Dollar transaction exposure
Not what you're looking for?
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 exposure in dollar terms? In pound terms?
b. Suppose the pound appreciates to $1.7642/pound. What is Rolls-Royce's gain or loss in pound terms, on its dollar transaction exposure?
Purchase this Solution
Solution Summary
This posting provides the solution to the student's dollar transaction exposure question.
Solution Preview
a. What is Rolls-Royce's dollar transaction exposure in dollar terms? In pound terms?
Dollar transaction exposure in dollar terms = $1500 ...
Purchase this Solution
Free BrainMass Quizzes
Understanding Management
This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.
Marketing Management Philosophies Quiz
A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.
Business Ethics Awareness Strategy
This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.
Basic Social Media Concepts
The quiz will test your knowledge on basic social media concepts.
Academic Reading and Writing: Critical Thinking
Importance of Critical Thinking