NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course: International Banking & Foreign Exchange Management
- An exporter wants to hedge his one year receivables in USD for $20 million, for which he wants to enter into a futures contract. The spot exchange rate is USD-INR70. The futures price for a contract having the same maturity date is ₹71. Is perfect hedging possible with the futures contract in this case? Calculate loss or profit in the cash and futures market if the spot price is ₹ 72 on the maturity date. (10 Marks)
- Amaron Ltd was exporting goods to Axa Ltd in Japan and wanted to be sure of payment to be received on time. It made a reque
st to the importer to issue Letter of Credit in the name of Amaron Ltd. The manager at Axa Ltd approached his bank manager to understand the steps involved in the issue. If you are the manager mention the steps that would be involved in the Letter of Credit transaction. (10 Marks)
- Aruna had completed her post-graduation in International Banking and had joined the forex department of a bank. She was explained clearly by her manager that the merchant buying and selling rates are derived with the help of the rates prevalent in the inter-bank markets and both are calculated differently. Her manager wanted her to prepare notes on how the rates are determined in the case of:
- Market’s Selling Rate (5 Marks)
- Market’s Buying Rate (5 Marks)