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Foreign Exchange Rates

Spot and Forward Rates

Boisjoly Watch Imports has agreed to purchase 15,000 Swiss watches for 1 million francs at today's spot rate. The firm's financial manager, James Destreumaux, has noted the following current spot and forward rates: U.S. Dollar/Franc Franc/U.S. Dollar Spo

How Money is Created

Describe fully how money is created through the actions of the federal reserve and presence of a fractional reserve banking system.

Concepts Regarding Exchange Rates

1. 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? Wh

To complete 3 amortization schedules

NOTE: There are two attached files: 1. The problem to be solved (to complete 3 amortization schedules) 2. An example amortization schedule (EXCEL file) that has been provided as a guide. QUESTION: The proposal under review is the special manufacturing project that we have been evaluating for the last week. So, the funds th

If the Japanese yen were to change from 100 yen per dollar

A) If the Japanese yen were to change from 100 yen per dollar to 90 yen per dollar, would the U.S. balance of payments be likely to "improve" (become more positive) or not? In answering, consider what effect the exchange rate change would have both on U.S. exports and imports to and from Japan and on purchase decisions made by m

Expansion in Canada

Problem: A company is looking at Canada as a possible expansion market, I have been asked to do an analysis on the Canadian currency (the Canada dollar) and make predictions about its short- and long-term prospects relative to the U.S. dollar. The senior officer team wants me to use whatever economic and financial data you ca

Lufthansa: To Hedge or Not To Hedge

The following is an MBA problem for which I am seeking a detailed answer in understandable English. (Note: I have had a problem in the past with answers that were substantively good but were hard for me to understand/figure out due to improper use of English grammar.) Case Synopsis: Heinz Ruhnau, Lufthansa's CEO, needed to

Exchange Rate Risks Case Study

Scenario: As a senior financial analyst for Fresh Juices, Inc., the largest fresh fruit drink company in the United States, you are a key player in corporate finance for the business. You are consulted on major capital projects, prepare analysis for executive officers, present material at senior management meetings, and play

Currency exchange risk management

Given where things are going with the project, you decide to start giving some thought to how the company can make money or lose money by simply engaging in international transactions. You start by looking at the net sales figures from the European region that the sales vice president provided in the following: Year 1 sales

Capitalization and Exchange Rate Risk

What are some strategies and techniques available to Fresh Juices, Inc. to manage foreign exchange risks? Scenario: As a senior financial analyst for Fresh Juices, Inc., the largest fresh fruit drink company in the United States, you are a key player in corporate finance for the business. You are consulted on major capital

Currency and Transaction Problems

1. Rolls-Royce, the British jet engine manufacturer, sells engines to U.S. airlines and buys parts from U.S. companies. Suppose it has accounts receivable of $1.5 billion and accounts payable of $740 million. It also borrowed $600 million. The current spot rate is $1.512/pound. a. What is Rolls-Royce's dollar transaction ex

International Finance

The head of sales wants to discuss potential sales in international markets. The sales vice president has estimates of the number of units that could be sold in various international markets. However, he is not sure how they would be priced in local currency and what determines the value of currencies in foreign markets. I

The Fair Value of Firm Commitment and Change in Spot Rate

On September 1, 2004, Jensen Company received an order to sell a machine to a customer in Canada at a price of 100,000 Canadian dollars. The machine was shipped and payment was received on March 1, 2005. On September 1, 2004, Jensen Company purchased a put option giving it the right to sell 100,000 Canadian dollars on March 1, 2

Exchange Rate

1. Which of the following combinations correctly describes the relationship between foreign currency transactions, exchange rate changes, and foreign exchange gains and losses? Foreign Exchange Type of Transaction Foreign Currency Gain or Loss

Foreign Exchange Problem Set

(See attached file for full problem description) 1. The foreign exchange quotations shown below are for the Swiss franc (SF) and the U.S. dollar ($). U.S. Dollar Equivalent Currency per U.S. Dollar Wednesday Tuesday Wednesday Tuesday Bid Ask Bid Ask Bid Ask Bid Ask Spot 0.6506 0.6508 0.6536 0.6539 1.5365 1.

bid-ask spreads for each currency

A: What are the bid-ask spreads for each currency India and Brazil (include calculations) b: What are the implications of the presence or absence of a forward exchange market?

Quality of the business environment in the host country

1. How can government policies impact the quality of the business environment in the host country? 2. You are a foreign investor. What are your main concerns regarding the investment opportunities? 3. Is country risk analysis the principal tool used to develop a company's foreign investment strategy? Explain.

Portfolio theory

1. Is risk aversion a reasonable assumption? What is the relevant measure of risk for a risk averse investor? 2. What are the benefits of diversification to an investor? what is the key factor determing the extent of these benefits? 3. Total risk can be decomposed into systematic risk. Explain each component of risk, and

International Corporate Finance

Define as many new risks that a firm operating in the global economy is faced with in comparision to firms operating entirely in one country. Please explain how you would reduce or eliminate one of the risks.

Bid-Ask Spreads

Please help me with the following: 1. What is the impact of bid-ask spreads on the relative investment attractiveness between US & Canada? 2. What are the bid-ask spreads for each currency (US & Canada)? Please show the calculations for each.


PLEASE ASSIST WITH EXPLANATIONS FOR THE FOLLOWING QUESTIONS. THANKS IN ADVANCE FOR YOUR HELP! Read the case study entitled "Foreign Assignment" on pages 621-622 of your text. After the meeting with Sara, Tom Fried emailed you. In the email, he explained the situation and asked your advice. In your email reply back to T