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Master of Business Administration- MBA Semester 3
IB0010-International Financial Management
(Book ID: B1759)
Assignment (60 Marks)
Note: Answer all questions must be written within 300 to 400 words each. Each Question carries 10
marks 6 X 10=60
Q1. Explain the difference between International Financial Management and Domestic Financial
Management? Discuss the goals of international financial management?
Answer. Domestic companies tend to restrict their operations to the country of origin, while
multinational corporations operate in more than two countries. Companies expand globally for many
reasons, mostly to obtain new markets, cheaper resources and reduction in operational costs, all of which
significantly affect financial management. These benefits also increase the risks faced by multinational
corporations. Multinational financial management differs from domestic financial management in six
essential ways.
Q2. Explain the advantages and disadvantages of fixed and floating rates systems? Discuss foreign
exchange transactions?
Answer. Advantages:
1. Price stability: This advantage has been viewed as one of the virtues of the metallic standard. Price
stability implies that changes in prices are small, gradual, and expected. One of the most important factors
that can affect price stability is monetary policy.
2. No need for internationalmanagement of exchange rates: Unlike fixed exchange rates based on a
metallic standard, floating exchange rates don’t require an international manager such as the International

2. Q3. Explain the concept of Swap. Write down its features and various types of interest rate swap.
Introduction of Swap-2
Features of swap-4
Various types of interest rate swap-4
Answer. In finance, a swap is a derivative in which counterparties exchange cash flows of one party's
financial instrument for those of the other party's financial instrument. The benefits in question depend on
the type of financial instruments involved. For example, in the case of a swap involving two bonds, the
benefits in question can be the periodic interest (coupon) payments associated with such bonds.
Q4. Elaborate on meaning of foreign exchange exposure. Explain the types of foreign exposure.
Answer. Foreign Exchange Exposure refers to the risk associated with the foreign exchange rates that
change frequently and can have an adverse effect on the financial transactions denominated in some
foreign currency rather than the domestic currency of the company.
In other words, the firm’s risk that its future cash flows get affected by the change in the value of the
foreign currency, in which it has maintained its books of accounts (balance sheet), due to the volatility of
the foreign exchange rates is termed as foreign exchange exposure.
Q5. Write short notes on:
 International Credit Markets
 International Bond Markets
Answer. (a) 'Credit Market'
1. The broad market for companies looking to raise funds through debt issuance. The credit market
encompasses investment-grade bonds and junk bonds, as well as short-term commercial paper.
2. The market for debt offerings as seen by investors of bonds, notes and securitized obligations such as
mortgage pools and collateralized debt obligations (CDOs).

3. Q6. Country risk is the risk of investing in a country, where a change in the business environment
adversely affects the profit or the value of the assets in a specific country. Explain the country risk
factors and assessment of risk factors.
Introduction of country risk factors-5
Explanation of assessment of risk factors-5
Answer. Many investors choose to place a portion of their portfolios in foreign securities. This decision
involves an analysis of various mutual funds, exchange traded funds (ETFs), or stock and bond offerings.
However, investors often neglect an important first step in the process of international investing. When
done properly, the decision to invest overseas begins with determining the riskiness of the investment
climate in the country under consideration. Country risk refers to the economic, political and business
risks that are unique to a specific country, and that might result in unexpected investment losses.
Spring-2016
Get solved assignments at nominal price of Rs.125 each.
Mail us at: subjects4u@gmail.com or contact at
09882243490