CHAPTER 11 INTERNATIONAL BANKING AND MONEY MARKET SUGGESTED ANSWERS AND SOLUTIONS TO END-OF-CHAPTER QUESTIONS AND PROBLEMS QUESTIONS 1. (a) The public (b) The directors If he wants perfect certainty, he should invest in public deposits or debentures as rate of return is pre fixed. At the same time, a company that is looking for extra funds will not be expected by investors (such as banks) to pay generous dividends, nor over-generous salaries to owner-directors. 2. International Agencies and Development Banks: A number of international agencies and development banks have been set up over the years to finance international trade and business by providing long and medium term loans and grants to promote the development of economically backward areas in the world. (a) Produces and distributes the goods or services Financial classes are offered at the associate's, bachelor's and master's degree levels, as well as through certification and continuing education programs. The Class 11 Business Studies Revision Notes are available in PDF form with a free to download feature. Public company usually does not create a charge on the assets of the company. Mr. John has ? If he wants some certainty in returns and also wants something extra in case of huge profits, he should invest in preference shares. What are retained profits? Connect. Merits of Trade Credit. For example, because of taxation considerations, they would rather make a capital profit (which will only be taxed when shares are sold) than receive current income, then finance through retained earnings would be preferred to other methods. Name the two Indian companies which have raised money through issue of GDRs. Bank Credit: Borrowings from banks are an important source of finance to companies. E rm finance - Der TOP-Favorit unserer Produkttester. The Standard Deviation Of Daily Percentage Changes Of The BP Is 1.5 Percent. The use of retained earnings as opposed to new shares or debentures avoids issue costs. Debentures represent This course is concerned with the financial management of the firms that operate in the increasingly globalized business environment. These instruments are called EDRs when private markets are attempting to obtain Euros. Answer: Public deposits. There can be mortgage debentures i.e. Answer: Equity shareholders get a return only when profits are left after giving interest to debenture holders and preferential dividend to preference shareholders. IV. It is recommended for the students to practice the given Class 11 Business Studies chapter wise important questions with the answers. International finance is a field of economics. Question 12. Understanding Asset Classes Simply put, an asset class is a grouping of comparable financial securities. It makes funds available without diluting the ownership of business. State various sources of short and medium term funds. Answer: Retained Profits: For any company, the amount of earnings retained within the business has a direct impact on the amount of dividends. International Financial Reporting Standards (IFRS) is a set of accounting standards developed by an independent, not-for-profit organization called the International Accounting Standards Board (IASB). NCERT Solutions Class 11 Business StudiesBusiness Studies Sample Papers, I. Answer: Question 10. It is a medium term fund. Therefore, it is unreasonable to transfer funds to general reserves which are called retained profits if there are exceptionally good profits. International Business class 11 Notes Business Studies Manufacturing and trading beyond the geographical boundaries of a country is known as international business. Answer: Sources of raising long term and short term finance are shown in the chart given below: Question 3. What is a trade credit? Debentures are good from debenture holders point of view but not for business. From their standpoint, retained earnings are an attractive source of finance because investment projects can be undertaken without involving either the shareholders or any outsiders. State two factors affecting the working capital requirement of a firm. What is factoring? 1. Business Finance It refers to capital funds and credit funds invested in the business. Bank lending is still mainly short term, although medium-term lending is quite common these days. What are Indian depository receipts (IDRs)? It deals with any monetary transaction that occurs between two or more countries and is an important tool for finding currency exchange rates, comparing interest rates and analyzing the the economic status of a country before making an investment. Debentures will get priority in getting the money back as compared to shareholder in case of liquidation of a company. Business needs to choose right source of finance to make the best use of it. The need of fund arises from the stage when an entrepreneur makes a decision to start a business. (d) Internal Sources and External Sources Classify internal and external sources on the basis of time. A short-term loan, for up to three years. Answer: GDRs have the following features: Question 8. Question 2.The term ‘redeemable’ is used for It makes its procedure difficult. Describe briefly the factors responsible for selecting a source of finance. and monetary liabilities (current liabilities and long-term debt) use current exchange rate, Non-monetary Assets (inventory, fixed assets, etc.) were incurred or use an appropriate weighted average exchange rate. At BYJU'S, it is available for free download here. When easy and flexible trade credit is available, it may induce the firm to indulge in over trading. Preference shares are not suitable for which kind of investors? Higher Order Thinking Skills (HOTS) Important Questions for Class 11 Business Studies are outlined by the subject matter experts from the latest edition of CBSE books. Answer: Global Depository Receipts and American Depository Receipts. Answer: (a) Fixed Capital and Working Capital Answer: Following factors responsible for selecting a source of finance: Question 8. If the financial statements of the foreign affiliate are in the local currency and the local currency is the functional currency use the current rate method. (d) 8. Answer: A lease is a contractual agreement, in which the owner of the asset grants the other party the right to use the asset in return for a periodic payment, but retains the title over the property. Maturities on commercial paper can range up to 365 days. It mainly discusses the issues related with monetary interactions of at least two or more countries. They also have a right to participate in the premium at the time of redemption. The arrears of dividend on cumulative preference shares must be paid before any dividend is paid to the ordinary shareholders. FIN 528 International Financial Management (4) Analysis of financial problems facing businesses engaged in international activities: financing foreign investment, financial control of foreign operations, and working capital management including foreign exchange positions using cases and readings. Prerequisite: B A 502 or FIN 509. Simple documentations makes it easier to finance assets. Answer: Reserve Bank of India. Each source has its own merits and demerits. (b) Providing information to the client on credit worthiness of prospective client. email@example.com. If the financial statements of the foreign affiliate are in the local currency and the dollar is the functional currency use (remeasured by) temporal method, If a country has cummulative inflation of approximately 100% over a 3 year period must use the temporal method. Lease rentals get tax advantage as they are deductible for computing taxable profits. (d). were incurred or use an appropriate weighted average exchange rate, Dividends use exchange rate in effect on date of payment, Equity- common stock and paid-in capital accounts use an appropriate historical rate, In the U.S. translation gains/losses are put in a special account (Cumulative Translation Adjustment- CTA). All these factors need to be paid for their services. Give reasons for your answer. Briefly discuss some of the services that international banks provide their customers and the market place. A business cannot function unless adequate funds are made available to it. Answer: IDR is an instrument in the form of a depository receipt created by the Indian depository in India against the underlying equity shares of the issuing company. use appropriate historical date, Dividends- use exchange rate in effect on date of payment, Income Statement- in general use average exchange rate for period. Question 5. Question 9. This document is highly rated by Commerce students and has been viewed 16359 times. Restrictive clauses: Bank credit has many restrictive clauses which includes mortgage on company’s assets or ineligibility to raise funds from specific sources. Another factor that may be of importance is the financial and taxation position of the company’s shareholders. A company must restrict its self-financing through retained profits because shareholders should be paid a reasonable dividend, in line with realistic expectations, even if the directors would rather keep the funds for re-investing. X Co. Will Receive 6 Million British Pound Tomorrow. International Finance is an important part of financial economics. International Finance 2020. Financial advisors focus on asset class as a way to help investors diversify their portfolio. Answer: Debentures are similar to shares, however, debenture holders do not have voting rights on how the business is run. Under the factoring arrangement, the factor Answers: Differentiate between a share and a debenture. From their standpoint, retained earnings are an attractive source of finance because investment projects can be undertaken without involving either the shareholders or any outsiders. Name any three special financial institutions and state their objectives. It enhances capacity of the business to absorb unexpected losses. These are explained below: Furthermore, for preference shares to be attractive to investors, the level of payment needs to be higher than for interest on debt to compensate for the additional risks. Question 10. Finance is called ‘life blood of a business’. Short Answer Type Questions The procedure of obtaining deposits is simple and does not contain restrictive conditions. Example: Receiving 80% of debtors’ outstanding debt on selling fabric abroad. Answer: The Lessors. Answer: Following preferential rights are enjoyed by the preference shareholders: Question 5. Die Weiterbildung Ihrer Beschäftigten kann gefördert werden, wenn die Maßnahme mehr als 120 Stunden umfasst und die Maßnahme sowie ihr Träger für die Förderung zugelassen sind. Question 7. What advantage does issue of debentures provide over the issue of equity shares? What are its advantages and limitations? Leasing company (lessor) owns the equipment and hires it out to the customers (lessee pays rental income to hire assets). (c) Fluctuating capital of the company (d) Loan capital of the company Question 23. View Notes - Finance class 11 from FINANCE FINA 3000 at IE University. Do you agree with this view? (a) Fixed Capital and Working Capital Question 13. 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(b) Participate in the management of the organization Kosovo (auch der Kosovo oder das Kosovo, albanisch Kosova/Kosovë, serbisch-kyrillisch Косово), amtlich Republik Kosovo, ist eine Republik in Südosteuropa auf dem westlichen Teil der Balkanhalbinsel.Die Republik Kosovo hat etwa 1,9 Millionen Einwohner und gilt als stabilisiertes De-facto-Regime. If he is interested in short term investment, then he should choose public deposits. Question 18. Choose from hundreds of free Finance courses or pay to earn a Course or Specialization Certificate. Tick (✓) the correct answer out of the given alternatives: Explain. Interest is charged (at a variable rate) on the amount by which the company is overdrawn from day to day. State two factors affecting the fixed capital requirement of a firm. Facebook Instagram Pinterest YouTube Twitter resources. Question 8. As the depositors do not have voting rights, it does not dilute control in the company. Business is concerned with production and distribution of goods and services for the satisfaction of needs of society. Short-term financing: It does not provide loans for long term as shares and debentures do. Facebook. Answer: It is not suitable for those investors who want to get a fixed return without failure. Question 4. Question 1. It is a convenient and continuous source of finance. Free PDF download of Important Questions for CBSE Class 11 Business Studies prepared by expert Business Studies teachers from the latest edition of CBSE (NCERT) books. It allows the lessee to acquire the asset with lesser investment. Business finance refers to the money required for carrying out business activities. What factors determine working capital and fixed capital requirements of a business? Understanding Asset Classes Simply put, an asset class is a grouping of comparable financial securities. Multiple Choice Questions Income Statement use actual exchange rate for the day when revenues, expenses, etc. ADRs are issued in We see a lot of completion in today's era. The dividend policy of the company is in practice determined by the directors. As a source of finance retained profit is better than other sources. Answer: Question 4. The risk of obsolesce is borne by the lessor. About the Events. Public deposits are the deposits that are raised directly from Trade credit can meet only limited financial needs. exchange. (d) Transfer the goods from one place to another Answer: (a) Discounting of bills and collection of the client’s receivables. (b) Generated through loans from commercial banks International trade is of three types (i) Export (ii) Import (iii) Entrepot (Re-export) State various sources of long term funds. * Die Zertifizierung Eye Comfort Certificate bezieht sich nur auf 24-Zoll und 27-Zoll Monitore. 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