Superior UniversityInternational Finance

Final Term ExaminationBBA & BSAF

(Subjective Type)

Name: .$0Roll No:

Date:Time Allowed: One Hour & 30 minutes

1(b) Discuss foreign exchange transactions in your own words.

What is meant by Foreign Exchange market & discuss its following functions withexamples::

a) Swapb) Hedgingc) Speculation 10

X#3: What do you understand with the FOREIGN EXCHANGE MANAGEMENT &f discuss the following:

a)b)

Motives of investing in Foreign Exchange MarketMotives of providing credit in foreign exchange marketOver Bought & Over Sold position of a currency. 10

Q#4: By defining & explaining ARBITRAGE & CROSS RATES make the followingdecision to invest or not in the respective currency in UK Foreign Exchange Market then toresell in Pakistan that foreign currency or not. Comment on your decision also.

IN PAKISTAN:

1 USD= Rs.1001 6BP= Rs.1501 UAE Dirham= Rs.20

You want to invest Rs.300,000.

IN UK:1 GBP=USD1.601 GBP= 6 UAE Dirham ' 10

Superior University, Raiwind Road Lahore

TECORPORAFINAL TERM EXAlBBA-7, BS (Accoi r

(SUBJECT I

The Superior College, University Campus, Lahore

FINANCEMINATION, 2015nting and Finance)VE PART)

Total Marks: 90Obtained Marks:

Name:

Roll No: / g (Date:

Instructions:4. The subjective pa -t is to be submitted within 2 HOURS 15 MIN, extra time will

not be given.5. Neat handwritinj ,

outlook/ presenta6. You can use the I

use of margins and marker for headlines will increase thea ion of your paper

b ckside of the page.Time Allowed: 2 HRS 15 MINasO. No. I:Seth Bullock, the owner of Bullock Gold Mining is e> aluating new gold mine in South Dakota. Dan Dority.the company's geologist, has just finished his analysis if the mine site. He has estimated that the mine wouldbe productive for eight years, after which the gold wot Id be completely mined. Dan has taken an estimate ofthe gold deposits to Alma Garrett, the companys financial officer. Alma has been asked by Seth to performan analysis ot the new' mine and present her recommei dation on whether the company should open the newmine. Alma has used the estimates provided by Dan tc determine the revenues that could be expected fromthe mine. She has also projected the expense of openii g the mine and the annual operating expenses. If thecompany opens the mine, it will cost $500 million :oday, and reclaiming the area surrounding it. Theexpected cash flows each year from the mine are sh iwn in the table. Bullock Mining has a 14 percentrequired return on all of its gold mines.

it

I 0

o 500,000,00.01 60,000,0002 90,000,0003 170,000,0004 230,000,000''5 205,000,0006 140,000,0007 110,000,0008 70,000,000

Required:1) Construct a spreadsheet to calculate the payback period, discounted payback period, profitability

index and net present value of the proposed mine.2) Based on your analysis, should the company oper the mine?

(Marks: 30)O. No. 2:You are evaluating the potential purchase of a small bus ness currently generating $42,500 of after-tax cashHow (Do= $42,500). On the basis of a review of similar-rate of return on the proposed purchase. Because you ar relatively uncertain about future cash flows, youdecide to estimate the firms value using several possibleRequired:, What is the firms value if cash flows are expec

infinity (Zero growth model)? What is the firms value if cash flows are expectec to grow at a constant annual rate of 7% from now

to infinity? j (Marks - 10+10)

oOl

isk investment opportunities, you must earn a 14%: relatively uncertain about future cash flows. y