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MOCK EXAM QUESTIONS

1. FINANCE-Discuss the concept of transaction risk in international

financial management. (The students have to define the transaction

risk, as a risk that arises from operating in more than one currency,i.e. where the obligation has arisen in one currency, but the pay-

ment may be made in another).

2. FINANCE- Discuss the Interest Rate Parity Theory (The students

should define interest Rate Parity theory in FOREX operations

, and outline the main situations in which the theory holds)

LECTURE3 SLIDE19

3. ECONOMICS-British Airways-owner IAG has announced 4,500 job

cuts at Iberia as part of a widely anticipated restructuring of the

Spanish carrier. Iberia is cutting its 156-strong fleet

by 25 aircraft, and reducing 15% of its network capacity, with the

airline focusing on the most profitable routes. "Iberia is in a fight for

survival. ........ It is unprofitable in all its markets. .........As a global

industry, airlines and governments are unable to duck the issue

of labour competitiveness." (Rafael Sanchez-Lozano, Iberia Chief

Executive, http://www.bbc.co.uk/news/business-20264407, 9

November, 2012) The airline industry is said is becoming

increasingly oligopolistic in nature.

Critically discuss the main features of an oligopolistic market

and consider the extent to which you think these apply to the

airline industry.

4. China has recently announced plans to initiate a new wave

of economic growth by ex-panding domestic consumption to offse

t declining export demand. Financial reform

is seen as a key to unlocking future growth: Domestic lenders

now have the flexibility to determine the interest rates at

which they will lend to consumers (within a stipulated

range), the yuan has been allowed to trade against the US dollar at

1.0% on either side of a daily rate set by the central bank (the

previous limit was 0.5%) and China's securities regulator

has eased entry rules for foreign investors under its Qualified

Foreign In-stitutional Investor (QFII) programme

to attract more long-term overseas investment. (Source:

http://www.bbc.co.uk/news/business-20248116).Explain, using economic theory and concepts how national

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income is determined. Consider how the Chinese plans to boost

economic growth outlined above would work.

5. Discuss the role and functions of the European Commission.

6. Discuss the effects of globalization on states capacity to deliver

policies and how that reflects on peoples perceptions about their

governments.

7. How has the Lisbon treaty contributed reshaping the European

Union decision making process?