Business

BIRMINGHAM CITY BUSINESS SCHOOL

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ASSESSMENT: PRE SEEN CLOSED BOOK EXAM

LEVEL: Level 6

MODULE: GLOBAL FINANCE

DATE: DEC 2010

TIME ALLOWED: 2 HOURS

EXAMINER: DORA HANCOCK

MEI YU

INSTRUCTIONS

Each question is 32 marks.

You should attempt 3 of the 4 questions given.

Maximum 96 marks will be awarded for answering 3 questions.

The remaining 4 marks will be awarded for presentation such as logic of arguments, effective arrangement and the use of concise and lucid English.

Please note that no mark will be given if you choose to answer a 4th question.

THIS IS A CLOSED BOOK EXAMINATION.

MOBILE PHONES MUST BE SWITCHED OFF AND PLACED BEYOND USE.

You Should Attempt 3 of the following 4 questions.

Question 1

What does Portfolio Theory tells us about the characteristics of a single currency in Europe as compared to characteristics of the individual currencies replaced by the single currency?

Your answer should include the principles of Portfolio Theory and a discussion of the predictions of Portfolio Theory for the Euro compared to the currencies it replaced. You will probably need to include a brief outline of the Euro and the Eurozone in order to answer this question. However, you do not need to undertake any empirical work on the Euro or the currencies it replaced in order to answer this question.     (32 marks)

Question 2

A UK company is seeking to finance a large project in an Eastern European country, which is not in the EU. The Finance Director wishes to evaluate the option of issuing equity compared to borrowing.

Required:

Describe the debt and equity finance available to the company, including their relevant characteristics, and discuss the appropriateness of each for the company. (32 marks)

Question 3

During the financial crisis in 2007 a number of UK...