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A reduction in the money supply is likely to
Select one:
a. Decrease deflation
b. Increase the interest rate
c. Increase inflation
d. Reduce the interest rate
Discuss whether the transition of an economy from one that is centrally planned to one in
which resources are allocated through the free market is likely to be of overall benefit to the
citizens of that economy.
SLC,A fancy footwear manufacturing company has an obligation to pay MXN 14 million in 30 days for a recent shipment from Mexico.
The CFO of SLC is contemplating hedging the company’s MXN exposure on this transaction. He collects the below information regarding the interest rates and exchange rates, from her forex trader:
Spot Rate: MXN 20.08 / USD
Forward Rate: MXN 20.28 / USD
30-day Put Option on USD MXN 19.50 / USD: 1% Premium
30-day Call Option on USD MXN 20.50/ USD: 3% Premium
USD 30-day interest rate (annualized): 7.5%
MXN 30-day interest rate (annualized): 15%
You are required to answer the below questions to assist the CFO:-
a. What are the hedging options available to SLC? What is the hedged cost of SLC payable using a forward market hedge and using a put option hedge?
b. What is the hedged cost of SLC payable using money market hedge?
A forex trader from Mumbai collects the below information regarding the exchange rate between INR and USD:
Bid Price: INR / USD = 74.2400
Ask Price: INR / USD = 74.2500
You are required to help him with the below questions he has:
(a) What is the direct exchange rate of INR-USD for the trader?
(b) What is the indirect exchange rate of INR-USD for the trader?
(c) What is a cross rate? If the bid and ask rate for USD-EUR are available as USD 1.16776-1.16782/EUR, what would be the bid-ask rates for INR/EUR, using the cross rate method
If you were sitting as Federal Reserve chairman, what measures would you have taken to avoid the crisis? [30 Marks]
Detail the relationship of the Zambia financial system and the economy using practical examples [40 Marks]
From the following Trial Balance on 31.12.07 Prepare Balance sheet
Rs. Rs.
Cash in hand 36,000
Bank O.D 30,000
Capital 3,25,000
Land & buildings 1,00,000
Closing stock 60,000
Furniture 12,500
Good will 47,500
Bills Receivable, Bills Payable 35,000 40,000
Car 40,000
Prepaid Advertisments 5,000
Debtors, Creditors 1,50,000 70,000
P&L Ac. 5,000
Loan from Ram 30,000
Drawings 25,000
_______ _______
5,00,000 5,00,000
(Ans ; Total of B. S : Rs. 4,75,000 )
From the following ledger balances taken from the Trial Balance of Venkatesh, prepare Final
accounts for the year 2007.
Credit Balances : Capital Rs. 360000, Creditors Rs. 87,200 ; Bills Payable Rs. 25270 ; Sales
Rs.789,820 ; Loans Rs. 1,20,000.
Debit Balances : Debtors Rs. 38850 ; Salaries Rs. 40,000 ; Discount Rs. 10,000; Postage
Rs.2,730 ; Bad Debts Rs. 2,870 ; Interest Rs. 12,950 ; Insurance Rs. 4,170 ; Machinery
Rs.1,00,000 ; Opening stock Rs. 99,450 ; Purchases Rs. 6,20,920 ; Wages Rs. 43,000 ; Bulidings
Rs. 2,37,800 ; Fixtures Fittings Rs. 1,69,550.
(Ans ; G.P. 26,450 ; Net Loss Rs. 46,270 ; B. S : Rs. 5,46,200 )
Why is stagflation a problem for any economy
