Assume that you are a U.S. based MNC. Please tell me how you would assess and reduce the economic exposure for a compan...
Homework Answers
U.S. based MNC owns in Mexico which is denominated in foreign currency (Mexican Peso ) are subject to economic exposure because the market value of the firm is affected by exchange rate movement in domestic market. In this case the value of the firm will be calculated in local currency and fluctuation in exchange rate in domestic market will affect the market value of the firm.
Exchange exposure of company is a measure of the sensitivity of a firm’s cash flows to a change in the spot exchange rate. Therefore the U.S. Company can reduce its economic exposure by shifting expenses from the U.S. to Mexico. In this way, the outflow of Mexican peso would be more similar to inflow of Mexican Peso and it will reduce the economic exposure of the company.
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Assume that you are a U.S. based MNC. Please tell me how you would assess and reduce the economic exposure for a compan...
Explain in detail how you would restructure your MNC operating in Iraq and Kuwait to reduce...
Explain in detail how you would restructure your MNC operating in Iraq and Kuwait to reduce economic exposure
let's assume you are a financial manager at MNC, and just exported goods to Mexico, how...
let's assume you are a financial manager at MNC, and just exported goods to Mexico, how a banker's acceptance would be beneficial to your company as an exporter?
(1)(a)What is exchange rate risk? Distinguish between Transaction Exposure and Economic exposure to exchange rate movements....
(1)(a)What is exchange rate risk? Distinguish between Transaction Exposure and Economic exposure to exchange rate movements. (b)Consider the following information: 90-day U.S interest rate..... ..4% 90-day Malaysian interest rate.. .3% 90-day forward rate for the Malaysian Ringgit $0.400 Spot Rate of Malaysian Ringgit ..$0.404 Assume a U.S based MNC will need 300,000 Ringgit in 90 days and wishes to hedge this payable position. Would it be better off using a FORWARD hedge or MONEY MARKET hedge?
Break-even Financing. Lakeland, Inc., is a U.S.‑based MNC with a subsidiary in Mexico. Its Mexican subsidiary...
Break-even Financing. Lakeland, Inc., is a U.S.‑based MNC with a subsidiary in Mexico. Its Mexican subsidiary needs a one‑year loan of 10 million pesos for operating expenses. Since the Mexican interest rate is 70 percent, Lakeland is considering borrowing dollars, which it would convert to pesos to cover the operating expenses. By how much would the dollar have to appreciate against the peso to cause such a strategy to backfire? (The one‑year U.S. interest rate is 9%.)
Please help!!!!! Your assignment is to tell me how would you frame the discussion based on...
Please help!!!!! Your assignment is to tell me how would you frame the discussion based on the class make-up for Topic “The Fall of the Berlin Wall” Audience #1: Day class: 70% age 18 to 22, 30% age 23 and over Audience #2: Evening class: 50% age 40 and over, 30% age 23 to 34, 20% age 18 to 22
You have been asked to assess the economic exposure of Rand Corp. using the following regression:...
You have been asked to assess the economic exposure of Rand Corp. using the following regression: rt = a + β * Δet + ut where rt is the return on Rand’s stock at time t, Δet is the percentage change in the dollar value of the Japanese yen at time t (i.e., dollars per yen), and ut is the regression error term at time t. The regression output shows: a=intercept= 0.30 β=slope coefficient= -1.20 p-value of slope coefficient =...
Assume that you have decided to hedge future payables that are coming from Mexico to a...
Assume that you have decided to hedge future payables that are coming from Mexico to a US MNC. How would the US MNC hedge these payables? Please use numbers.
St. Paul Co. does business in the United States and New Zealand. In attempting to assess its economic exposure, it compiled the following information. a. t. Paul's U.S. sales are somewhat affecte...
St. Paul Co. does business in the United States and New Zealand. In attempting to assess its economic exposure, it compiled the following information. a. t. Paul's U.S. sales are somewhat affected by the value of the New Zealand dollar (NZS), because it faces competition from New Zealand exporters. It forecasts the U.S. sales based on the following three exchange rate scenarios: 1) when exchange rate of NZS S0.40, revenue from US is S100 million, 2) exchange rate of NZS-S0.50,...
St. Paul Co. does business in the United States and New Zealand. In attempting to assess its economic exposure, it compiled the following information. a. St. Paul’s U.S. sales are somewhat a...
St. Paul Co. does business in the United States and New Zealand. In attempting to assess its economic exposure, it compiled the following information. a. St. Paul’s U.S. sales are somewhat affected by the value of the New Zealand dollar (NZ$), because it faces competition from New Zealand exporters. It forecasts the U.S. sales based on the following three exchange rate scenarios: 1) when exchange rate of NZ$=$0.40, revenue from US is $100 million, 2) exchange rate of NZ$=$0.50, revenue...
Can someone please help me solve this and tell me how you would go about measuring...
Can someone please help me solve this and tell me how you
would go about measuring these types of costs
PROBLEM FOUR (20 POINTS) You are a resource economist for the state of Washington. The state is considering the removal of the Wynoochee Dam, which generates 10.8 Mw per year of electricity and also provides the water supply for the City of Aberdeen. You have been assigned as part of a team to determine the costs (not benefits) of this...
(1)(a)What is exchange rate risk? Distinguish between Transaction Exposure and Economic exposure to exchange rate movements. (b)Consider the following information: 90-day U.S interest rate..... ..4% 90-day Malaysian interest rate.. .3% 90-day forward rate for the Malaysian Ringgit $0.400 Spot Rate of Malaysian Ringgit ..$0.404 Assume a U.S based MNC will need 300,000 Ringgit in 90 days and wishes to hedge this payable position. Would it be better off using a FORWARD hedge or MONEY MARKET hedge?
St. Paul Co. does business in the United States and New Zealand. In attempting to assess its economic exposure, it compiled the following information. a. t. Paul's U.S. sales are somewhat affected by the value of the New Zealand dollar (NZS), because it faces competition from New Zealand exporters. It forecasts the U.S. sales based on the following three exchange rate scenarios: 1) when exchange rate of NZS S0.40, revenue from US is S100 million, 2) exchange rate of NZS-S0.50,...
Can someone please help me solve this and tell me how you
would go about measuring these types of costs
PROBLEM FOUR (20 POINTS) You are a resource economist for the state of Washington. The state is considering the removal of the Wynoochee Dam, which generates 10.8 Mw per year of electricity and also provides the water supply for the City of Aberdeen. You have been assigned as part of a team to determine the costs (not benefits) of this...
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