Q.

1) Globalization is a process of international integration that arises due to the increasing connectivity of man as well as the exchange of goods, ideas and other aspects of culture. Give brief introduction of globalization and identify the advantages and disadvantages? Years. Increasing globalization and a human connection with the products, ideas and other aspects of culture that arises due to the exchange can be defined as the process of international integration. This includes the distribution and communication technology and global connectivity in the production entails fixing of cultural and economic activity. "Globalization" Harvard Business Professor Theodore Levitt used at the end of "Globalization of markets" in the title of an article in the Harvard Business Review in 1983. The benefits of globalization 1. Economic Growth: An open economy can have a higher GDP growth in a closed due to better access to different markets and company exposure to better technology. 2. Cost Reduction: Open economies can import inputs, raw materials and technology at cheaper rates, and benefit in terms of lower cost structure. 3. Improving the availability of goods and services: Open economies have access to many countries. They can use the best among all those available. India is a country of labor was able to use cheap Chinese products due to the opening of trade. 4. Prosperity and the flow of the world's productive resources: Open economies can exchange raw materials and other goods with others. This will benefit both producers and customers. 5. Incentives for research and innovation adoption: Countries that human resources can develop new products and technology and use the market to the least developed countries increase trade. 6. Raise cheaper loans: open economies not only win on the end customer, but also have access to the financial markets of countries in which they do business. They can get cheaper than their country of origin loans. Disadvantages of globalization 1. Open economies are interdependent makes them prone to unavoidable risks such business cycles. The most recent example is the U.S. recession that has affected the world. 2. import dependency, political, economic and cultural risks of a country can show. 3. Large-scale increase in international capital flows has increased the problem of heavy debt of some countries and their inability to repay their debts. 4. Exchange problems due to different currencies of different countries. Q.2) The foreign exchange markets, where money in one currency is traded against another. Writing the history of exchange. Explain fixed and variable rates and the advantages and disadvantages of fixed rate system?

Years. History of changes: deposit of money and gold coins in the early 17th century saw, Converters, goldsmiths, etc. From the beginning of the first currency of the people of England were goldsmiths entry. This has led to the development and expansion of banking services, and people started getting confidence.Note the Bank may take possession of some of their products.Thus, until the story where currency.All foreign money is exchanged in the world changers Middle East. In 1880, began his practice of using the value of the gold standard The main objective was to ensure a fixed amount of any currency. Fixed rate system: system of exchange of currencies in which the regulator will continue to try to keep.Between national and foreign currency is fixed exchange rate system. The system determines the government.The value of a country's currency against a fixed amount of another currency.Gold is the traditional system of fixed exchange rates. Floating exchange rate system: Exchange rate broadly divided into two categories: float.Floating clean and dirty. Clean the system of floating exchange rates, the exchange rate is determined, without any intervention by the central authorities and the forces of demand and supply. But when central banks intervene in the exchange rate increases or system decrease.Floating exchange rate, it is considered dirty or managed float shares. Advantages of the system of fixed exchange 1. The system ensures that the exchange rate by eliminating uncertainty. 2. It insulates the economy from external disturbances that the exchange rate is controlled by the stock market. 3. Without fear of exchange rate changes on foreign investors are encouraged to invest in the country. 4. In poor countries can obtain foreign exchange for development objectives at low cost. Disadvantages of the system of fixed exchange 1. Strict control and monitoring system requires regular monetary authorities. 2. So this system is not self-balancing on the evaluation and the undervaluation of the day. 3. Exhausted all other avenues to resolve balance of the order of payment to redesign, then used the charge of the economic value of the accumulated and faces many economic problems. 4. Strict control and monitoring system requires regular monetary authorities. Q.3) swap is an agreement between two or more parties to exchange sets of cash flows over a period in the future. What do you understand by trade? Explain its characteristics, types of swaps and various types of interest rate exchange?

Years. The swap agreement between two or more parties to a swap is the exchange of boxes. Flows cash at some point in the future. The parties undertake to replace the called parties. There is an equal amount of time on different days of the sale, but a combination of a purchase. Credit transactions costs and other financial instruments to increase control over an innovation that reduces the financial instrument used by corporations and banks. The first swap agreement negotiated in 1981 between Deutsche Bank and an undisclosed opposition. International Swap Dealers Association (ISDA) swap swap market growth in normative documents developed rapidly in 1984. In 1985, ISDA exchange for the standard was released. Features exchange Changes to exchange contracts and cash flows in accordance with the requirements of the existing opposition parties. The transactions will be able to meet specific customer needs. The parts counter, you can choose the amount, maturity dates, as Replace the market has no control. There are some limitations There are two kinds of swaps, they are as follows: 1. Currency exchange: The exchange rates of the currencies of specific intervals, ie a transfer agreement. There are reasons to lock the exchange rate. Large commercial banks to mediate, a company agrees to transfer the coins. 2. Interest rate swap: This is an arrangement to pay its interest rate by one party to another in exchange for a package. The most common arrangement for a period of time to time in the exchange rate is a payment with a fixed interest rate. Different types of interest rate swap The interest rate swap is the most important categories: plain vanilla swap: This swap fixed rate period of variable rate payment is the transfer of money. Yes, sometimes called floating exchange rates. Transfer Forward: The system starts at some point in the future that the interest rate is the exchange of money. It was a floating interest rate swap is correct. callable exchange: Swap another application swaption (swaptions) a callable swap fixed by paying for the right to terminate the swap prior to maturity is a party .. Putable exchange: it has the right to terminate the swap floating rate of the money supply. Q.4) the international credit markets are the forum where companies and governments can get credit. Bring your understanding of the credit and explain two very important aspects of the international credit market international markets. See and give an example? Years. Presentation of international credit markets: On the international credit market where companies and governments in the Council Credit / Debt

(Loans under various forms) can be obtained. Markets This is an important part of the international capital market. In the international capital market in the financial markets or the center.The global financial stocks, debt securities, debt securities, currencies, mutual funds and other long term.Securities bought and sold. These markets offer the opportunity to deal with companies and international investors in various stocks and corporate bonds of different countries. Syndicated loans: As syndicated syndicated loans, bank loans are group.There may be a government agency or a loan. Interest rates may be targets loan term basis as London Interbank offered rate fixed or variable rate (elaipioar). This hybrid combines loans instruments.Relationship and facilities general business credit. They allow you to share.Without disclosure of credit risk among the various financial institutions and that the bond issuer will face the burden of marketing. External commercial borrowing (ECB): ECB commercial banks, credit provider, buyer credit check credit fixed rate bonds, floating rate bonds, credit agencies permitted export loan and loans, such as the IFC (International Finance Corporation), such as companies, ADB (Asian Development Bank) and CDC (Commonwealth Development Corporation). ECBs stages of liberalization in India since 1997. Later still, companies raise capital to expand capacity already, and financial capital to make new investments. All 35 The ECB is allowed to use the infrastructure and Greenfield projects percent of the total project cost. ECB with an average maturity Beaches three, five and seven years. ECB are often used: infrastructure projects (a) the project costs In the field of telecommunications (b) license fee payment for goods and capital services (c) prices in foreign currencies Corporate organizations that manage the maturity period for ECB capital can be used for general corporate purposes, 10 to 20 years. However, ECBs can not be obtained by the Fund to invest in the stock market Or five dabbling in real estate. It depends on how we can mobilize the ECB Comparative value of the current interest in India and other countries rates. Melt The European Central Bank is simply the cost of depreciation / appreciation to add the margin, if the value the rupee. Q.5) The cost of capital is the minimum rate of return required by a company on its investments to provide the rate of return on its capital providers. Describe the cost of capital between countries? Years. Effect of different countries in the cost of debt: Cost of credit risk of a country is based primarily on the risk-free rate and the demand for premium credit. Risk-free interest rate depends on the differences at any time the interest

and general economic conditions that are available on the government bond rate, the financial and political stability depends on the tax laws. It depends on investment and financing needs. In each country, there is at this stage. In some countries, tax laws provide incentives to save more, invest more funds available. In addition, the tax laws relating to tax rate on profits, the tax depreciation rules, investment funds and investment tax credits are necessary business. Country differences in the cost of equity: Changing the cost of equity of a company depends on the opportunity cost if he invested in the company, investor, investment options that will be used. Two parts of the back, they cover the risk premium on government obligations and the risk of interest rate the company is a source of their financial assets. According to interest rate risk, there is a difference between the stock price. Investment options in the country is also based on the share price. There are many investment opportunities in a country where the share price is higher, and vice versa. Examine the debt and the cost of equity as follows: Debt and equity prices and the weighted average cost of capital (WACC) is called to get the overall cost of capital in proportion to their market value. In various countries because of differences in credit and equity prices, capital expenditures will be different. In some countries, such as Japan's capital should be relatively low cost. They lower the risk-free rate, which reduces the cost. And can obtain financing at a lower price-earnings multiple cost. The estimated cost of capital International debt and equity prices can be assessed when they need to finance new projects to use capital structure to determine post-tax cost of debt about.The project is relatively easy to manipulate data estimated Other companies, such as the level of risk of the project. Q6) Explain the principles of taxation and double taxation. What are some important points tax havens and its types? Years. principles of taxation: Two general principles of international taxation is a housing policy and resource policy. Residential taxpayer lies in the political and policy-based resource assessment of tax liabilities of taxpayers source of income taken into account in the calculation of tax liability. Principle of residence: residents of a country regardless of whether it is domestic or foreign origin by income taxed on their worldwide income steadily.

 Principle Source: The country of residence, income, whatever the source of regular income is not taxable. Foreign income people in the country are not taxed in the country of origin. Double taxation: The risk of double taxation associated with doing business outside of the country of origin of a person. In their country of origin after completing business transactions may be subject to both taxes. Point of income on the basis of residential status, based on the fact that the income earned in that country to another country under a tax in the country. tax havens As a tax haven country or income tax and zero tax rate used is that which has the lowest. International (MIS), the collection of local taxes, tax shelters used to protect the accused income. Alworth (1988) four types of tax shelters: (I) those who have no income tax or corporate income: this title will be in the Bahamas, Bermuda, Cayman Islands, Nauru, New Hebrides Islands, and Turks and Caicos are. (Ii) that very low tax rate: as such can countries, Netherlands Antilles, Montserrat, Gersey, Guernsey and the Isle of Man, the British Virgin Islands. (Iii) tax all income from foreign sources exempting: This may be the head of Costa Rica, Hong Kong, Liberia and Panama are. The governments of these countries tax only on income generated in domestic and foreign sources of income did not come. (IV) which allows special tax benefits in certain cases: In the first four eligible for special tax benefits provided countries maintaining Companies, while the second in the three countries, the tax applies to the particular situation of enterprises and international corporations.