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Fina 430:International Finance Question Paper

Fina 430:International Finance 

Course:Business Administration

Institution: Kenya Methodist University question papers

Exam Year:2013



KENYA METHODIST UNIVERSITY

END OF 1''ST ''TRIMESTER 2013 (EVENING) EXAMINATION
SCHOOL : BUSINESS AND ECONOMICS
DEPARTMENT : ACCOUNTING, FINANCE AND INVESTMENT
UNIT CODE : FINA 430
UNIT TITLE : INTERNATIONAL FINANCE


TIME: 2 HOURS

INSTRUCTIONS

Answer question one and any other two in Section B

Question One

Define international finance and explain its significance.

(10 Marks)


Discuss characteristics and participants of foreign exchange market.

(10 Marks)

Question Two

Describe various foreign exchange regimes/systems highlighting advantages of each system.

(15 Marks)

Assume that the direct quote between the $ and £ is £1 = $ 1.5 and that the inflation rate in UK is 10% and the inflation rate in the US is 6%

Required;
Compute the % change in the direct quote and determine the exchange rate. (5 Marks)

Question Three

Explain the meaning of the following terms as used in the forward exchange market

(8 Marks)

Hedgers
Arbitrageurs
Speculators
Forward transactions

Describe four factors affecting exchanges rates

(12 Marks)

Question Four

Discuss factors that cause disequilibrium in the balance of payments.

(10 Marks)


Discuss balance of payments occurring and accounts.

(10 Marks)

Question Five

Explain the law of one price (purchasing power parity).

(4 Marks)


Discuss the two types of foreign exchange risk or exposure.

(16 Marks)

Question Six

Describe four types of international banking offices.

(12 Marks)


Explain four purposes of IMF as an international financial institution.

(8 Marks)






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