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Foreign Exchange Rates

Swenser Corporation - What is the effective interest rate on the foreign loan?

Swenser Corporation arranged a two-year, $1,000,000 loan to fund a foreign project. The loan is denominated in Mexican Pesos, carries a 10% nominal rate, and requires equal semi-annual payments. The exchange rate at the time of the loan was 5.75 pesos per dollar but immediately dropped to 5.10 pesos per dollar before the first

Foreign Currency Transaction

On November 15, 2003, Chow Inc., a U.S. company, ordered merchandise FOB shipping point from a German company for 200,000 euros. The merchandise was shipped and invoiced on December 10, 2003. Chow paid the invoice on January 10, 2004. The spot rates for euros on the respective dates were: November 15, 2003 $.4955 December 10

Exchange Rates Explanation

Chapter 23 (Quiz 1) 1. Exchange rates. Use table below for the problems a. How many euros can you buy for $100? How many dollars can you buy for 100 euros? b. How many Swiss francs can you buy for $100? How many dollars can you buy for 100 Swiss francs? c. If the euro depreciates with respect to the dollar, will the

Triangular Arbitrage Problem

Assume the following information Value of Canadian dollar in U.S. dollars $.90 Value of New Zealand dollar in U.S. dollars $.30 Value of Canadian dollar in New Zealand dollars NZ$3.02 Given this information , is triangular arbitrage possible? If so, explain the steps that would relect triangular arbitrage, and compute t

Financial Statement Reporting and Disclosures

See the attached file. Indicate how each of the following items would be recognized in a company's financial statements for 2007, and what elements would be recognized. If no elements are to be recognized, note this in the answer. For each item, conceptually justify why the elements are to be recognized or why none should be

International Finance - Purchasing Power

You are the treasurer of a U.S. multinational corporation with a subsidiary in Spain and you are concerned about the purchasing power of the Spanish peseta. a. Your expatriates in Spain tell you that the McDonald's Big Mac costs Pta375. You know that the Big Mac costs $2.43 in the United States. Given this information, what i

Euro vs dollar

Explain the exchange rate determination between euro and dollar. Determine money supply between euro and dollar Explain in context appreciation and depreciation for euro and dollar Show graphically.

Exporting and Currency

Why is an exporter that is to be paid in six months in a foreign currency worried about fluctuating foreign exchange rates? Are there ways in which this exporter can protect itself? If so, what are they? How does the credit or money market hedge work? Why is acceleration or delay of payments more useful to an IC than to small

Covered Interest Arbitrage

7. Covered Interest Arbitrage (CIA) 7. Covered Interest Arbitrage (CIA) Given the following: US 90-day interest rate 5% Canadian 90-day interest rate 10% Current Spot Rate $0.8512/C$ 90-day Forward Rate $0.8501/C$ You have $1 Million and would like to engage in CIA: i.) Outline the steps for CIA with the approp

Spot Exchange Rate, forwards, finance

3. The Bid price of Euro is $1.41075 / Euro and the Ask Price is $1.42076/Euro. a. What is the Bid-Ask % Spread? b. If you have $1,000 how many Euros you will get? (You are buying Euros here) c. If you have Euro 1000, how many US dollars, you will receive? (You are selling Euros here)

Country Risk Analysis

Please use India to write an initial country risk analysis. Discuss each of the following: a. Economic exposure b. Translation exposure c. Transaction exposure d. Political e. Socio-economic f. Environmental What are some procedures and techniques that can be used to mitigate the risks? U

Fed Rates

The Fed just drop in interest rates in the US. What does this mean to a foreigner holding dollars? I guess another way to look at is what are the implications in terms of foreign exchange rates and capital flows?

Foreign Exchange Translation

P12-17 Translation, Journal Entries, Consolidated Comprehensive Income, and Stockholders' Equity On January 1, 20X5, Taft Company acquired all of the outstanding stock of Vikix, Inc., a Norwegian company at a cost of $151,200. Vikix's net assets on the date of acquisition were 700,000 kroner (NKr). On January 1, 20X5, the b

Why is an exporter worried about fluctuating foreign exchange rates?

1. Why is an exporter that is to be paid in six months in a foreign currency worried about fluctuating foreign exchange rates? 2. Are there ways in which this exporter can protect itself? If so, what are they? 3. How does the credit or money market hedge work? 4. Why is acceleration or delay of payments more useful to a


What factors contribute to the fluctuation of exchange rates? Discuss. What is the best way for a multinational corporation to hedge against foreign currency risk? What are some differences between hedging and forward contracts? What is an example of a recent merger or acquisition in the service industry or western geograp

International financial management challenges

What additional challenges arise in international financial management? What factors cause currencies to differ in value from one another? How do currency fluctuations affect earnings of multinational corporations?

Business Multiple Choice

1. Which statement best explains the consequences of globalization? a. balance of payments b. creation of supply and demand c. increase in market share d. under the counter trade e. long term cash management 2. Expropriation is taking of fo

Finance Multiple Choice

1. Although quick and easy to apply, the payback method is deficient in that it a. disregards the time value of money b. is based on arithmetic rather than algebra c. disregards cash flows after the payback period d. a and c 2. The cost of particular capital components may be __________ the returns paid to inv

Financial Management

Textbook: Foundations of Financial Management 12th edition Question 3 Which of the following is not a true statement? a. Common stockholders have a residual claim to income. b. Bondholders may force a corporation into bankruptcy for failure to make interest payments. c. Common stockholders are legally entitled to s

Exchange rates

See attached file for full problem description. 8. Assume that you can buy 245 Canadian dollars with 100 British pounds. How much profit can you earn on a triangle arbitrage given the following rates if you start out with 100 U.S. dollars? Country U.S. $ Equivalent Currency per U.S. $ Canada ? 1.3500 U.K. 1.8305 ? A.

Marketing In Thailand

You own a company and would like to "go global!" Research a potential market and product to get your export operations started and present your findings to potential investors. Note: The product and country that I have chosen is mosquito repellent in Thailand. Use the outline below: - Introduction - Description of

1) a. Has the price, in dollars, of the automobile increased or decreased during the 22-year period because of changes in the exchange rate? b. What would the dollar price of the automobile be in July 2005, again assuming that the car's price changes only with exchange rates? 2) What is the present value in dollars of its equity ownership of the subsidiary?

1. Results of exchange rate changes: Early in September 1983, it took 245 Japanese yen to equal $1. Nearly 22 years later, in July 2005 that exchange rate had fallen to 111 yen to $1. Assume the price of a Japanese-manufactured automobile was $9,000 in September 1983 and that its price changes were in direct relation to exchange

Risk analysis for Brazil

Conduct an initial country risk analysis on the country Brazil include the following in it: a. Economic exposure b. Translation exposure c. Transaction exposure d. Political e. Socio-economic f. Environmental

Spot Value Purchase vs Forward Exchange Rate Purchase

I need to purchase 100,000 yen for next month. Should I spot purchase or forward exchange rate purchase. I only have US Dollars to spend and need to purchase yen. I have determined that if I spot buy I would need $808.08 to make the payment today. Would it be better to forward exchange rate for this payment?

Foreign Exchange

You are assigned the duty of ensuring the availability of 100,000 yen for the payment that is scheduled for the next month. Considering that your company possesses only U.S. dollars, identify the spot and forward exchange rates. What are the factors that affect your decision of utilizing spot versus forward exchange rates? Which

International Fisher Effect: Find Expected Spot Rate of Exchange

The annual interest rate on one-year, U.S. government bonds is 5 percent. The annual interest rate on one-year Swedish government bonds is 7 percent. The current spot rate of exchange between the dollar and the Swedish krona is $0.1286. If the International Fisher Effect (IFE) holds, what is the expected spot rate of exchange in