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PROBLEM - 20 You as a dealer in foreign exchange have the following position in Great British Pound on 31st November, 2015 : GBP Balance in the Nostro A/c Credit 5,00,000 Opening Position Overbought 100,000 Purchased a bill on London 90,000 Sold forward TT 80,000 Forward purchase contract cancelled 40,000 Remitted by TT 125,000 Draft on London cancelled 60,000 What steps would you take, if you are required to maintain a credit Balance of GBP 80,000 in the Nostro A/c and keep as overbought position on GBP 40,000 ?PROBLEM - 18 True view Ltd. a group of companies controlled from the United Kingdom includes subsidiaries in India, Malaysia and the United States. As per the CFO's forecast that , at the end of the June 2010 the position of inter-company is as follows: i. The Indian subsidiary will be owned or will receive $1,44,38,100 by the Malaysian subsidiary and will to owe or will pay the US subsidiary US$ 1,06,007. ii. The Malaysian subsidiary will be owed or will receive MYR 14,43,800 by the US subsidiary and will owe it or will pay US$ 80,000 Suppose you are head of central department of the group and you are required to net off inter-company balances as far as possible and to issue instructions for settlement of the net balance. For this purpose, the relevant exchange rates may be assumed in term of f1 are US$ 1.415; MYR 10.215; $68.10. What are the net payments to be made in respect of the above balances?PROBLEM - 17 An Indian importer has a payable of f100,000. The seller has given the Indian importer the following two options. i. Pay immediately with a cash discount of 1% on the payable. ii. Pay after. 3 months with interest at 4% P.a. The borrowing rate for the importer in Rupees is 12% P.a. The following are the exchange rates as on December 02,2002. Rs/E Spot 74.76/80 3 month 38/40 Which of the above two options is advisable for the importer?PROBLEM - 16 Pacific Leather Goods Lid. an Indian manufacturer exports leather goods to USA. The company is exporting 5000 units at a price of $60. The company has imported some specialty chemicals from Europe to produce the export items. The cost of chemicals per unit of leather good stands at Euro 10. The fixed overhead costs per unit comes at Rs.250 and other variable overheads, including the freight cost, add upto Rs.1250 per unit. The payments for both exports and imports are due in six months. The current exchange rate are as follows: Rs./$ 46.90 Rs./ Euro 40.40 After six months (at the time of settlement of payments) the exchange rate turns out as follows: Rs./$ 47.90 Rs./Euro 41.25 You are required to: i. Calculate the loss/gain due to transaction exposure. ii. Based on the following additional information calculate the losses/gains due to transaction and operating exposure if the contracted export price per unit is Rs.2700: . The current exchange rate changes to RS./$ : 47.50 Rs./ Euro : 40.80 . Price elasticity of demand for the company's product in the USA is estimated to be 1.60. . The payments are to be settled at the end of sixth month.PROBLEM - 15 Bharat Electronics Limited in Bangalore exports space vehicles to Belgium by importing all the components from south Korea. Imports are invoiced in Hong Kong dollars and exports in Euro. The company is exporting 6000 unit at a pries of Euro 165 per unit. The cost of imported components is HK$ 75. The fixed cost and other variable costs per unit per unit are
