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DRIVE winter 2016

PROGRAM MBA
SEMESTER IV
SUBJECT CODE &
NAME
MA0042/MA0047
TREASURY MANAGEMENT

1. It is said that treasury exposure allows treasury management to various risks in the
organisation. Do you agree ? Justify your agreement/disagreement.
Treasury management and treasury exposure
Answer:
Yes i am agree that treasury exposure allows treasury management to various risks in the
organisation because
The high risk environment in which treasuries operate can be linked to three reasons. First of
all treasuries are normally operating in a different market than that of the rest of the
organisation, namely the financial markets. Secondly, risks are very visible in treasury
departments due to the large amount of funds involved: losses on foreign currency exposures
or from poor

2 Explain Asset Liability Management (ALM) Information System in banks.

Analyse the Interest sensitivity and ALM.
ALM information system
Interest sensitivity and ALM
Answer:

ALM information systems

Information is the key to the ALM process. Considering the large network of branches and
the lack of an adequate system to collect information required for
ALM which analyses
3 Highly rated corporate borrowers in India are permitted to issue unsecured debt-
notes to meet the need of their working capital. In the light of this statement cite two
such popular instruments and explain their essential features.
Highly rated corporate borrowers in India are permitted to issue unsecured debt-notes
to meet the need of their working capital. In the light of this statement cite two such
popular instruments and explain their essential features.

Answer: Debentures are the long-term unsecured debt instruments which are not supported
by securities. These are issued essentially by corporate for the purpose of raising funds and

4 Compare and contrast the features of ADRs and GDRs.

Distinguish between Depository Receipts and Participatory Notes.
What is a Foreign Exchange Derivative ?
ADRs and GDRs
Depository Receipts and Participatory Notes
Foreign Exchange Derivative

Answer: The following are the features of GDRs and ADRs:

These are in the nature of a certificate or receipt issued by an international depository bank
outside the country.
These are issued to non-resident investors.
These are issued against the issue of foreign currency convertible bonds or against the issue
of shares by the issuer company.
These are

5 Critically analyze the tools available for managing risks in a financial institution.

Tools available for managing risks

Answer: Tools available for managing risks
The risk management tools forecasts the analysis and implementation of various methods in
order to mitigate risks. It includes several systems and models that enhance correlation of
risks and returns across investments and support portfolio management process. The major
tools available for risk management are:
Failure Mode Effects Analysis (FMEA) This tool is used for identifying the cost of
potential failures in the business operations. This method can be applied during analysis and
design phases of the business operations which help in identifying the significant failures
caused by risk. The

6
What are the assumptions in preparation of gap report in terms of assets, liabilities as
well as off balance sheet items ?

Assumptions to prepare gap report in terms of Assets, Liabilities and off balance sheet
items
Answer: Assumptions in preparation of gap report in terms of assets, liabilities and off
balance sheet items
Assets
Assets are nothing but any item of economic value owned by an individual or corporation.
Assumptions regarding a banks future stock of assets include their possible marketability and
use an asset as a guarantee of existing assets which could increase flow of cash and others. To

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