You have been tasked to brief the finance team on an aspect of international finance and then to lead a discussion with the firm's finance team. The briefing is needed to provide more foundation for the finance team because they are not well versed in the international aspects of finance. Provide a briefing describing when a
If I were to transition a company such as Starbucks or General Motors (we will use those as sample companies) to China what key economic indicators would either refute or support my argument for company expansion. I understand that we as a company would need to determine if there is a need for the products in the company and to
Need your help with these questions. Most of them are basic logic but some may require a source or two. 1. Why it is necessary to understand what determines exchange rates? 2. Which are the main differences between a currency forward market and a futures market? 3. Which are the major currencies floating against each other
Some firms use "leads" or "lags" to re-time the transfer of funds in international transactions. To benefit from changing exchange rates, firms holding a __________ currency will __________ their payments before the currency drops in value. Answer choices: a) hard; lead b) soft; lag c) soft; lead d) hard; lag
Intracompany leads and lags are generally more feasible than comparable intercompany activities because the favorable impact of the lead or lag for one company is the reverse for the other firm.
When an enterprise has a receivable or payable denominated in a foreign currency and settlement of the obligation has not yet taken place, that firm is said to have __________ exposure.
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
Describe fully how money is created through the actions of the federal reserve and presence of a fractional reserve banking system.
Suppose the spot quote on the euro is $0.9302-28, and the spot quote on the Swiss franc is $0.6180-95. How would I compute the percentage bid-ask spreads on the euro and franc? And what would the direct spot quote be for the franc in Frankfurt?
For instance, if the $: ? exchange rate is $1 = ?0.85, and the SFr/? exchange rate is SFr 1 = ?0.75 What is the $/SFr exchange rate?
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
What has been driving the Philippines peso exchange rate over the past year?
What has been driving the dollar in Singapore's exchange rate over the past year?
What foreign exchange risk factors should be considered while making investments in another currency?
What are the implications of the absence or presence of a forward exchange market in Mexico?
Are the following statements true or false? Explain. 1. If the general price index in Japan rises faster than that in the United States (assuming that there are zero transaction costs, that no barriers to trade exist, and that products are identical in both countries), we would expect the yen to appreciate with respect to t
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
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
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
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
Let's say you are an importer in France. You want to import a product from Mexico. The product will cost you 200 pesos per unit. You want 1,400 units. You have agreed with the Mexican producer that you will pay him in Dollars. How many dollars will you purchase? How many French Francs will it take to purchase that amount of do
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
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
Your next meeting is with the head of treasury to discuss the international impact to the firm's capital structure. Toto Matsui, the head of treasury, wants you to analyze what would be the implications to the firm's capital structure if the company took on debt denominated in some currency other than U.S. dollars. In particular
Explain the risks and opportunities involved with the following exposures: 1. transaction exposure 2. operating exposure 3. translation exposure 4. tax exposure
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
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
Analyze what the implications would be to the firm's capital structure if the company took on debt denominated in some currency other than U.S. dollars. In particular analyze the following: 1.) What risks will the company incur if it increases its long-term debt from US$100 million to US$150 million by taking on 40 million in
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
Aztec Corporation, a U.S. subsidiary in Mexico City begins and ends its calendar year with an inventory balance of P500 million. The dollar/peso exchange rate on January 1 was $.02=P1. During the year, the U.S. general price level advances from 180 to 198 while Mexican general price level doubles. The exchange rate on Decembe