export financing. (20)

7. What is Interest Rate Parity Theory ? Explain the Fisher Effect and International Fisher Effect. (20)

8. Write explanatory notes on any two of the following : (10+10)

(a) Euro Bonds

(b) Currency Swaps

(c) Economic exposure

(d) Transfer Pricing