Mr Mohsin is a business man living in Karachi. He deals in exports of appetizing products. These goods need to be processed and preserved before being packaged and consigned. Mohsin is a seasoned business man running his decades old family business hence knows the intricacies involved in international trade. Recently Mohsin traders exported goods worth $618000 on account
for 90 days to Wall Mart in California. Spot rate prevailing is PKR 120:122 and 90 days forward $
rate is PKR 122:124. Moreover one call options as well as one put option with exercise prices of $
PKR 120 and PKR 122 with premiums of PKR 4 beside PKR 5 respectively are available. Finance manager has developed following probabilities of 90 days future expected spot rates
Probabilities Spot Rate PKR 0.25 120:122
0.45 122:124
0.30 127:129
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If KIBOR is 8% and 10% p.a.; likewise US interest rates are 10% and 12% p.a. for depositors and borrowers respectively.
a) Advise management about optimum hedging technique furthermore will it be better for the firm to remain unhedged.
b) IfPakistanexperiencesanincreaseinInflation&Interestrates,asaresult.Whatwillbe its effect on its Current account?
Answers
Explanation:
1. Jiya, an entrepreneur, decided to open a chain of retail stores to sell fast-food items. Explain to her
the crucial requirement for a successful venture ? 1
2. Harsh plans production of a motor car for the common man at a very low price. Name the
characteristic that develops his ideas into available and successful project. 1
3. Mention the elements of the innovation process. 1
OR
Identify the important method for generating ideas about market trends of supply, demand,
consumer preference, competition degree, etc.
4. How is economic feasibility of an idea assessed? 1
5. Write 4 c’s of credit. 1
OR
Define sole proprietorship organization.
PART-B
This part contains 5 questions carrying 2 marks each. Answers to these questions should be in 50
to 75 words.
6. When is a viable opportunity said to born? 2
7. Pragya Ltd. decided to sell air conditioners and refrigerators at a discount during winter season
to clear the stock. Name and explain the environmental factor which helped them in taking this
decision. 2
OR
Why does an entrepreneur need to scan environment ? Explain.
8. Saransh’s father owned a small piece of agricultural land in Chaksu, around 60 kms, away from
Jaipur. During one of his visit to Jaipur to sell ‘Wheat’ in Mandi, Saransh happened to visit a “flower
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Answer:
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