Performance Management System | NMIMS Assignment Help June 2023 Questions
Q1. ABC Ltd- An Indian Multinational Company wants to expand its operations in European Nations and has decided to buy a land in Poland for setting a manufacturing unit. The setting of the manufacturing facility will open billion-dollar European Market for the company.
For this new venture, company needs an investment of 70 million dollars with the time frame of 10-12 years. Assume yourself in the role of Finance Manager of ABC ltd. Discuss about different international finance sources to raise the required capital.
Q2. An Indian company imported goods from US. The US manufacturer invoices the shipment in Dollar (USD), and the amount is USD 5 million. The importer needs to pay the amount by 30 October 2023. The data regarding the futures contract as on 10 October 2023 is:
Interbank Spot Market
USD-INR 80.2725 – 80.2775
USD INR 281023 80.3175- 80.3250
Explain the process of hedging with currency futures for the above case, if the spot rate turns out to be INR 79.1250 on 28th October. What is the notional loss/profit of the Indian company when compared to the actual spot rate on October 28th? (Assume that the futures settlement rate is the same as the spot rate on the contract expiry date.)
Also, if the spot rate was 81.6250 on the expiry date, what would be the company’s notional profit for having decided to hedge the exposure?
Q3. An Indian Merchant importing goods from UK worth 1 million GBP. But there is no direct quotation between GBP INR is available in the market. The spot rate in the market available is
GBP USD 1.2100
INR USD 0.012
a. Calculate the exchange rate between GBP INR using the above information
b. Assume that spot quotation between USD INR 80.7400- 80.8700. The six months forward is 216.25-218.25. Calculate the six months forward bid and ask rate for USD INR.