4:06 z 8. 50 (3) SECTION-B Voi) LT2ll 44% 62243 Answer any three questions from the following. Each question carries 10 marks.(310-30) 8. Explain the importance of Balance of Payment to Indian Economy and Identify the relationship of Balance of Payment with other Economic variables. 9. Companies XYZ and ABC has been offered the following rates p.a. on $10 million five-year loan: Fixed Rate Floating Rate Company XYZ 13.0% LIBOR +0.2% Company ABC 14.4% LIBOR +0.7% Company XYZ requires a floating rate loan; Company ABC requires a fixed rate loan. Design a swap that will net a bank, acting as intermediary, 0.1% p.a. and that will appear equally attractive to both companies. 10. Given the following data Spot Rate: Rs 86.02-$1 6 month Forward Rate: Rs 86.01-$1 Annualized interest rate on 6 month rupee: 12 percent Annualized interest rate on 6 month dollar: 8 percent Calculate the Arbitrage possibilities. 11. An Exporter is exporting 100 articles at a cost of 80$ each and importing 100 units of materials at 20/unit, he incurs other variable expenses of Rs. 35,000 at the time of entering into contract, the exchange rate is Rs.71.5/S at the time of export it is Rs 70/$ while Rs./ at the time of order is Rs. 60/, while at the time of export is Rs.63/E. If the price elasticity of goods is 1.5, what are the transactions and economic exposure? 12. Compulsory Case Study: SECTION-C (115=15) Walmart is a US based firm, required 1,00,000 in 180 day's and had four options before it: a) A forward hedge b) A money market hedge c) An option hedge d) No hedge [P.T.O. (4) 62243 Its analysts developed the following information which was used to asses the alternative T + Edit Annotate Fill & Sign Convert All ||| = O