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Foreign Exchange Rates

International accounting question

2. Following is the consolidated balance sheet (000s omitted) of Stern bank, a U.S. financial institution with wholly owned corporate affiliates in London and Geneva. Cash and due from banks includes CHF 100,000 and a £(40,000) bank overdraft. Loans consist entirely of Swiss franc receivable while consolidated deposits include

International accounting: which foreign exchange rates to use; MBI acquisition?

1. Foreign exchange rates are used to establish budgets and track actual performance. Of the various exchange rate combinations which do you favor? Why? Is your view the same when you add local inflation to the budgeting process? 2. You are the CFO of Marisa corporation a major electronics manufacture head quartered in Sh

Interest rate (Floating for fixed rate) Swap: Carter Enterprises can issue floating-rate debt at LIBOR +2 percent or fixed-rate debt at 10.00 percent. Brence Manufacturing can issue floating-rate debt at LIBOR +3.1 percent or fixed-rate debt at 11 percent. They are considering a swap in which Carter will make a fixed -rate payment of 7.95 percent to Brence, and Brence will make a payment of LIBOR to Carter. What are the net payments of Carter and Brence if they engage in the swap?

Carter Enterprises can issue floating-rate debt at LIBOR +2 percent or fixed-rate debt at 10.00 percent. Brence Manufacturing can issue floating-rate debt at LIBOR +3.1 percent or fixed-rate debt at 11 percent. Suppose Carter issues floating-rate debt and Brence issues fixed-rate debt. They are considering a swap in which Carter

What is the rate of return to an American investor

An American investor buys 100 shares of London Enterprises at a price of £50 when the exchange rate is $1.60/£. A year later the shares are selling at £52. No dividends have been paid. a. What is the rate of return to an American investor if the exchange rate is still $1.60/£? b. What if the exchange rate is $1.70/£?

International accounting questions

How does accounting for foreign inflation differ from accounting for domestic inflation? What does double dipping mean in accounting for foreign inflation? Why are financial statements potentially misleading during periods of changing prices? What are some of the consequences of overstated earnings?

Impact on Foreign Exchange Markets

What would be the impact on foreign exchange markets if Congress takes too long to raise the US debt ceiling and some of the debt is in danger of default?

Risk Management: Hedging

1. Mr. Goodie holds American put options on Delta Triangle stock. The exercise price of the put is $40 and Delta stock is selling for $35 per share. If the put sells for $4.5, what is the best strategy for Mr. Goodie? 2. A classmate of yours recently entered the import/export business. During a visit with him last week, he

Foreign currency translation problem

(See attached file for full problem description) --- Translation Problem - Translate the following financials using the current rate method. Relevant rates are as follows: 1/1/04 1 bobb = $ .85 US 10/1/04 1 bobb = $. 80 12/31/04 1 bobb = $ .66 Weight averag

Study questions in Business Finance that need to be answered concerning Calculation of PV, Exchange Rate Fluctuation, Financial Intermediateries Role, Foreign Investment Decision, EPS, PE

Thankyou for your assisstance ahead of time. I have eight questions that i need assistance getting the solutions for. I have listed them below. I have alos upped the credits to 10. The text is: foundations of Financial management (Stanley Block & Geoffrey Hirt) eleventh edition. Regards, Ch. 5 question 10 1) When yo

Investor's Holding Period Return

1. If the demand for a country's exports falls at the same time that tariffs on imports are raised, will the country's currency appreciate or depreciate in the long run? 2. An investor in England purchased a 91-day T-bill for $987.65. At that time, the exchange rate was $1.75 per pound. At maturity, the exchange rate was $1.8

Forever Young, Inc.

Hello! Would someone please provide me with a step by step solution for the following problem? A U.S. corporation, Forever Young, Inc., intends to import $1,000,000 worth of cosmetics from Switzerland and will make payment in SF three months from now.The foreign exchange spot rate of Swiss franc to the U.S. dollar is SF6

Question on futures hedging

The following is a question I answered that came up short, I think probable I should have looked at it from a short position: 1. Explain how futures contracts could be used to hedge a bond portfolio against the risk of rising interest rates. Then explain how futures could be used by both exporters (due to receive foreign curr

Covered interest arbitrage problems

2. Exchange rate pass through. Assume that the export price of a Nissan Maxima from Osaka Japan is ¥3,000,000. The exchange rate is ¥122/$. The forecast rate of inflation in the United States is 2% per year and tis 0% per year in Japan. a. What is the export price of the Nissan at the beginning of the year expressed in US d

Finance - Widget Company of America

You are the financial manager of Widget Company of America. The purchasing manager of your company asks for your advice on an upcoming purchase of Dilithium crystals for the next generation widget project. He can buy the crystals from suppliers in four different countries: Spain, South Africa, Egypt, and Ireland. The current

Foreign currency losses

Company X routinely purchases inventory from foreign markets. Transactions in foreign currency leaves Company X exposed to the risks associated with exchange rate changes. What are some methods Company X could use to reduce its exposure to foreign currency losses?

Accounting Problems: Mercan and Furrin

See attached file for full problem description. Mercan Corporation acquired 100% of Furrin Corp. on Jan.1, 2006. Furrin Corp. operates primarily in the country in which it is domiciled (Australia) and therefore its financial statements are to be translated using the Current Rate Method. Mercan paid 540,000 Australian dollars

Change in US Exchange rates based on political changes

7. The President of the U.S. announces that he will reduce inflation with a new anti-inflation program. If the public believes him, predict what will happen to U.S. exchange rates. 11. If American auto companies make a breakthrough in automobile technology and are able to produce acar that gets 60 miles to the gallon, what wi

Global Financing and Exchange Rate Mechanisms

Currency Hedging a. Describe Currency Hedging, b. How it is used in global financing operations, c. Describe its importance in managing risks. At least three sources must be cited (preferably peer reviewed sources). I am willing to negotiate the credit value for a high quality response to my query. I can also add t

Finance: Put & call options, currency contracts, spot rates, economic exposure

1.- Which of the following is NOT true for the writer of a put option? a.-The maximum loss is limited to the strike price of the underlying asset less the premium. b.-The gain or loss is equal to but of the opposite sign of the buyer of a put option. c.-The maximum gain is the amount of the premium. d.-All of the above

Financial Statements for Desert City Roasters: prepare and analyze

Please complete the last three years of the financial statements using the information contained in the mini case study in the adobe attachment. Also please provide answers to the following questions. 1) In reading the case have the companys financial goals been achieved and explain why or why not? 2) Please provide some r

Balance Sheet Conversion

The balance sheet below represents the end-of-year balance sheet for a new wholly owned subsidiary of a U.S. multinational corporation operating in Poland. All amounts are shown in millions of zloty, the local currency. The subsidiary was incorporated on January 1, 1994, when the exchange rate was 40.50/zloty. Since the subsidia

If a U.S. company starts a new subsidiary in Papua New Guinea on January 1

I need more assistance with this question. Previous help did not seem correct or I did not understand the solution. If a U.S. company starts a new subsidiary in Papua New Guinea on January 1 with an equity stake of 700 million kina (the currency of Papua New Guinea), and earns 300 million kina of income during the year which