Share
Explore BrainMass

Foreign Exchange Rates

Discount, Premium and Exchange Rate: Example Problem

The Wall Street Journal reported the following spot and forward rates for Swiss Franc ($/SF) Spot $0.8202 30-day forward $0.8244 90-day forward $0.8295 180-day forward $0.8343 a) Was the 30 day forward a discount or premium? b) Suppose you executed a 90 day forward contract to exchange 1

Stock Investments: Adjusting Returns for Exchange Rates

A French investor buys $100 shares of Goodyear Corp. for $3,000($30 per share). Over the course of a year, the stock goes up 6 points. a. If there is a 10 percent gain in the value of the dollar versus the euro, what will be the total percentage return to the French investor? First determine the new dollar value of the invest

Cross rates and Purchasing Power Parity

19-2) Cross Rates: A currency trader observes that in the spot exchange market, 1 U.S. dollar can be exchanged for 4.0828 Israeli shekels or for 111.23 Japanese yen. What is the cross exchange rate between the yen and shekels; that is, how many yen would you receive for every shekel exchanged? 19-4) Purchasing power parity:

Foreign Currency and Nike Case Study

Since Nike has international business in numerous countries, it closely monitors exchange rate movements. In particular, Nike has major business in Japan and in the United Kingdom. It has even begun to sell its shoes in Eastern European countries. Nike recognizes that it must monitor movements in currencies that were not allowed

Fisher Effect Mechanics & Exchange Rate Fluctuations

Please provide me assistance with an explanation of the Fisher effect, its mechanics, and how it can be applied in the hypothetical situation below. Also please explain how implications of exchange rate fluctuations as they relate to marketing and production decisions. You are asked to help put together a training program des

Gandor Company: should the company participate in joint venture with Chinese firm?

Gandor Co. is a U.S. firm that is considering a joint venture with a Chinese firm to produce and sell videocassettes. Gandor will invest $12 million in this project which will help to finance the Chinese firm's production. For each of the first 3 years, 50 percent of total profits will be distributed to the Chinese firm, while t

Correct Exchange Rate Needed for Translation

Please explain what exchange rate is and the correct rate to use for translating the trial balance in this problem from the foreign currency to U.S. currency. Am I to assume that since the trial balance is year end that I would use only the year end rate of Nkr 0.20 for all of the amounts listed or am I do use different exchange

What is meant by foreign exchange risk?

What is meant by foreign exchange risk? What specific problems does foreign exchange present in an organization? How could an organization needing Euros in six months protect itself from currency fluctuations?

Hypothetically, what is the theoretical future price of EUR:USD, which will mature in 2 yrs in the future? Now suppose the EUR:USD future contract mature in 2 yrs is currently traded at 1.45:1 in futures market, what should you do to arbitrage?

Suppose you are trading Forex (Foreign exchange) now, and the spot price is EUR:USD=1.40:1. The risk free rate of EUR is 3% while risk free rate of USD is 1% (a) Hypothetically, what is the theoretical future price of EUR:USD, which will mature in 2 yrs in the future? (b) Now suppose the EUR:USD future contract mature in

Pitnner's Nokia stock value

1. Mrs Pitnner owns 100 shares of stock in Nokia valued at 16.5 euros per share. What is the value (in U.S dollars) of Mrs Pitnner's shares of stock when the exchange rate a. .9188 yen = 1$ b. 70 yen = 1$ c. 1.212 yen =1$ 2. John is planning on purchasing his dream car directly from the manufacturer in Germany. In order

US and Canada Spot and Forex Rates

The spot exchange rate for the Canadian dollar is Can $1.26 and the 6month forward rate is Can $1.22. Which is worth more, the U.S. Dollar, or the Canadian Dollar? Assuming absolute PPP holds, what is the cost in the U.S. of an Elkhead Beer if the price in Canada is Can $2.19? Why might the beer actually sell at a differe

Global Financing and Exchange Rate Mechanisms

Prepare a 800-1,000-word paper in which you analyze one of the following global financing and exchange rate topics: 1) Purchasing Power Parity/"Big Mac Index" Select a particular country, and a particular industry, Describe Purchasing Power Parity/"Big Mac Index", how it is used in global financing operations, and its impo

Study analysis of the Blades, Inc.

See attached file for full problem. Prepare a case study analysis of the Blades, Inc. 1. Explain factors that affect foreign exchange rates. 2. Summarize the case and answer questions 1-6.

Foreign Exchange and Derivatives Markets

I need help on this assignment. I have to answers the following questions based on a chosen senario. The selected scenario is : A manufacturing organization considering expansion to India or Brazil 1. What are implications of the absence or presence of a forward exchange market? 2. Does interest rate parity hold? Wh

MCQ: Business combinations, major customer, foreign currencies

#3. Principles for allocating the cost of a business combination re provided in SFAS 141, "Business Combinations.: When the fair value of a net assets acquired exceeds the total cost of the investment, the difference should be: a. Applied pro rata to reduce, but not below zero, the amounts initially assigned to specific no

International Business: Import & Export Product, Exchange Rates

You are the international manager of a US business that has just invented a revolutionary new personal computer that can perform the same functions as PCs, but costs only half as much to manufacture. Your CEO has asked you to decide how to expand into the European Union market. Your options are to export from the United States t

Finances and Currency Exchange Rates

1. Under the parent company concept, which of the following statements is true? A) Holding control of a subsidiary provides the parent with an indivisible interest in that company. B) Consolidated financial statements are produced primarily for the benefit of the parent company stockholders. C) The parent company concept i

Revaluation of the Yuan

From the perspective Chinese government should they accelerate an upward revaluaton of the Yuan (Renminbi)? Yes or no and why.

Solution to "Global Business Environment" question

Prepare a 700 word paper in which you conduct a country risk analysis for your selected global business venture (SEELING BOOKS IN BRAZIL). Analyze the following risks in your paper: o Political, legal, and regulatory risks o Exchange and repatriation of funds risks o Competitive risk assessment o Taxation and

Ch 17: Exchange Rates, spot prices, indirect quotes, arbitrage, cross rates

Please find the information in the attachment. Show all formulas and calculations and send in a word or excel document. 17-1. (Spot exchange rates) An American business needs to pay (a) 10,000 Canadian dollars, (b) 2 million yen, and (c) 50,000 Swiss francs to businesses abroad. What are the dollar payments to the respecti

Swap Contracts to Eliminate Currency Risk

Suppose you are a consultant living in the United States and have been engaged by a French company to perform a market study, which should take 18 monthes to complete. They are planning to pay you 100,000 francs monthly. The current exchange rate is $0.20 per franc. You are concerned that the French Franc will strengthen versus

Financing Foreign Operations in Thailand or Ghana

A service organization is considering expansion to Thailand or Ghana. An initial country risk analysis for each country must be conducted. What is Thailand's economic exposure? What is Ghana's economic exposure?

Financing Foreign Operations: United Airlines in Japan with yen debt

United Airlines recently inaugurated service to Japan and now wants to finance the purchase of Boeing 747s to service that route. The CFO for United is attracted to yen financing because the interest rate on yen is 300 basis points lower than the dollar interest rate. Although he doesn't expect this interest differential to be o

Spot Echange Rates

Canada-dollar Spot .8437 30-day .8417 90-day .8395 Japan-yen Spot .004684 30-day .004717 90-day .004781 Switzerland-franc Spot .5139 30-day .5169 90-day .5315 (Spot exchange rates) An American business ne

Exchange Rates Calculations

New Zealand-dollar Spot .8437 30-day .8417 90-day .8395 Japan-yen Spot .004684 30-day .004717 90-day .004781 Switzerland-franc Spot .5139

Spot Exchange Rate; cross rate between dollars and euros.

Please show in steps for clarity. In Britain, 90 day investments have a 4 % annualized return. In the US, 90 day investments of similar risk have a 1% annualized return. In the 90 day forward market, 1 British pound equals $1.66. Also, 1 British pound equal 1.16 Euros. a. If interest rate parity holds, what is the spot exc