1. Assume a U.S.-based subsidiary wants to raise $1,000,000 by issuing a bond denominated in Indian rupees (RS). The current exchange rate of the rupee is $.025. Thus, the MNC needs ___________ rupees to obtain the $1,000,000 needed. A) 50,000,000 B) 20,000 C) 1,000,000 D) 40,000,000 2. Good Company prefers variable to fi
24. What is a company's functional currency? A) the currency of the primary economic environment in which it operates B) the currency of the country where it has its headquarters C) the currency in which it prepares its financial statements D) the reporting currency of its parent for a subsidiary E) the currency it cho
Define the functions and roles played by financial markets and institutions, particularly as they relate to the flow of funds from lenders to borrowers within the global financial system You want to explain to a group of new hire bank employees the role the Great National Bank has as an institution in the financial market an
Which of the following is cited as a good reason for NOT hedging currency exposures Answer choices: a) Shareholders are more capable of diversifying risk than management. b) Currency risk management through hedging does not increase expected cash flows. c) Hedging activities are often of greater benefit to management th
One-year interest rates are currently 3.30% in the United States and 2.60% in "Euroland." The current spot rate between the euro and dollar is $1.3225/?. What is the expected spot rate in one year if the international Fisher effect holds? a. $1.3315/? Andrea Cujoli is a currency speculator who enjoys "betting" on changes
1. What are the major advantages and disadvantages of estimating demand by market consumer clinics? 2. (a) On what does the domestic-currency price of a nation's imports depend? (b) What would happen to the domestic-currency price of a nation's imports if the foreign-currency price of the nation's currency increases and the
What kind of international risk factors would impact a company like Sony? Are they higher or lower in a cross border investment activity?
Please fill in the blank: (hint: you don't have to use just one word for each blank) 3. In order to protect newly-formed industry groups, some nations will charge duties on foreign goods from those sectors in order to allow them to get strong enough to compete internationally. This is called: _____________________
Use the example of Benny Baby below. In international terms, what were the effects of currency fluctuations on the Mexican consumer during that time period? What do you think were the effects of that devaluation on Benjamin Cabrera? What would have happened had Benjamin been the exporter and I had been the importer? ****Here
Can you please explain how the use of derivative securities can further enhance a portfolio's performance.
Can you please explain how the use of derivative securities can further enhance a portfolio's performance.
Please give some thought to how the company can make money or lose money by simply engaging in international transactions. The net sales figures from the European region are as followed: Year 1 sales = 125 million euros Year 2 sales = 150 million euros Year 3 sales = 175 million euros Year 4 sales = 200 million euros
I've placed a chart of the value of Reais (Brazil) compared to the US dollar. Can you please help me understand the value here? Questions: How did the currency change compare to the USD? Stronger or weaker? How does this fluctuation affect an importer? An exporter? An investor? Currency Table Brazil Reais Units per U
Prepare a summary on the following points: 1. Describe the role and history of the International Accounting Standards Board. 2. Include an examination of the Board's evolution and stance on ethics issues.
Total corporate risk includes systemic but not systemic risk. a. True b. False Hedging is the use of financial derivatives contract to protect against unexpected rate changes movements. a True b false International Company, an American company, wants to borrow money for its expansion in Australia. Recommend an o
On May 16, the exchange rate of a German mark was $.58. On May 20, the exchange rate is $.57. Which of the following statements is true? a. The dollar has risen against the mark b. The dollar has fallen against the mark c. The dollar is weaker than the mark d. The dollar and the mark are equally strong What causes one
1. What are some benefits of the international capital markets? Does borrowing a portfolio of currencies offer any possible advantages over the borrowing of a single foreign currency? 2. Why would an organization consider investing short term funds overseas? What techniques are available to multinational firms to speed up the
Dear Student, Thank you for using BM. Below are my answers. First, derivatives are financial instruments which offer returns based on the return of an underlying asset. Derivatives are usually undertaken to manage or hedge the risk exposures of a firm. Second, the Financial Accounting Standards Board or FASB's Statement of Financial Accounting Standards or SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, outlines the basic guidelines for the accounting of these instruments and they are as follows. Derivatives must be reported by companies in the balance sheet as either assets or liabilities and recorded at their fair value, and their classifications determined how the difference in the fair value and their book value at the statement date be reported in the financial statements. 1. Derivative designated as a hedging instrument for the exposure to changes in the fair value of the underlying. The difference between the fair and book values is recognized in the income statement adjusted for the gains or losses from the hedged item. 2. Derivative as a hedging instrument for the exposure to the variability of cash flows of a forecasted transaction. Differences in fair and book values of the derivative instrument are initially included as part of the other comprehensive income under the equity section of the balance sheet and then reclassified into the income statement when the underlying transactions have been executed. 3. Derivatives as a hedging instrument for the exposure to foreign currency exchange rate volatility for a net investment in a foreign operation. The difference between the book and fair values is also reported in other comprehensive income. 4. Derivatives not designated as a hedging instrument. Differences in fair and book values are accounted for in the income statement for the period.
Please help with the following problem. A clothier makes coats and slacks. The two resources required are wool cloth and labor. The clothier has 150 square yards of wool and 200 hours of labor available. Each coat requires 3 square yards of wool and 10 hours of labor, whereas each pair of slacks requires 5 square yards of
Please provide a brief explanation of how the following international risk factors affect the United States REAL ESTATE INDUSTRY: 1. International political risk 2. Foreign exchange rate risk 3. Economic risk
Hello BrainMass OTAs, I need help with two questions strictly related to healthcare/hospital mergers. 1. Evaluate this assertion: since 1997 there has been a steady decline in hospital mergers. A major reason for this decline has been the lack of anticipated cost savings from the mergers. 2. Also, if a health care merg
1) Why do global businesses fail even after strategic planning occurs? What tactical adjustments can you make to correct malfunctions (organizational, financial, marketing, ethical, political, legal, etc.) to avoid a total global business failure? 2) What is the relationship between country risk analysis and possible exit str
1. The $/Euro exchange rate is Euro= $0.95, and the Euro/SFr exchange rate is SFr 1 = Euro 0.71. What is the SFr/$ exchange rate? 7. In 1995, one dollar bought ¥80. In 2000, it bought about ¥110. A. What was the dollar value of the yen in 1995? What was the yen's dollar value in 2000? B. By what percent h
Given stocks, mutual funds, and/or bonds, what would be the best retirement plans? Why? What are some examples of when you make risk versus return decisions in everyday life?
You have been asked to research the export patterns of a principal competitor, which include : Clorox (TM) , Colgate-Palmolive ( TM) , Dial Corporation (TM) , and Procter & Gamble (TM) . Locate the annual report ( and other information ) for one of these companies and prepare a memo ad
A. U.S. investor has a portfolio of French, German, Italian, and Dutch bonds. Is this portfolio less risky in U.S. dollar terms now that the euro is the common currency of Europe, since the portfolio is now only exposed to a single exchange rate rather than to four exchange rates for the franc, mark, lira, and guilder?
Using the attached financials; develop a set of pro forma financials (income statement and balance sheet only) for the next fiscal year-end using the percent-of-sales method. Assume that the company's sales have increased by 20%. Be sure to list the underlying assumptions of your analysis and computations.
Briefly describe the types of risks faced by investors in domestic bonds? Also indicate the additonal risks associated with nondomestic bonds. Explain the differece between Stocks and Bonds and which one Corporations use most to raise capital.
1. Define each of the following theories in a sentence or simple equation: a. Interest-rate parity theory b. Expectations theory of forward rates c. Law of one price 2. Ms. Rosetta Stone, the treasurer of International Reprints, Inc., has noticed that the interest rate in Switzerland is below the rates in most other coun
I want to include examples of tools that organizations can use to manage risk but just don't know how to get started.
Within the M&M framework of corporate taxes but no personal taxes, determine the present value of the interest tax shield of Herculio Mining, as well as the total value of the firm. Herculio has net operating income of $5 million; there is $50 million of debt outstanding with a required rate of return of 6 percent; the required
Derivative Financial Instrument, Trading Securities Entries, Journal Entries for Fair Value and Equity Methods
13. Derivative Financial Instrument - The treasurer of Miller Co. has read on the Internet that the stock price of Ewing Inc. is about to take off. In order to profit from this potential development, Miller Co. purchased a call option on Ewing common shares on July 7, 2002, for $240. The call option is for 200 shares (notional v