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Hba2303:Financial Accounting Question Paper

Hba2303:Financial Accounting

Course:Bachelor Of Commerce

Institution: Meru University Of Science And Technology question papers

Exam Year:2012

QUESTION ONE (30 MARKS)
a) change in exchange rates. (10 Marks) b) Super Ltd and Premier Ltd have been offered the following rates per annum on sh.50 million five year loan Fixed rate floating rate
Super Ltd 9% KIBOR + 0.3%
Premier Ltd 10.8% KIBOR + 0.8%
Super Ltd requires a floating rate loan while Premier Ltd requires a fixed rate loan
Required;
i. How can the two companies enter into the swap arrangement in which each benefit equally? (10 Marks) ii. What risk could this generate? (5 Marks) c) Explain the major functions of foreign exchange market. (5 Marks)
2
QUESTION TWO (20 MARKS)
a) Explain the factors responsible for the recent surge in international portfolio investment. (8 Marks) b) As an investor, what factors would you consider before investing in the emerging stock market of a developing country? (7 Marks) c) Discuss the benefit to a company to cross list its equity shares on more than one national exchange. (5 Marks)
QUESTION THREE (20 MARKS)
a) Explain the concept of Euro currency and Euro bond market. (5 Marks) b) Briefly discuss various types of international backing offices. (10 Marks) c) The following information is risk and returns of two stock markets in dollars($) Stock market Return (mean) Risk (S.D) Kenya 1.26% per month 4.43% Sudan 1.23% per month 5.55%
The correlation coefficient between the two market is 0.58 suppose you invested equally in the two market, determine the expected return and standard deviation of the resulting international portfolio. (5 Marks)
QUESTION FOUR (20 MARKS)
a) Explain the meaning of purchasing power parity. (5 Marks) b) Differentiate between nominal exchange rate and real exchange rate. (5 Marks) c) Explain the factors that influence exchange rates. (10 Marks)

Hba2303:Financial Accounting Question Paper

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