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PAPER вЂ“ 2: TACTICAL FINANCIAL SUPERVISION
Question No . 1 is compulsory.
Solution any five questions from the remaining 6 questions.
Doing work notes should form portion of the answer.
(a) A Traditional bank sold Hong Kong Dollars 40, 00, 500 value destination for a its buyer at ` 7. 12-15 and protected itself working in london Market on the same day, when the exchange costs were: US$ = HK$ 7. 9250
Local interbank market rates for US$ were
Area US$ 1 = ` 55. 00
You are required to calculate rate and ascertain the gain or loss in the transaction. Dismiss brokerage.
You need to show the computations for exchange rate about four fraccion points.
(b) ABC Limited is looking at acquisition of OUTL Ltd., which includes 3. 10 crore shares issued and outstanding. Industry price per share is ` 440. 00 currently. ABC Ltd. 's typical cost of capital is 12%. The cash inflows of DEF Ltd. for three years are as under:
` in crores
You are required to calculate the range of valuation that DASAR Ltd. needs to consider. Have P. Versus. F. (12%, 3) =0. 893, zero. 797, 0. 712
(c) Ramesh owns a parcel of land on which this individual intends to create apartment units for sale. Number of apartment units to be constructed could possibly be either 10 or 15. Total structure costs for the alternatives are estimated to be ` 600 lakhs or ` 1025 lakhs correspondingly. Current market selling price for each condo unit is usually ` 70 lakhs. The marketplace price after having a year to get apartment products will depend upon the conditions of market. In the event the market is buoyant, each flat unit will be sold for ` 91 lakhs, if it is slower, the sale selling price for the same will be ` seventy five lakhs. Determine the current value of vacant plot of land. Should Ramesh begin construction now or maintain your land vacant? The annual rental per apartment product is ` 7 lakhs and the safe interest rate is definitely 10% l. a. Assume that the construction price will remain unchanged.
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LAST EXAMINATION: MAY POSSIBLY, 2013
(d) XYZ Limited borrows ВЈ 15 , 000, 000 of half a year LIBOR + 10. 00% for a amount of 24 months. The company anticipates a rise in LIBOR, hence that proposes to buy a Hat Option from its Bankers at the strike rate of almost eight. 00%. The lump sum premium is 1 ) 00% for the whole reset durations and the fixed rate of interest is usually 7. 00% per annum. The actual position of LIBOR throughout the forthcoming totally reset period is as under: Reset Period
on the lookout for. 00%
You are required to show what lengths interest rate risk is hedged through Hat Option. To get calculation, workout figures at each stage up to four quebrado points and amount nearest to ВЈ. It should be element of working records.
(a) The bank (Dealer) covered alone by buying through the London marketplace at market selling rate. Rupee вЂ“ US Money selling charge
= ` 55. 20
US Buck вЂ“ Hk Dollar
= HK dollar 7. 9250
Rupee вЂ“ Hong Kong mix rate (` 55. twenty / six. 9250)
sama dengan ` six. 9653
Gain / Loss to the Traditional bank
Amount received from client (HK$ 40, 00, 000) Г— ` 7. 12-15
` two, 86, 00, 000
Sum paid about cover deal (HK$ 40, 00, 1000 Г— ` 6. 9653)
` a couple of, 78, 61, 200
Gain to Bank
several, 38, 800
Gain to bank = 40, 00, 000 (` 7. 12-15 вЂ“ ` 6. 9653) = ` 7, 32, 800
(b) Valuation based upon Market Price