Tuesday, September 24, 2013

MS - 45 International Financial Management



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ASSIGNMENT
Course Code                      :               MS - 45
Course Title                       :               International Financial Management   
Assignment Code            :               MS-45/SEM - II /2013
Coverage                             :               All Blocks

Note:  Attempt all the questions and submit this assignment on or before 31st October, 2013 to   the coordinator of your study centre.

1.Explain in detail how the financial architecture has evolved over a period of time.
Answer :  In 1990s, In response to major financial crises, the international community embarked on a range of initiatives to help prevent crises and to manage them in the event that they nevertheless occur. This framework was referred to as the International Financial Architecture (IFA).

International Financial Architecture (IFA) is a financial system consisting of institutions and regulators that act on the international level,




2.What are international financial flows? Explain the structure of the balance of payments and discuss the basic principles governing recording of the flows.

Answer : International financial flows refers to the movement of money with the intention of investment, trade or business production. Changes in global politics and in technology have resulted in a mind blowing growth of international financial flows.

International Capital Flows (Financial flows) means the inflow and outflow of capital from one nation to another nation.

The balance of payments measures all flows of money between the UK and the rest of the world. The current account records the movements of all goods and services into and out of the UK. The capital account measures all capital flows



3.Explain in detail the Purchasing Power Parity (PPP) and the Interest Rate Parity (IPR)
Answer : What is Purchasing Power Parity?

Purchasing power parity (PPP) is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries. This means that the exchange rate between two countries should equal the ratio of the two countries' price level of a fixed basket of goods and services. When a country's domestic price level is increasing (i.e., a country experiences inflation), that country's exchange rate must depreciated in order to return to PPP.

The basis for PPP is the "law of one price". In the absence of transportation and other transaction costs, competitive markets will equalize the



4.Why is cost of capital different across countries?
Answer : The cost of capital in a country is a key variable determining that country ability to compete    for internationally mobile capital. It sets the level of investment in the economy and is thus a central factor in the determination of real wages and economic growth. In the United States, at least, the allegedly high cost of capital is often blamed for the slow rate of growth of productivity and the perceived loss of international competitiveness. The same concerns are expressed in Canada, along with a host of additional factors. Among them are that tax changes in the U.S., if not matched by changes in Canada, can have adverse impacts on the



5.What are the factors responsible for the recent surge in international portfolio investment?
Answer : The recent surge in international portfolio investments reflects the globalization of financial
markets. Specifically, many countries have liberalized and deregulated their capital and foreign exchange markets in recent years. In addition, commercial and investment banks have facilitated international investments by introducing such products as American Depository Receipts (ADRs) and country funds. Also, recent advancements in computer and telecommunication technologies led to a major reduction in transaction and information costs associated with international investments. In addition, investors might have become more aware of the potential gains from international investments.


Dear students get fully solved assignments
Send your semester & Specialization name to our mail id :
  help.mbaassignments@gmail.com
or
call us at : 08263069601

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