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    Foreign Exchange Rates

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    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/£?

    Exchange rate and interest rate problems

    1. You can borrow 4.15% in the U.S. If the spot rate for Swiss Francs is 1.314 Swiss Francs/$ and the one year forward rate is 1.2707 Swiss Francs/$, what is the equivalent interest rate in Switzerland? 2. How many U.S. dollars could you get for 28 Swiss Francs today?

    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

    Please help me to further understand global business

    Can you please answer the following questions in as much detail as possible so I can understand the concepts? 1. What is a global product or service? Can any product or service be marketed globally? Why or why not? How can you relate the 4ps of marketing to Customer Relations Management (CRM) in a global business environment

    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

    Strategies

    What are some possible strategies that a firm can use to protect against exchange rate risk?

    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

    Thai Baht

    Do you notice any similarities between the collapse of the Thai baht in 1997 and the collapse of the Korean won around the same time (see the country focus)? What are these similarities? Do you think these two events were related? How?

    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?

    Foreign Exchange Rate Risk Mitigation

    Can you please help me by explaining the financial risks of conducting business internationally? Also, please explain the significance of foreign exchange rate risk and how this risk can be mitigated? Please list as much details as possible.

    Foreign Exchange Risk, Interest Rate and Exchang Rates

    In international cash management, managers have a choice between managing only foreign exchange risk or managing foreign exchange and interest rate risk together. Considering only nominal changes in exchange rates and nominal interest rates, do you expect the inclusion of interest rate risk in the analysis to suggest that the ca

    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

    how many US dollars the French subsidiary contributes to earning

    Last year, the French marketing subsidiary of International Pharmaceuticals Corporation, (IPC) a New Jersey based drug manufacturer, earned 700,000 euros. This year, partly due to a weaker U.S. dollar, the French subsidiary will earn 900,000 euros. Last year the exchange rate was 1.2 euros per dollar, and this year, it is 1.0 eu

    Loans

    If a loan has a pre-payment penalty attached to it, would it still be viable to retire it? Why or why not? Is it better to retire all loans much before their term? Explain your answer.

    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

    British pound to New Zealand dollar were trading at 0.49

    1. The New Zealand dollar to U.S. dollar exchange rate is 1.36, and the British pound to U.S. dollar exchange rate is 0.62. If you find that the British pound to New Zealand dollar were trading at 0.49, what would you do to earn a riskless profit? 2. Short term interest rates are 2% in Japan, and 4% in the United States. The

    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