Risks of Noncompliance in Corporate Governance Organizations must address compliance concerns to ensure their longevity. There is a measurable amount of risk associated with falling out of compliance. The degree of risk to an organization differs from one compliance issue to another. As a team, think about the recommendatio
Please, answer the questions below. 1. What is the current account generally composed of? 2. What is the capital account generally composed of? 3. Is a current account deficit something to worry about? 4. If a government wants to correct a current account deficit, why can't it simply enforce restrictions on imports? 5. Wi
Explain how a rise in the euro might affect a French company exporting wine to the U.S., and compare that to the impact on a German firm importing semiconductors from the U.S.
Explain how transactions (both sales and purchases) in a foreign currency are recorded and reported.
1. What role does economics play in your personal decisions? What role does economics play in your organizational decisions? 2. What are your opportunity costs of getting your degree from UOP online? 3. What can you say about the elasticity of the demand curve that faces the product (or service) produced by your organiza
Suppose that on January 1, American Golf's French subsidiary, Golf du France, had a balance sheet that showed current assets of FF 1 million; current liabilities of FF 300,000; total assets of FF 2.5 million and total liabilities of FF 900,000. On December 31, Golf du France's balance sheet in Frances was unchanged from the fig
17-3 (Indirect quotes) Compute the indirect quote for the spot and forward Canadian dollar, yen, and, and Swiss franc contracts. Country Contract $/Foreign Currency Canada-dollar Spot .8437 30-day .8417 90-day .8395 Japan-
A stock is currently $25. It is known that at the end of 2 months it will be either $23 or $27. The risk-free interest rate is 10% per annum with continuous compounding. What is the value of a 2-month derivative that will be either 529 (if the stock price is 23) or 729 (if the stock price is 27)? Use no-arbitrage arguments.
Assume the U.S. interest rate is 7.5%, the New Zealand interest rate is 6.5%, the spot rate of the NZ$ is $.52, and the one?year forward rate of the NZ$ is $.52. At the end of the year, the spot rate is $.48. Based on this information, what is the effective financing rate for a U.S. firm that takes out a one year, uncovered NZ
Comment on the following statement: "Wage flexibility is a substitute, albeit an imperfect one, for exchange rate flexibility."
Why has speculation failed to smooth exchange rate movements?
Many Asian governments have attempted to promote their export competitiveness by holding down the values of their currencies through foreign exchange market intervention. a. What is the likely impact of this policy on Asian foreign exchange reserves? On Asian inflation? On Asian export competitiveness? On Asian living standa
Following the Mexican devaluation, investors questioning Argentina's ability to maintain currency convertibility began pulling their money out of Argentina. In response, the Argentine government took extraordinary steps to maintain its exchange rate at $1 per peso. a. What were the likely consequences of this capital flight f
Comment on the following headlines in The Wall Street Journal: a. "Sterling Drops Sharply Despite Good Health of British Economy: Oil Price Slump Is Blamed" (January 17, 1985). b. "Dollar Surges as Coup in Soviet Union Revives Unit's Appeal as a Safe Haven" (August 20, 1991). c. "Dollar Plummets on Soviet Coup Failure"
You buy eight contracts of Euro currency futures (i.e. total of one million Euros) with an initial margin of $2835 per contract. You buy the contracts at $1.3468/Euro and after a few days of trading the contracts end at a price of $1.3534/Euro with the following ending price each day: $1.3465, $1.3443, $1.3434 and $1.3534. Wh
Develop a code of ethics and social responsibility for a new college or university in regard to its foreign students. Your ethics code should cover the following areas - recruiting, degree completion times, scholarship availability, work study issues, language, culture, on-site versus off site instruction and any other issues
Harvard Business Case: 9-395-016 January 3, 1995 3M: Profile of an Innovating Company Through cases based on real companies, use the knowledge of how firms with different organizational modes can operate in a given industry, the factors that favor one mode over another, and the manner in which the modes relate to shiftin
Six-Month T-Bills have a nominal rate of 7 %, while default-free Japanese bonds that mature in 6 months have a nominal rate of 5.5%. In the spot exchange market, 1 yen equals $0.009. If interest rate parity holds, what is the 6-month forward exchange rate?
27. South Korea's Korean Air Lines (KAL) is the world's 12th largest passenger airline and its second-largest cargo carrier. It has borrowed $5 billion (much of it denominated in dollars) to finance its fleet of planes. a. In what ways is KAL affected by depreciation of the won against the dollar? b. How can KAL use the f
21. Boeing Commercial Airplane Co. manufactures all its planes in the United States and prices them in dollars, even the 50% of its sales destined for overseas markets. Assess Boeing's currency risk. How can it cope with this risk?
17. Thomasville Plastics Corp. has contracted to buy $1.1 million worth of Japanese plastic-injection molding machines. The contract price is set in dollars. Does Thomasville bear any currency risk associated with this purchase? Explain.
16. Nissho Iwai American Corporation is the American arm of a large Japanese trading company that deals in everything from steel to tuna fish. Assess the credit risk implications for Nissho Iwai of a 30% rise in the dollar value of the yen.
13. Monsanto Co., the St. Louis chemical firm, is a major seller of herbicides. Its two brand name herbicides, Roundup and Lasso, have a large share of the U.S. and foreign markets. It's major competitors are other U.S. chemical companies. How are sales and profits of these products, as well as Monsanto's other chemicals, likely
12. A common complaint leveled against the Japanese government is that it deliberately holds down the value of the yen to boost exports of Japanese products. American steelmakers have been particularly vocal in their complaints. As a remedy, steelmakers in 1985 asked President Reagan to curtail Japanese steel imports further and
8. The European chemical industry pays for an estimated 79% of its oil based feedstock in dollars. Thus, its costs are declining sharply because of the drop in the price of oil combined with the sharp decline in the value of the dollar. What is the likely impact on the European chemical industry's profits of the dollar decline?
6. Aldridge Washmon Co. is one of the largest distributors of heavy farming equipment in Brownsville, Texas, located on the border with Mexico. The time is late 1981. Sales have increased dramatically over the past two years, and Aldridge is requesting an expansion of its credit line. What information would you as a banker need
10. Over the past year, China has experienced an inflation rate of about 17 percent, in contrast to U.S. inflation of about 2.5 percent. At the same time, the exchange rate has gone from Y8.7/U.S.$1 to Y8.2/U.S.$1. a. What has happened to the real value of the yuan over the past year? Has it gone up or down? A little or a lot
10. Why do exchange rate changes bring feast or famine for Volvo, but neither feast nor famine for Ford? Consider the distribution and concentration of their production facilities worldwide.
In what sense is the boost in profits of American companies due to a falling dollar artificial?
5. Bakrie, an Indonesian conglomerate, is assessing the likely consequences of the rupiah's precipitous decline on its different businesses. These businesses include a telecommunications company that is building a network (using mostly imported equipment) throughout Jakarta to offer wireless service to its residents, a company t