FIN2700Money,BankingandFinancialMarkets

Quiz2(2/2012)Bangna

ASSUMPTIONUNIVERSITY MARTINDETOURSSCHOOLOFMANAGEMENT DEPARTMENTOFFINANCEANDBANKING QUIZ2(2/2011)

COURSETITLE LECTURER DATE TIME : : : : FIN2700Money,BankingandFinancialMarkets Dr.PathathaiS.,Dr.TeerasakN.,Dr.NirunchaL.,A.RattanaW., A.PeerawichC.,A.SirikarnJ.andA.SawN. February3,2013 9.0010.00hrs(1Hour)

Instruction: Calculatorswithnotextfilesandfinancialcalculatorsareallowed. Answerallquestionsinthegivenbooklet. Answerwithoutsupportingcalculationwillnotbegraded. PartI:ShortAnswers.(20Marks) Question1(5marks) 1.1 Inwhichsituationsinthestockmarketsthatcalledbullmarketsandbearmarket?(2 Marks) Bullmarkets>>stockpricesandvolumeoftradingcontinuingraise(1) Bearmarkets>>stockpricesandvolumeoftradingcontinuingfall(1) 1.2 Explainwhybullmarketsenablethecompaniestoraisemorerevenuepershareofstock issued?(1Marks) Lowercostofcapital(1)ormorepaidincapital(1) 1.3 Ifthemarketexpectedtohavelowinflation,whatshouldbetheimpacttothestockprices?(1 Marks)Explain(1Marks) Stockpricesraise(1) Lowexpectedinflation(0.5)>>lowinterest(0.5)>>stockpricesincrease Question2(5marks) 2.1 Whatarethetwocriticalcomponentsofaggregateexpendituresareinfluencedbythestock price?(2Marks) Consumptionspending(1) Investmentspending(1) 2.2 Whatsituationthatcauseswealtheffect?How?(2Marks) Changeinstockprices(1) Becauseitaffectindividualsnetworthontheirconsumptionandsavingdecision(1) 2.3 Givetwoexamplesoftheeventsthateventuallyendavirtuouscycle?(1Mark) Asharpincreaseinoilprices(0.5) Majorpoliticalormilitarydevelopment(0.5) Question3(5marks) DuringthecelebrationofNewYear2013,Millionsoftouristscomeshoppingattheshopsaround CentralWorld,SiamParagonandSiamDiscovery. 3.1 WouldtheeventscauseThaibahttoappreciateordepreciateagainstotherforeign currencies? Explainintermofproductpreferencesanddrawgraphtosupportyouranswer.(2.5 marks) Appreciate(0.5) Thaicansellproduct moreforeignbuyers(0.5) higherdemandforThaibaht(0.5) Drawgraph:showthedemandforThaibahtshiftright(0.5)andBaht(0.5) 3.2 IftheeventsresultinhigherinflationrateinThailandcomparetotheinflationrateinJapan, woulditcauseThaibahttoappreciateordepreciateagainstJapaneseYen?Explainanddraw graphto supportyouranswer.(2.5marks) Depreciate(0.5)
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ThisexampaperisABACspropertyandcannotbedistributedorduplicatedwithoutproperauthorization.

FIN2700Money,BankingandFinancialMarkets

Quiz2(2/2012)Bangna

Thailandhasinflation lessforeignbuyers(0.5) lessdemandforbaht(0.5) Drawgraph:showthedemandforbahtshiftleft(0.5)andbahtvalue(0.5)

Question4(5marks) Suppose you areThaiExporterexportingSugarCranetoHongKong. Youexpecttoreceivethepaymentof HKS 5,500,000 in the next 60 days. The current spot rate is 4.02 Baht/HK$, butyouexpectThaiBahtwill fluctuate against the Hong Kong dollar over the next 60 days so you decide to buy a forward contract with theforwardrateof4.19Baht/HK$. 4.1 WhatisyourexpectationoftheHK$bydecidingtosignforwardcontract?(1mark) HK$appreciate(1) 4.2 Ifthefuturespotratein60dayis4.12Baht/HK$,howmuchisyouractualreturninBahtinase c thatyouhaventboughtforwardcontract?(1mark) 5.5m*4.12=22.66m(1) 4.3 HowmuchisyouractualreturninBahtunderforwardcontract?(1mark) 5.5m*4.19=23.045m(1) 4.4 DoesThaiexportergainorlossbysigningthisforwardcontract?Explain(2marks) Gain(1)b/cexporterreceivemorebahtfrombahtdepreciationorHKSappreciation(1) PARTII:ProblemsSolving.(10MARKS) Answerswithoutsupportingcalculationwillnotbegraded.

Usetheprovidedinformationtoanswerthefollowingquestion. 1. ApplycrosssectionalratioanalysistoanalyzetheMatthewCompanysliquiditywithout relyingonitsinventories.(2.5marks) Answer Quickratio=(CAInventory)/CL(choosecorrectratio0.5) =(35,4009000)/26,500(0.25/0.5/0.25) =1(0.5) 1>0.7BetterthanBetty(0.5) 2. ApplycrosssectionalratioanalysistoanalyzetheMatthewCompanysfixassetutilization. (2.5marks) Answer FATO=Sales/FA(choosecorrectratio0.5) =185,000/21,912.8(0.5/0.5) =8.44(0.5) 8.44>0.9BetterthanBetty(0.5) 3. Ifyouarealongterminvestorwhowantstoreceivedividendfromthecompanyratherthan thecapitalgain,calculatetherateofreturnofMatthewshareandusecrosssectionalratioanalysisto analyzetheattitudeofinvestorstowardMatthewshare.Regardingthecrosssectionalanalysis,isthe sharecheapofexpensive?(5marks) Answer DPS=Dividendtocommonshareholders/#ofsharesoutstanding(0.5) =17,119.2/22,500(0.5/0.5) =0.76bahtpershare(0.5) DY=DPS/Price(0.5) =0.76/35*100(0.5/0.5) =2.17%(0.5) 2.17%<6%WorsethanBetty(0.5) Matthewshareisexpensive(0.5)

ThisexampaperisABACspropertyandcannotbedistributedorduplicatedwithoutproperauthorization.

FIN2700Money,BankingandFinancialMarkets

Quiz2(2/2012)Bangna

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ThisexampaperisABACspropertyandcannotbedistributedorduplicatedwithoutproperauthorization.