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# Exchange Rates Problem

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Using the information in Figure 11.1 on p. 328.
Describe your findings in a 200- to 300-word response.

1. You are assigned the duty of ensuring the availability of 100,000 yen for the payment that is scheduled for next month.
Considering that your company possesses only U.S. dollars, identify the spot and forward exchange rates. What are
the factors that affect your decision of utilizing spot versus forward exchange rates? Which one would you choose?
How many dollars do you have to spend to acquire the amount of yen required?

2. As an entrepreneur, you are interested in expanding your business to either Poland or Portugal. As part of your initial
analysis, you would like to know how much investment is needed to go to these markets. In order to get a rough number,
you hire a consulting firm to do initial investment analysis. The consulting firm provides you a short report about how much
money is needed for both countries. The numbers provided are: one million zloty (Poland's currency) and 45 million escudo
(Portugal's currency). To make a clear comparison, you need to convert these currencies to U.S. dollars. Do the conversion
and suggest where to invest.

#### Solution Preview

Thank you for posting today. It is my goal to provide ideas, definitions, research help, and instructions on how you, the student, should approach the assignment.

Thank you for posting the pdf file of the actual textbook. Without that, I would not have been able to address this assignment adequately.

Question 1: We are talking about Japanese Yen, so if you look at the forward 1 month ...

#### Solution Summary

The solution includes an explanation of how to answer each of the exchange rate questions posted in the assignment. The attached file is the data table.

\$2.19