DFIN308 INTERNATIONAL FINANCIAL MANAGEMENT

Description

SESSION	JANUARY – FEBRUARY 2026
PROGRAM	MASTER OF BUSINESS ADMINISTRATION (MBA)
SEMESTER	3
COURSE CODE & NAME	DFIN308 INTERNATIONAL FINANCIAL MANAGEMENT

 

 

 

Assignment Set – 1

 

 

Q.1. Describe the components of balance of Balance of Payments.

Ans 1.

Balance of Payments

A systematic record of all economic transactions between the residents of a country and the rest of the world during a certain period (usually one year) is called the Balance of Payments (BOP). It gives a holistic view of a country’s monetary and trade ties with the global economy. The BOP comprises three broad sectors: Current Account, Capital Account, and Financial Account.

Current Account

The Current

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Q.2. Explain various derivative instruments traded in Foreign Exchange market.

Ans 2.

Derivative Instruments in the Foreign Exchange Market

Foreign exchange (forex) trading is the biggest and most active market on the planet. Derivative instruments in the forex market are financial contracts with a value based on the underlying currency exchange rates. The primary uses of these instruments are to hedge currency risk, speculate and arbitrage. Forward contracts, futures contracts, options and swaps are

 

 

Q.3. Write Short notes on: Interest rate parity  Forward-to-forward contracts

Ans 3.

Interest Rate Parity

Interest Rate Parity (IRP) is one of the basic concepts in international finance that provides an equilibrium relationship between interest rates of two countries and the exchange rate of their currencies. It says that the difference in the nominal interest rates of two countries is equal to the expected percentage change in the exchange rate between the two countries for the same period. If IRP is true, then there is no possibility to engage in risk-free arbitrage through borrowing in one currency and investing in another. IRP is at the very heart of the determination of both

 

Assignment Set – 2

 

Q.4. Define cross-border acquisition and discuss its effects?

Ans 4.

Cross-Border Acquisition

An acquisition that has been made across a country border is called a cross-border acquisition. One of the most important and strategically effective types of Foreign Direct Investment (FDI) and is a major strategy adopted by Multinationals (MNCs) when they want to expand quick in the international market, acquire technology, gain new market access, and competitive repositioning without going through the full process of building up operations from scratch with

 

 

 

Q.5. Describe Foreign Exchange Exposure and highlight the various techniques of managing those exposures.

Ans 5.

Foreign Exchange Exposure

Foreign exchange exposure is the possibility that foreign exchange rates will negatively impact a company’s financial results, cash flows or overall market value. Foreign exchange risk exists to a greater or less extent in any organization that operates internationally, has foreign currency assets or liabilities, or transacts in foreign currencies. There are three broad categories of exposure: transaction exposure, translation exposure and economic exposure.

Transaction

 

Q.6. “Factoring is an efficient financing technique.” Comment.

Ans 6.

Factoring as an Efficient Financing Technique

Factoring is a financing scheme whereby a company sells its outstanding invoices, known as accounts receivables, to a specialised third party, called a factor, at a discount rate agreed between them. The factor immediately passes on a significant amount of the invoice value (usually 70 to 90 per cent) to the selling business. The factor receives the entire amount from the customers and pays off the remaining balance minus service fees and financing charges. Factoring