MS-03 Economic and Social Environment

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Course Code MS-03
Course Title Economic and Social Environment
Assignment Code MS-03/TMA/SEM-I/2016
Coverage Code All Blocks



Q.1 a) Examine the interaction between Economic Environment and Business  Management.


Answer: Decisions made by managers are crucial to the success or failure of a business. Roles played by business managers are becoming increasingly more challenging as complexity in the business world grows. Business decisions are increasingly dependent on constraints imposed from outside the economy in which a particular business is based—both in terms of production of goods as well as the markets for the goods produced. The impact of rapid technological change on innovation in products and processes, as well as in marketing and sales techniques, figures prominently among the factors contributing to the increasing complexity of the business environment.





  1. b) Discuss the relationship between economic and non-economic factors with the help of interaction matrix, giving examples.


Answer: The economic environment of business exercises a strong influence on the non-economic environment of business just as the non-economic environment influences the economic environment.  The economic environment is, thus, both exogenous and endogenous. it determines as well as it is determined by non-economic environment. Let us consider a few specific ‘interactions’.


The sociological environment affects ant/ gets   the economic environment of business. The social Attitude towards business and management determines how nanny people get attracted to private business as an ‘activity and to management as a career. If business gets a social sanction as a respectable profession, the occupational





Q.2. What is the rationale for private sector development? Critically examine the problems and prospects of privatization.

Answer: Private Sector Development (PSD) is a term in the international development industry to refer to a range of strategies for promoting economic growth and reducing poverty in developing countries by building private enterprises. This could be through working with firms directly, with membership organisations to represent them, or through a range of areas of policy and regulation to promote functioning, competitive markets. Supporters argue that PSD is an important part of poverty reduction.Whether as workers, subsistence farmers or entrepreneurs, most poor people already participate in markets. Strengthening these markets in ways that secure higher incomes for the poor is therefore seen by PSD advocates as a fair and




Q.3. Discuss the merits and demerits of currency convertibility for a developing economy.

Answer: Advantages of Currency Convertibility


  1. Encourages Exports
  • Market forex rate is higher than officially fixed exchange rates so exporters can get more rupee against foreign exchange;
  • low import intensity exports are boosted


  1. Import Substitution
  • Free or market determined exchange rate is more than previous officially fixed exchange rate
  • Imports become expensive and import substitution





Q.4. a) Briefly discuss the significance and need for financial reforms.

Answer: Financial sector reforms have long been regarded as an important part of the agenda for policy reform in developing countries. Traditionally, this was because they were expected to increase the efficiency of resource mobilisation and allocation in the real economy which in turn was expected to generate higher rates of growth. More recently, they are also seen to be critical for macro-economic stability. This is especially so in the aftermath of the East Asian crisis, since weaknesses in the financial sector are widely regarded as one of the principal causes of




  1. b) What reforms have taken place in the small scale sector? Discuss with examples.


Answer: Till 1978, large units were not allowed to produce shoes, which were reserved for the small-scale industries (SSI). Quality was poor, and exports negligible. But that year, the Government permitted large-scale shoe manufacturing, though with the rider of hefty export obligations. Soon, exports began to pick up as the quality and standardisation that these units achieved, created a new awareness of the product in markets abroad. This helped SSI units improve their





Q.5. Examine the impact of economic reforms on growth rate of GDP and FDI.


Answer: Foreign Direct Investment (FDI) is considered as an engine of economic growth. Before the Economic reforms the flow of foreign direct investment to India has been comparatively limited because of the type of industrial development strategy and the various foreign investment policy followed by the nation. Government policy towards foreign capital was very selective. Foreign investment was normally permitted only in high technology industries in priority areas and in export oriented areas. So the inflow of FDI before 1990’s was very low. To fully utilize the





Q.6. Write short notes:


  1. a) Public Sector in the present scenario

Answer: In the current climate of elevated risk created by the vulnerabilities of and threats to the Nations IT infrastructure, cyber security is not just a paperwork drill. Adversaries are capable of launching harmful attacks on IT systems, networks, and information assets.Consequently, many in the industry and critical infrastructure organizations have come to recognize that their continued ability to gain consumer confidence will depend on





  1. b) Economic Development

Answer: Economic development is a term that economists, politicians, and others have used frequently in the 20th century. The concept, however, has been in existence in the West for centuries. Modernization, Westernization, and especially Industrialization are other terms people have used while discussing economic development. Economic development has a direct relationship with the environment and environmental issues.




  1. c) Importance of Balance of Payments

Answer: The greatest importance of balance of payments lies in its serving as an indicator of changing international economic position of a country. The balance of payments is the economic barometer which can be used to appraise a nation’s short-term international economic prospects, to evaluate the degree of its international solvency, and to determine the appropriateness of the exchange rate of country’s currency.



  1. d) Role of Government.


Answer: GOVERNMENT SHOULD BE BASED UPON SOUND PRINCIPLES :- Such an approach to vital political questions of the day can only lead to public confusion and legislative chaos. Decisions of this nature should be based upon and measured against certain basic principles regarding the proper role of government. If principles are correct, then they can be applied to any specific proposal with confidence.

“Are there not, in reality, underlying, universal principles with reference to which all issues must be resolved whether the society be simple or complex in its mechanical organization? It seems to me we could relieve ourselves of most of the bewilderment


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MS-02 Management of Human Resources

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Course Code MS-02
Course Title Management of Human Resources
Assignment Code MS-02/TMA/SEM-I/2016
Coverage Code All Blocks




Q 1. Discuss the need and objectives of Human Resource Planning (HRP). Describe the salient features and the process of Human Resource Planning undertaken by the organization you are working in or any organization you are familiar with. Briefly describe the organization you are referring to.


Answer: Human Resource Planning is a process by which an organisation ensures that it has the right number & kind of people at the right place and at the right time, capable of effectively and efficiently completing those tasks that help the organisation achieve its overall objectives.


Importance  of  HR  PLANNING


  • Each Organisation needs personnel with necessary qualifications, skills, knowledge, experience & aptitude .
  • Need for Replacement of Personnel – Replacing old, retired or disabled personnel.
  • Meet manpower shortages due to labour turnover



Q 2. Briefly describe various methods of Job Analysis. Evaluate and identify the method applied in an organization known to you or you are familiar with. Critically analyze the role and importance of Job Analysis on Work Flow in an organizational setup.


Answer: Job Analysis is very vital step in human resources planning process. A Job is a bundle of related tasks; A synonym of job is work. Work is understood as physical and mental activity that is carried out at a particular place and time, according to instructions, in return for money. Monetary consideration is necessary in determining whether an activity is really a work. Housewife does not do work as she is not doing it for money. Where as a servant’s job becomes work as with work job also carries monetary consideration. The job incumbent attends to all the allied tasks for wages or salaries.

The nature of work and how mangers




Q 3. Discuss the concept of Team. Explain various approaches to team development you have came across with respect to your own organisation or any organization you are familiar with. Briefly describe the organization you are referring to.


Answer The concept of team is important, their effectiveness depends, to a large extent, on the teams of which they are members. In modern organisations individuals are required to work in different types of teams



Teams take time to develop. A team is not formed merely by declaring some individuals as a team. A lot of research has been done on group formation and development, and different theories of groups development have been suggested. Tuckman summarising the various theories suggested five stages of group development. Tuckman’s model has




Q 4. Discuss the changing role of HRM. Explain the challenges associated with effective HRM policies and practices in the context of present business scenario, citing examples from your organization or any other organization you are familiar with. Briefly describe the organization you are referring to.


Answer: The Foremost and prime HR function in any organization is recruiting the right person and then getting requisite quality and quantity of work (Read productivity) for a reasonable period of tenure, in line with organizational goals (Do most of organizations and the top HR Bosses themselves know about it?). One can call it Strategic Human Resource Management, which uses various tools and techniques for motivation, appraisal, training, cross cultural management, emerging issues in personnel laws like, sexual harassment and competence mapping, etc. In



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MS – 41: Working Capital Management



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MS – 41: Working Capital Management



Course Code :                                           MS-41
Course Title :                                            Working Capital Management
Assignment No. :                                      MS-41/TMA /SEM-I/2016
Coverage :                                                 All Blocks



Question 1: Collect the Financial Statements of any two firms from the same industry for 2014-2015 and calculate their Efficiency, Liquidity and Structural Ratios. Based on these ratios, give your views on the working capital management of these firms.


Solution: Financial statements are valuable summaries of financial activities because they can organize information and make it easier and clearer to see and therefore to understand. Each one—the income statement, cash flow statement, and balance sheet—conveys a different aspect of the financial picture;




Question 2: The Ratan Corporation sells goods earning a gross profit of 25% on sales. You are required to prepare a Statement showing the




Working Capital requirement of the company adding 10% margin for


contingencies from the annual figures given below:










Sales 3,00,000
Materials used 1,08,000
Wages 96,000
Manufacturing expenses 1,20,000
Administrative and other expenses 30,000
Selling and distribution expenses 18,000
Depreciation 12,000
Income tax payable in four instalments of  
which one falls in the next financial year 60,000





Additional Information is as follows:


  • Credit given by suppliers of materials is 2 months


  • Credit allowed to customers is 1 month


  • Wages are paid half month in arrear


  • Manufacturing and administrative expenses are paid one month in arrear


  • Selling and distribution expenses are paid quarterly in advance


  • The company wishes to keep one month stock of raw material and also of finished goods


  • The company believes in keeping cash of Rs. 50,000 including the overdraft limit of Rs. 20,000 not yet utilized by the company.


Solution: Calculation of working capital requirements

  (A) Current Assets                 Rs.    
      225000 ∗ 1            
  Debtors at cost (1 month) 225000             18750    




Question 3: (a) Why are the Letters of Credit (LCs) known as non fund based working capital finance and what role do they play in facilitating trade?



Solution: Letters of Credit (LCs) known as non fund based working capital finance



because Letter of credit and bank guarantee has a very thin line of difference. Bank guarantee is revoked and bank makes payment to the holder in case of non performance of the opposite party whereas




(b) Is it right to say that the LCs do not involve any financial obligation or risk on the part of the issuing banker? Give your comments.



Solution: It is not right to say that the LCs do not involve any financial obligation or


risk on the part of the issuing banker because Letter of Credit is generally required when the seller of goods and services deals with unknown parties or otherwise feels the necessity to safeguard his interest. Under such circumstances, he asks the buyer to arrange a letter of credit from his banker. The banker issuing the L/C commits to make payment of the amount mentioned therein to the seller of the goods


Question 4: What do you mean by ‘Short Term Integrated Funds Planning’? Discuss whether this planning is really practiced in the corporate world in India.


Solution: Short Term Integrated Funds Planning


The term financial meaning means different things to different managers. It depends upon the nature, size and organizational structure. In general terms, financial planning mainly involves anticipating the impact of operating and financial policies on the future financial position of the organization and formulating appropriate responses in the light of the same.





Question  5:  Identify  the  major  players  in  the  Indian  Money  Market.


Discuss the major hurdles they face in their operations.



Solution: Major players in the Indian Money Market



A money market is a market for borrowing and lending of short-term funds. It deals in funds and financial instruments having a maturity period of one day to one year. It is a mechanism through which short-term funds are loaned or borrowed and through which a large part of financial transactions of a particular country or of the world are cleared.



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MS – 26 Organisational Dynamics

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Course Code                                                      :                               MS – 26

Course Title                                                       :                               Organisational Dynamics

Assignment Code                                            :                               MS-26/TMA/SEM – II/2015

Coverage                                                             :                               All Blocks


Note: Attempt all the questions and submit this assignment on or before 31st October, 2015 to the coordinator of your study centre.


Question. 1. What is alienation? Explain the Sociological and Psychological approach to alienation. Discuss how alienation can be dealt with an example.



Answer: The theory of alienation, as expressed in the writings of Karl Marx, refers to the separation of things that naturally belong together, or to put antagonism between things that are properly in harmony. In the concept’s most important use, it refers to the social alienation of people from aspects of their “human nature.” Marx believed that alienation is a systematic result of capitalism.


Marx’s theory of alienation is founded upon his observation that, within the capitalist mode of production, workers invariably lose determination of their lives and destinies by being deprived of the right to conceive of themselves as the director of their actions, to determine the character of their actions, to define their relationship to other actors, and to use or own the value of what is produced by their actions. Workers become autonomous, self-realized human beings, but are directed and diverted into goals and activities




Question. 2. What is organizational Stress? Briefly describe the strategies to cope with stress at individual and organizational levels. Cite few instances how you deal with organizational stress that you have faced.



Answer: Employees stress is a growing concern for organizations today. Stress can be defined as a lively circumstance in which people face constraints, opportunities, or loss of something they desire and for which the consequence is both unpredictable as well as crucial. Stress is the response of people to the unreasonable/excessive pressure or demands placed on them.


Stress is not always negative. It may also




Question. 3. Discuss the importance of delegation and the forces which influence delegation. Describe how delegation improved the effectiveness of an organisation with an example.



Answer: Delegation is assigning responsibility and authority to someone in order to complete a clearly defined and agreed upon task while you retain ultimate responsibility for its success. Delegation incorporates empowering your teammates through effective leadership, and may be directed in any direction and used in any organization.


Empowerment: Empowerment means letting others become the experts, even if this means that they will surpass your abilities. In this way, you will encourage your team members to take a personal interest in their own development and your team’s success. The senior retreat chairman empowered the committee, which led to the




Question. 4. Describe the importance of ethics in present day environment of organisations. Discuss how organisations can promote ethical behavior. Illustrate.



Answer: Ethical principles provide the foundations for various modern concepts for work, business and organisations, which broaden individual and corporate priorities far beyond traditional business aims of profit and shareholder enrichment. Ethical factors are also a significant influence on institutions and public sector organisations, for whom the traditional priorities of service quality and cost management must now increasingly take account of these same ethical considerations affecting the commercial and corporate world.


The modern concept of ethical organisations encompasses many related issues including:





Question. 5. Discuss and describe various dimensions of Diversity and the approaches to deal with Diversity.



Answer: If we define diversity as any and all differences between and among people, we immediately face the challenge of figuring out which differences are at play as well as which are significant.  One approach to this challenge is to try to identify types or categories of difference.  For example, scientists deal with the tremendous diversity in the natural world by classifying plants and animals into groups that share physical characteristics and giving these groups names, such as birds and mammals, reptiles and amphibians.



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MS – 25 Managing Change in Organisations

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Course Code                                                      :                               MS – 25

Course Title                                                       :                               Managing Change in Organisations

Assignment Code                                            :                               MS-25/TMA/SEM – II/2015

Coverage                                                             :                               All Blocks


Note: Attempt all the questions and submit this assignment on or before 31st October, 2015 to the coordinator of your study centre.


Question.1. Discuss the important factors responsible for change. Explain with the help of examples what makes excellent companies tick?


Answer:As societies continue to evolve and changing demand creates the need for new products and services, businesses often are forced to make changes to stay competitive. The businesses that continue to survive and even thrive are usually the ones that most readily adapt to change. A variety of factors can cause a business to reevaluate its methods of operation.


Competition: The entrance of a new competitor into a market can cause a business to change its marketing strategy. For example, a small electronics



Question.2. Discuss the concept of ‘turnaround management’. Cite organizational examples where turnaround management has taken place successfully.


Answer:Turnaround management is a process dedicated to corporate renewal. It uses analysis and planning to save troubled companies and returns them to solvency, and to identify the reasons for failing performance in the market, and rectify them. Turnaround management involves management review, root failure causes analysis, and SWOT analysis to determine why the company is failing. Once analysis is completed, a long term strategic



Question.3. Explain the concept of ‘intervention’ and types of interventions with the help of examples.


Answer:To effectively adapt and thrive in today’s business world, organizations need to implement effective OD interventions aimed at improving performance at organizational, group and individual levels. OD interventions involve respect for people, a climate of trust and support, shared power, open confrontation of issues, and the active participation of stakeholders. OD interventions are broader in scope, usually affecting the whole organization (socio-technical systems). OD interventions are sponsored by the CEO and supported and “owned” by staff at the different levels of the organization.




Question.4. Enlist the key roles in managing change citing suitable organisational examples.


Answer:The ultimate goal of change management is to engage employees and encourage their adoption of a new way of doing their jobs. Whether it is a process, system, job role or organizational structure change (or all of the above), a project is only successful if individual employees change their daily behaviors and workflows. This is the essence of change management.


There is a whole system of people in the organization responsible for supporting employees in making this transition. From the highest levels


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(Answer Any 8)



Question.1. Explain the types of Credit Risk?


Answer:A credit risk is the risk of default on a debt that may arise from a borrower failing to make required payments. In the first resort, the risk is that of the lender and includes lost principal and interest, disruption to cash flows, and increased collection costs. The loss may be complete or partial and can arise in a number of circumstances, for example:


  • A consumer may fail to make a payment due on a mortgage loan, credit card, line of credit, or other loan.




Question.2. Why E-Banking Systems prove attractive to money launderers?


Answer:Money laundering is the process of transforming the proceeds of crime, corruption or kleptomania into ostensibly legitimate money or other assets. However, in a number of legal and regulatory systems, the term money laundering has become conflated with other forms of financial crime, and sometimes used more generally to include misuse of the financial system (involving things such as securities, digital currencies, credit cards, and traditional currency), including terrorism financing and evasion of international



Question.3. Explain the term an audit?



Answer:Auditing refers to a systematic and independent examination of books, accounts, documents and vouchers of an organization to ascertain how far the financial statements present a true and fair view of the concern. It also attempts to ensure that the books of accounts are properly maintained by the concern as required by law. Auditing has become such a ubiquitous phenomenon in the corporate and the public sector that academics started identifying an “Audit Society”. The auditor perceives and recognizes the propositions before him/her for examination, obtains evidence, evaluates the same and formulates an opinion on th




Question.4. Define the term Call option?


Answer:A call option, often simply labeled a “call”, is a financial contract between two parties, the buyer and the seller of this type of option. The buyer of the call option has the right, but not the obligation, to buy an agreed quantity of a particular commodity or financial instrument (the underlying) from the seller of the option at a certain time (the expiration date) for a certain price (the strike price). The seller (or “writer”) is obligated to sell the commodity or financial instrument to the buyer if the buyer so decides. The buyer pays a fee (called a premium) for this right.






Question.5. Explain the features of Derivatives?


Answer:Derivative can be defined as a contract or an agreement for exchange of payments, whose value is derived from the value of an underlying asset. In simple words the price of derivative depends on the price of other assets.


Derivatives are agreements (contracts) which confer rights and/or obligations based on some underlying interest. The specific rights and obligations encompassed by a derivative contract may be cash settlement, delivery of, or the transfer of rights to, the underlying interest. The underlying interest of a derivative may include physical





Question.6. Define ‘Swap’ in detail?


Answer:A swap is an agreement between two parties to exchange sequences of cash flows for a set period of time. Usually, at the time the contract is initiated, at least one of these series of cash flows is determined by a random or uncertain variable, such as an interest rate, foreign exchange rate, equity price or commodity price. Conceptually, one may view a swap as either a portfolio of forward contracts, or as a long position in one bond





Question.7. What are the factors influencing exchange rate risks?


Answer:Aside from factors such as interest rates and inflation, the exchange rate is one of the most important determinants of a country’s relative level of economic health. Exchange rates play a vital role in a country’s level of trade, which is critical to most every free market economy in the world. For this reason, exchange rates are among the most watched,analyzed and governmentally manipulated economic measures. But exchange rates matter on a smaller scale as well: they impact the real return of an investor’s portfolio.




Question.8. Write short notes (Any two)


  1. a) Stress Testing




  1. b) Pat option




  1. c) Forward Rate Agreement (FRA)





Question.9. Explain the categories of Bank Frauds?


Answer:Bank fraud is the use of potentially illegal means to obtain money, assets, or other property owned or held by a financial institution, or to obtain money from depositors by fraudulently posing as a bank or other financial institution. In many instances, bank fraud is a criminal offence. While the specific elements of particular banking fraud laws vary depending on jurisdictions, the term bank fraud applies to actions that employ a scheme or artifice, as opposed to bank robbery or theft. For this reason, bank fraud is sometimes considered a white-collar crime.





Question.10. Define ‘Treasury Bills or T-Bills’ in details?




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Case Study Project

Total Marks: 80





  1. B.: 1)Attempt any Four Questions

2)All questions carries equal marks.





Case 1


(10 Marks)




Mr Oak pays US $ 2000 to buy a December 103 Call option on a US $ 1,00,000. US Treasury Bond at anexercise price of US $ 103. If the price rises above US $ 103, Mr Oak will gain from the difference and ifthe price falls below US $ 103, the maximum amount that Mr Oak may lose is the amount of Premium paid.



Question. 1. Explain the term ‘Speculation’?


Answer:Speculation is the practice of engaging in risky financial transactions in an attempt to profit from fluctuations in the market value of a tradable good such as a financial instrument, rather than attempting to profit from the underlying financial attributes embodied in the instrument such as capital gains, interest, or dividends. Many speculators pay little attention to the fundamental value of a security and instead focus purely on price movements. Speculation can in principle involve any tradable good or financial instrument. Speculators are particularly common in the markets for stocks, bonds, commodity futures, currencies, fine art, collectibles, real estate, and derivatives.


Speculators play one of four primary roles in financial markets, along with hedgers who engage in transactions to offset some other pre-existing risk, arbitrageurs who seek to profit from situations where fungible instruments trade at different prices in different market segments, and investors who seek profit through long-term ownership of an




Question.2. Define Risk Management in detail?


Answer:Risk management is the identification, assessment, and prioritization of risks (defined in ISO 31000 as the effect of uncertainty on objectives) followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate eventsor to maximize the realization of opportunities. Risk management’s objective is to assure uncertainty does not deflect the endeavor from the business goals.


Risks can come from various sources including uncertainty in financial markets, threats from project failures (at any phase in design, development, production, or sustainment life-cycles), legal liabilities, credit risk, accidents, natural causes and disasters, deliberate attack from an adversary, or events of uncertain or unpredictable root-cause. There are two types of events i.e. negative events can be classified as risks while positive events are classified





Question. 3. Define derivatives in detail?


Answer:A derivative is a security with a price that is dependent upon or derived from one or more underlying assets. The derivative itself is a contract between two or more parties based upon the asset or assets. Its value is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes.


Derivatives either be traded over-the-counter (OTC) or on an exchange. OTC derivatives constitute the greater proportion of derivatives in existence and are unregulated, whereas derivatives traded on exchanges are standardized. OTC derivatives generally have greater risk for the counterparty than do standardized derivatives.





Question.4. Suggest Mr Oak to hedge the above transaction position?


Answer:Mr Oak pays US $ 2000 to buy a December 103 Call option on a US $ 1,00,000. US Treasury Bond at an exercise price of US $ 103. If the price rises above US $ 103, Mr Oak will gain from the difference and if the price falls below US $ 103, the maximum amount that Mr Oak may lose is the amount of Premium paid. They should prefer hedge.


A hedge is an investment position intended to offset






Case 2


(10 Marks)


Suppose United States dollar is relatively stable while the Indian rupee is suffering from sudden inflationarypressures. As the Indian Rupee buys less in the domestic economy. Indian and their banking institutionsseek the safe haven of the United States Dollars to maintain the purchasing power of their liquid resources.The demand for US dollars created by Indian‘s buying them with Indian Rupees makes the US dollars morevaluable in terms of the rupees and drives up the exchange rate. The United States Dollars commands moreRupees in an exchange of currency.



Question. 1.Define the meaning of Foreign Exchange?


Answer:Foreign exchange is the exchange of one currency for another or the conversion of one currency into another currency.


Foreign exchange also refers to the global market where currencies are traded virtually around the clock. The largest trading centers are London, New York, Singapore and Tokyo. The term foreign exchange is usually abbreviated as “forex” and occasionally as “FX.”


Foreign exchange transactions encompass everything





Question. 2. What are the Exchange rate risks?


Answer:In the present era of increasing globalization and heightened currency volatility, changes in exchange rates have a substantial influence on companies’ operations and profitability. Exchange rate volatility affects not just multinationals and large corporations, but small and medium-sized enterprises as well, even those who only operate in their home country. While understanding and managing exchange rate risk is a subject of





Question. 3. What are the factors influencing exchange rate risks?


Answer:Foreign Exchange rate (ForEx rate) is one of the most important means through which a country’s relative level of economic health is determined. A country’s foreign exchange rate provides a window to its economic stability, which is why it is constantly watched and analyzed. If you are thinking of sending or receiving money from overseas, you need to keep a keen eye on the currency exchange rates.





Question. 4. Comment ‘The relationship between currencies is not always stable and therefore creates exchange raterisk’.


Answer:An exchange rate is the rate at which one currency can be exchanged for another. In other words, it is the value of another country’s currency compared to that of your own. If you are traveling to another country, you need to “buy” the local currency. Just like the price of any asset, the exchange rate is the price at which you can buy that currency. If you are traveling to Egypt, for example, and the exchange rate for U.S. dollars is 1:5.5 Egyptian pounds, this means that for every U.S. dollar, you can buy five and a half Egyptian pounds. Theoretically, identical assets should sell at the same price in different countries, because the exchange rate must maintain the inherent value of one currency against the other.






Case 3


(10 Marks)

In order to operate successfully, business communities need computer systems that can accurately record andsummarize their business transactions. This type of information technology is called a Business InformativeSystem. Business Information Technology or Systems have become an essential component of everybusiness organization. It would be very difficult to successfully run a business without some type ofinformation system.


Question. 1. How Business Information System support any business?


Answer:An information system (IS) is any organized system for the collection, organization, storage and communication of information. More specifically, it is the study of complementary networks that people and organizations use to collect, filter, process, create and distribute data.


A computer information system is a system composed of people and computers that processes or interprets information. The term is also sometimes used in more restricted senses to refer to only the software used to run a computerized database or to refer to only a computer system.


Information system is an academic study of systems with




Question. 2. Explain the components of Business Information System?


Answer:There are various types of information systems, for example: transaction processing systems, decision support systems, knowledge management systems, learning management systems, database management systems, and office information systems. Critical to most information systems are information technologies, which are typically designed to enable humans to perform tasks for which the human brain is not





Question. 3. Distinguish between computer hardware and software?


Answer:Computer hardware is any physical device used in or with your machine, whereas software is a collection of code installed onto your computer’s hard drive. For example, the computer monitor you are using to read this text and the mouse you are using to navigate this web page is computer hardware. The Internet browser that allowed you to visit this page and the operating system that the browser is running on is considered software.


All software utilizes at least one hardware device to operate. For example, a video game, which is software, uses the computer processor (CPU), memory (RAM), hard drive, and video card to run. Word processing software uses the computer processor, memory, and hard drive to create and save documents.


In a computer, hardware is what makes a







Question. 4. Explain the role and responsibilities of Information Technology Professionals.



Answer:The IT security world has witnessed huge demand in the recent years and this transition is majorly due to the global acknowledgment for the need for IT security. As the world has adopted the IT world as a necessary belonging, the threats surrounding the IT world too are increasing. This led to IT security strategies that can resolve IT problems and control threats occurring in the technology field. The IT security professionals are handed with responsibility of protecting the IT world from rising threats and issues. Let’s have a look at the job of IT







Case 4


(10 Marks)



Question. 1. The primary goal of any national payment system is to enable the circulation of money in its economy. It isrecognized world wide that an efficient and secure payment system is an enabler of economic activity. Morerecently, the proliferation of electronic payment mechanisms, the increase in the number of players in thefinancial arena and the payment crises in quite a few countries and regions in the 1990’s have focusedattention on public policy issues related to the organization and operation of payment systems.





Question. 1. What is payment system?


Answer:A payment system is any system used to settle financial transactions through the transfer of monetary value, and includes the institutions, instruments, people, rules, procedures, standards, and technologies that make such an exchange possible. A common type of payment system is the operational network that links bank accounts and provides for monetary exchange using bank deposits.


What makes a payment system a system is the use of cash-substitutes; traditional payment systems are negotiable instruments such as drafts (e.g., checks) and documentary credits such as letters of credit. With the advent of computers and





Question. 2. Explain components of a payment system?


Answer:The payment and settlement system consists of the following components:


  • Banks providing financial intermediation
  • A legal and statutory framework
  • Rules, regulations and agreements
  • Various payments instruments and payment streams.
  • Payment and settlement transactions.





Question. 3. Explain the importance of payment system?


Answer:Payment systems are a vital part of the financial infrastructure of a country. In Malaysia, the large value payment system, RENTAS, which is operated by the Malaysian Electronic Clearing Corporation Sdn. Bhd. (MyClear), a payment subsidiary owned by Bank Negara Malaysia, enables the transfer and settlement of high-value interbank payments and securities. Its failure could contribute to systemic crisis and transmit financial shocks to the financial system. The efficient functioning of RENTAS allows transactions to be completed safely and in a timely manner contributing to overall economic performance.





Question. 4. Explain the evolution of payment systems in various stages?


Answer:Payment systems refer to the set of rules, procedures, and mechanisms for transferring money between two or more financial institutions and their customers. Efficient, secure and reliable payments and settlements systems reduce the transactions costs and are essential for the effective implementation of monetary policy and smooth functioning of money and capital markets.


The principal components of a payment system


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