Spot, Money, and Bond Markets
Not what you're looking for?
Recently, Wal-Mart established two retail outlets in the city of Shanzen, China, which has a population of 3.7 million. These outlets are massive and contain products purchased locally as well as imports. As Wal-Mart generates earnings beyond what it needs in Shanzen, it may remit those earnings back to the United States. Wal-Mart is likely to build additional outlets in Shanzen or in other Chinese cities in the future.
a. Explain how the Wal-Mart outlets in China would use the spot market in foreign exchange.
b. Explain how Wal-Mart might utilize the international money markets when it is establishing other Wal-Mart stores in Asia.
c. Expalin how Wal-Mart could use the international bond market to finance the establishment of new outlets in foreign markets.
My answers:
a. Many foreign transactions do not require an exchange of currencies but allow a given currency to cross country borders therefore it will be easy for the US dollar to be exchanged on the spot market.
b. When short term funds are needed, Wal-Mart will be able to utilize internation money markets to finance imports,etc.
c. By utilizing the international bond market, Wal-Mart will have access to long-term funds in the foreign market to help with establishing new outlets within the foreign markets.
Purchase this Solution
Solution Summary
This posting explains how Wal-Mart might utilize the spot market in foreign exchange; the international money markets and the international bond markets to finance the establishment of new outlets in foreign markets.
Solution Preview
ANSWERS:
a. Explain how the Wal-Mart outlets in China would use the spot market in foreign exchange.
The Wal-Mart stores in China need other currencies to buy products from other countries, and must convert the Chinese currency (yuan) into the other currencies in the spot market to purchase these products. They also could use the spot market ...
Purchase this Solution
Free BrainMass Quizzes
Transformational Leadership
This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.
Team Development Strategies
This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.
Income Streams
In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.
Motivation
This tests some key elements of major motivation theories.
Understanding the Accounting Equation
These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.