Question

KNOWLEDGE CHECK 

In early 2016, the same Germany machinery company has interest from four prospective clients from emerging markets: Indonesia, Brazil, Russia, and South Africa. They all want to buy ten machines, but the factory can only produce ten in time. Therefore, the company has to choose only one client. Given the volatility of the domestic currencies of the four prospective clients, the CFO would like to choose the client which is least likely to cancel the order due to currency volatility. The invoice comes due on June 30, 2016. According to volatility alone, which prospective client would be most likely to cancel the order?  

• Russia 

• South Africa 

• Brazil 

• Indonesia 
  

Answer 1

The information given about currencies is only Indonesian rupiah. It is seen from the graph that the probability on 30th June is almost 78%. So, it is less likely for it to cancel the order due to volatility.

The answer is to go with Indonesia.

Answer 2

Indonesia