How Are the Iais Principles Met with in the Mauritian Legislation on Insuranc

UNIVERSITY OF MAURITIUS FACULTY OF LAW AND MANAGEMENT SECOND SEMESTER EXAMINATIONS MAY 2009 class BSc (Hons) Accounting with pay Level 3, 4 BSc (Hons) Finance Level 3 BSc (Hons) Finance with Law Level 3 MODULE NAME learn International Finance Wednesday MODULE CODE DFA3006Y(5) 6 May 2009 era 9. 30-12. 30 Hours NO. OF QUESTIONS SET 6 DURATION NO. OF QUESTIONS TO BE ATTEMPTED 3 Hours 4 INSTRUCTIONS TO CANDIDATES This paper consists of SIX disbeliefs and you ar required to answer ANY FOUR (4) motilitys International Finance DFA3006Y Question 1 a) (i) Explain the term outside exchange exposure in relation to the operations of a multinational enterprise. 5 attach ( ii ) How are such(prenominal) exposures usually handled by management? 9 mark (b) Seattle Inc is a medical device manufacturer. The partys annual sales of $ 40m urinate been growing rapidly, and working chief city financing is a common source of concern. The Chief Finance Officer, Martin tam-tam has recently b een approached by one of the companys major Nipponese customers, Yosaka, with a new allowance proposal. Yosaka typically orders ? 12. million in produce every other month and pays in Japanese yen. The current payment terms extended by Seattle Inc are 30 days, with no discounts abandoned for early or cash payment. Yosaka has suggested that it would be willing to pay in cash (in Japanese yen) if it were given a 3. 0 % discount on the purchase price. On the basis of the information below Spot deem 30-day forward rate 90-day forward rate 180-day forward rate ? 96. 60/$ Yosakas Weighted median(a) cost of detonating device ? 99. 08/$ Seattle Inc Weighted average cost of capital ?100. 42/$ ?103. 56/$ 9. 00% 11. 95%Advise Martin gong on Yosakas proposition, assuming that Seattle Inc hedges all its foreign currency transactions. (c ) 8 marks write in code the rate of forward premium of the US $ on the 180-day forward rate. 3 marks Total marks 25 Page 1 of 3 International Finance D FA3006Y Question 2 When the financial systems fail, everyone suffers Edward Carr, The Economist. (a) Explain the importance of regulations in a financial system. 15 marks (b) In the wake of the financial crisis that has shaken America and Europe, do you think regulators have failed in their role? 10 marks Total marks 25 Question 3 (a) Briefly outline the disadvantages of a fixed exchange rate political science? 6 marks (b) Explain the following terms (i) Special Drawing Right ( SDR ) ( ii ) Currency board arrangement ( iii ) Euro currency ( iv ) Dollarisation 12 marks (c) The Thai baht was devalued by the Thai government from Bt 25/$ to Bt 29/$ in July 1997. Calculate the devaluation of the baht against the US dollar 3 marks (d) Explain the end between devaluation and depreciation of a currency. 4 marks Total marks 25 Page 2 of 3International Finance DFA3006Y Question 4 (a) Do you think free global capital mobility is desirable for emerging economies? 15 marks (b) Explain ho w an active secondary market for securities muckle be beneficial to ( i ) lenders ( ii ) borrowers 10 marks Total marks 25 Question 5 (a) Outline the main summary statements of the balance of payments accounts and explain in short their economic significance. 10 marks (b) How can flows of laundered money from drug trade or international terrorist activities find their way into the Balance of Payments? 5 marks (c)How can such illegal flows be avoided if a country wants to be perceived as a wakeful financial centre? 10 marks Total marks 25 Question 6 (a) As a firm evolves, domestic operations are no longer comme il faut to sustain further development, and the firm seeks other avenues of growth. Outline the considerations that need to be taken if the firm is contemplating a strategic alliance with a foreign partner. 15 marks (b) Explain the difference between internal financing and external financing for a foreign subsidiary and give two examples of internal financing. 10 marks To tal marks 25 -END OF QUESTION PAPER- Page 3 of 3