MS 45 Solved Assignment 2021-22

 
MS-45
INTERNATIONAL FINANCIAL MANAGEMENT

Course Code : MS-45

Course Title : INTERNATIONAL FINANCIAL MANAGEMENT

Assignment Code : MS-45/TMA/SEM-I/2021

Coverage : All Blocks

 

MS 45 Solved Assignment 2020-21 : All assignments are in PDF format which would be send on email/WhatsApp (9958676204)  just after payment…

Attempt all questions. All questions carry equal marks.

1. What are the different kinds of International Financial Flows. Explain the structure of Balance of Payments and discuss the basic principles governing recording of these flows.

International financial flows take a variety of forms, one of the most important categories being that of foreign direct investment. This section also presents information on total financial flows into the United States, and on the reserve assets of monetary authorities for the world as a whole.

The definition of foreign direct investment (FDI) flows is provided under “FDI Flows and Stocks” in the Economic Globalisation section. Quarterly data are in billions of US dollars, and are expressed as an average of the last four quarters.

Cross-border portfolio flows and positions for the United States are collected as part of the US Treasury International Capital (TIC) system; these data exclude all cross-border direct investment flows. Monthly data are in billions of US dollars, and expressed as averages of the previous 12 months

Reserve assets consist of those external assets that are readily available to, and controlled by, monetary authorities of individual countries for the financing of payments imbalances. These reserve assets comprise foreign exchange assets (currency and deposits, as well as securities), other claims, Special Drawing Rights and reserve position at the International Monetary Fund (IMF); they exclude central banks’ holdings of gold. Data are expressed in billions of US dollars.

Limits in the comparability of FDI data are discussed under “FDI Flows and Stocks” in the Economic Globalisation section.

US Treasury International Capital (TIC) data cover most types of international financial flows, while excluding data on direct investment flows, which are collected by the US Department of Commerce’s Bureau of Economic Analysis. The TIC reporting system collects data on cross-border portfolio investment flows and positions between U.S. residents (including US-based branches of firms headquartered abroad) and foreign residents (including offshore branches of US firms).

While recording the international financial flows in the balance of payments, a couple of norms need to be followed. One is that the structure of the balance of payments is based just on the principles of the double-entry book-keeping. It means that all the inflows of funds are put on the credit side and all the outflows of funds are debited; and ultimately, the two sides are balanced.

The second norm is that since the different forms of the financial flows vary in nature, they are to be entered accordingly in the two compartments of the balance of payments. It may be mentioned that the balance of payments statement is divided into two compartments. One is known as the current account followed by the other known as the capital account. Those transactions that represent earning or spending are recorded in the current account. For example, when a country earns foreign exchange through export, the amount is entered in the current account. On the other hand, if' the financial flow does not represent earning, it is entered in the capital account. For example, foreign dir ect investment or foreign portfolio investment is entered in the capital account. Thus, it is on this basis that the different types of financial flows are recorded in the current and the capital accounts.

2. What do you understand by Purchasing Power Parity (PPP) and Interest Rate Parity? Explain the reasons for deviation of these parity conditions.

3. Discuss the various types of exchange rate exposures and explain the techniques used to manage these exposures.

4. Explain the role and services offered by the Export Credit Guarantee Corporation (ECGC).

MS 45 Solved Assignment 2020-21 : All assignments are in PDF format which would be send on email/WhatsApp (9958676204)  just after payment…

5. Discuss the factors peculiar to the international operations of Firms and explain the issues involved in foreign investment analysis.

 

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