Professional Documents
Culture Documents
1. Explain the difference between International Financial Management and Domestic Financial
Management? Discuss the goals of international financial management?
Difference between international financial management and domestic financial management.
Goals of international financial management
2. Explain the advantages and disadvantages of fixed and floating rates systems? Discuss foreign
exchange transactions?
Explain advantages and disadvantages of floating rate systems.
Meaning, types
3. 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: Swap is an agreement between two or more parties to exchange sets of cash flows over a period
in future. The parties that agree to swap are known as counter parties. It is a combination of a purchase
with a simultaneous sale for equal amount but different dates. Swaps are used by corporate houses and
banks as an innovating financing instrument that decreases borrowing costs and increases control over
other financial
4. Elaborate on meaning of foreign exchange exposure. Explain the types of foreign exposure.
Meaning of foreign exchange exposure
Explain the types of foreign exposure
Answer: The foreign exchange exposure of a firm can be defined as a measure of the sensitivity of its
cash flows to changes in exchange rates. Due to the difficulty of measuring cash flows, exposure is
examined by most of the researchers through the study of how a firms market value responds to the
changes in the exchange rates. The value of a currency in a floating exchange-rate regime changes
frequently and
6. 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]