B.Com In Banking & Insurance (BCBI) Sem V March 2025 March 2025 International Banking and Finance Question Paper - Mumbai University | munotes

Questions asked in this paper

• 2)Figures to the right indicate full marks

1. Q1 A) Multiple Choice Questions (Any 8) 8 marks
   • 1) A deficit in the current account of the BoP means
   • a) The country is importing more than it is exporting
   • b) The country is receiving more investment from abroad than it is making
   • c) There is more money flowing into the country than out
   • d) There is a surplus in the capital account
   • 2) The term "invisible trade" in the BoP refers to
   • a) Trade in goods
   • b) Trade in services, income, and transfers
   • d) Investment in physical assets
   • 3) Offshore banks are typically located in
   • a) Countries with strict tax policies
   • b) Countries known as tax havens, such as the Cayman Islands and Switzerland
   • c) Developing countries
   • d) Countries with large populations
   • a) Direct ownership of physical assets
   • b) Investment in financial assets like stocks, bonds, and other securities
   • c) Building factories and infrastructure in a foreign country
   • d) Controlling management decisions in foreign companies
   • 5) is a major participant in the foreign exchange market
   • a) Central banks
   • b) Retail investors
   • d) Commodity traders
   • 6) In the forex market, the term "bid price" refers to:
   • a) The price at which a dealer is willing to buy a currency
   • b) The price at which a dealer is willing to sell a currency
   • c) The-average price of a currency pair over time
   • d) The interest rate of foreign currency deposits
   • 7) is the primary goal of risk management
   • b) Minimizing the impact of adverse events on financial performance
   • c) Eliminating all forms of business risk
   • d) Increasing volatility in financial markets
   • 8)In an options contract, the right to buy an asset at a specific price before a certain date is
   • a) Put option
   • b) Call option
   • c) Swap
   • d) Forward contract
   • 9) is acommon risk associated with cryptocurrency investments
   • a) Guaranteed returns
   • d) No fluctuation in value
   • a) A bank that operates in multiple countries simultaneously
   • b) A foreign bank that provides services on behalf of another domestic bank in cross
   • c) A bank that deals only in domestic currency transactions
   • d) A bank that offers retail services to international travellers
2. Q1 B) State whether the following statements are True or False: (Any seven) 7 marks
   • 2) A Letter of Credit can only be used for international trade transactions
   • 3) The primary purpose of a forward contract is to hedge against price fluctuations in the
   • 4) Translation risk is relevant to the income statement but not to the balance sheet
   • 5) FEDAI is a non-governmental organization that provides guidelines and standards for foreign exchange dealings in India
   • 6) FEMA was enacted in India to replace the Foreign Exchange Regulation Act (FERA)
   • 7) FCEBs are only issued by governments and not by private corporations
   • 8) American Depositary Receipts (ADRs) are a type of Depositary Receipt issued specifically for trading on U.S. exchanges
   • 9) Under a hard peg, the central bank has significant flexibility in adjusting monetary policy to respond to economic conditions
   • 10) A currency is considered fully convertible if it can be exchanged freely at market rates without restrictions or controls
3. Q2 a. Explain importance of international finance. 8 marks
   • b. Explain advantages of foreign portfolio investment. 7
4. Q2 c.Explain meaning of GDR. Also explain parties involved in GDR. 8 marks
   • d. Explain features of Bretton woods system. 7
5. Q3 a.Explain determinants of exchange rate. 8 marks
   • b. Explain meaning and advantages of foreign currency swaps. 7
6. Q3 c.Explain risks faced by corporates and banks. 8 marks
   • d. Distinguish between FERA and FEMA. 7
7. Q4 a.Explain meaning and features of international banking in detail. 8 marks
   • b. Explain risk management through hedging. 7
8. Q4 c.Calculate forward rates of Euro to Dollar for various maturities based on following Spot Euro against dollar is 1 EURO =1.3787/1.3797 Euro to Dollar
9. Q4 d.Calculate Mid-rate, Spread, Spread % and Inverse quote for EUR/USD 1.5580/1.5600
10. Q5 a.Explain meaning and types of letter of credit. 8 marks
    • b. Explain reasons for growth of Eurocurrency market. 7
11. Q5 a. Explain risk management through hedging. (07 Explain different types of letter of credit. (08)
12. Q5 Write short notes on any three: 15 marks
    • b. Disadvantages of FDI
    • e. Components of BOP

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