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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