...FIN5IFM: International Financial Management Topic 5 Equity: Concepts and Techniques Take Home Questions 1. In 1989, Jaguar Plc, an English company, was listed on the London SEAQ and on NASDAQ. At the time, one fourth of Jaguar common stock was held in the form of ADRs quoted on NASDAQ. Under U.K. accounting principles, Jaguar reported a 1988 net income (before extraordinary items) of £61 million, a decrease of 27% from 1987 net income. Under U.S. GAAP, Jaguar reported a 1988 net income (before extraordinary items) of £113 million, an increase of 89% over the comparable figure for 1987. What would your reaction be as an investor? 2. A company can generate an ROE of 12% and has an earnings retention ratio of 0.80. Next year’s earnings are projected at $100 million. If the required rate of return for the company is 10%, what is the company’s tangible PE value, franchise factor, growth factor, and franchise PE value? 3. You are an active British stock portfolio manager. Your performance is measured against the FTSE index, a broadly based British stock index. It has been repeatedly observed that small-capitalization stocks outperform largecapitalization stocks over prolonged periods of time (“small-firm effect”) but that there have been periods when the reverse was true. It has also been repeatedly observed that value stocks (firms with low price-to-book ratios) outperform growth stocks over prolonged periods of time (“value/growth effect”) but that there have been periods when...
Words: 440 - Pages: 2
...28, 2015 AIFS Summary AIFS (American Institute for Foreign Study) is a company that organizes educational programs for students to study abroad. The College division and High School Travel division are two of AIFS’s primary divisions. The students travel to several countries for the educational programs, thus AIFS receives payments in a variety of currencies. The primary dilemma for AIFS is the risk associated with currency exchange and how to mitigate these risks. Christopher Archer-Lock and Becky Tabaczynski, two employees at AIFS, work together to hedge the risks. The company had been so successful and obtained a loyal customer base with their “no surprise” pricing policy. The pricing policy was that their prices would not fluctuate before their next catalog was issued. The college division only disbursed two catalogs per year and the high school division only disbursed 1 catalog yearly. AIFS incurs more risk by maintaining these prices over such a long period of time. The demand and currency exchange rate are very volatile. Unexpected world events, such as terrorism attacks, can directly affect the demand to study abroad and currency exchange rates. However, the “no surprise” pricing policy is heavily rewarded with loyal customers. In efforts to maintain their loyal customers, AIFS has no intentions on changing this policy. Hedging these risks is not an easy solution. AIFS must aim for high sales volume and high exchange rates to remain profitable. AIFS can hedge with...
Words: 321 - Pages: 2
...exposure at AIFS? American Institute for Foreign Study (AIFS) is a student exchange organization. It organizes exchange programs in education and culture throughout the world with two of its major divisions serving American students traveling abroad in the Study Abroad College division and High School Travel division. AIFS receives their revenues in American Dollars (USD) but incurs their costs and expenses in a foreign currency, mainly in the Euro (EUR) and the British Pound (GBP). AIFS’s currency is exposed to changes in the foreign exchange rate, therefore their gain or loss is determined by the appreciation or depreciation of the American dollar in the foreign market. In order for AIFS to protect its assets they need to hedge their currency in forward contracts and options to reduce currency exposure risks. There are three types of currency risks: the bottom-line risk, the volume risk and competitive pricing risk. AIFS starts to hedge foreign currencies between 6 months and 2 years prior to the main pricing date and the implement forward contracts and currency options (primarily forward contracts) to hedge currency exposure risks. AIFS establishes its pricing in advance and guarantees that price, so if the market changes they will still honor the set price. The Bottom-line Risk Adverse changes in exchange rates against the dollar without hedging could increase costs because AIFS requires large sums of money to cater to their clients. The main hedging technique that AIFS implements...
Words: 1311 - Pages: 6
...1) AIFS - There are several factors that give rise to currency exposure at AIFS. One of these is the fact that most of their revenues are denominated in USD ($) but most of the expenses they incur are in foreign currencies (mainly Euros and British Pounds). One of the reasons AIFS hedges currency is to protect themselves from changing foreign exchange rates. This also protects them from one of their 3 major types of risk – the bottom line risk, or the risk that foreign exchange rates could increase the firm’s cost base. The second type of risk AIFS encountered was sales volume risk. Since currency is traded based on projected sales, the actual sales amount at the end of the financial period could vary from the projections and a lower actual sales volume could be very damaging to AIFS financially. The third type of risk AIFS tries to hedge against is competitive pricing risk. This means regardless of how the exchange rates arep fluctuating, AIFS could not transfer rate changes into an increase in their price. Since AIFS does their banking with 6 different institutions, and maintains good, close relationships with each, AIFS is able to hedge with their lines of credit for each bank, rather than depositing funds in these banks to complete the transactions. This saves AIFS in transaction costs and the number of transactions since the banks know and trust them. The ultimate success of the hedging activities is determined by the final sales volume and the fair market value of the USD...
Words: 728 - Pages: 3
...DESSAIN ANDERS SJOMAN Cobertura contra el riesgo de moneda en AIFS Christopher Archer-Lock, Contralor con sede en Londres para la Organización de Intercambio Estudiantil American Institute for Foreign Study (AIFS) hablaba casi diariamente con su contraparte de Boston, Becky Tabaczynski, Directora de Finanzas de la división ACIS de High School Travel del Grupo. En este día, a principios de julio de 2004, su llamada telefónica diaria había sido especialmente estimulante. Como había ocurrido anteriormente con frecuencia, habían discutido la cobertura de divisas, un área de gran importancia para la empresa. AIFS recibía la mayor parte de sus ingresos en dólares (USD), pero sus costos se generaban en otras monedas, principalmente en euros (EUR) y libras esterlinas (GBP). El desajuste de moneda era natural dado el negocio de AIFS: la empresa organizaba programas de intercambio educativo y cultural en todo el mundo. Dos de las principales divisiones de AIFS servían a estudiantes de Estados Unidos que viajaban al extranjero. La división Study Abroad College, de la que Archer-Lock era contralor y tesorero, enviaba estudiantes de edad universitaria a universidades de todo el mundo para programas de un semestre, y la división de High School Travel, cuyas finanzas manejaba Tabaczynski, organizaba viajes de 1 a 4 semanas para estudiantes de secundaria y sus profesores. La cobertura de moneda ayudaba a AIFS a proteger sus utilidades de perjudiciales variaciones en el tipo...
Words: 7170 - Pages: 29
...AIFS’ business of sending students abroad and the timing difference between when the prices were set and when payment was received created transaction exposure. Guaranteeing that prices of the trips would not change prior to the release of the next catalog was a major table stake of the company’s business, and very important to maintaining a loyal customer base. Given this, movements in the cost basis caused by fluctuations in exchange rates could not be passed onto customers. When combined with the fact that there was a relatively long lead time between when prices were locked in and when the payment from students was received (over a year in the college student program) resulted in a significant amount of uncertainty regarding the company’s primary operating cost. The potential variance in the annual volume of students enrolled in the company’s programs also created issues with currency exposure. Hedging based on projected sales totals is difficult, especially when certain events that can materially impact volumes are well beyond the company’s control. If no hedging was done, the company would be fully exposed to the movements in exchange rates after each price was set/catalog was issued. The magnitude and direction of the movements from when the price was locked in would determine the gain or loss on each individual trip that was booked. This would cause the company’s cash flows to be quite volatile, and this uncertainty would create a litany of problems for the company....
Words: 704 - Pages: 3
...300 (2:30-3:45pm, Mon. & Wed.) | Date: | October 26th, 2010 | 1) There are several factors that give rise to currency exposure at AIFS. One of these is the fact that most of their revenues are denominated in USD ($) but most of the expenses they incur are in foreign currencies (mainly Euros and British Pounds). One of the reasons AIFS hedges currency is to protect themselves from changing foreign exchange rates. This also protects them from one of their 3 major types of risk – the bottom line risk, or the risk that foreign exchange rates could increase the firm’s cost base. The second type of risk AIFS encountered was sales volume risk. Since currency is traded based on projected sales, the actual sales amount at the end of the financial period could vary from the projections and a lower actual sales volume could be very damaging to AIFS financially. The third type of risk AIFS tries to hedge against is competitive pricing risk. This means regardless of how the exchange rates arep fluctuating, AIFS could not transfer rate changes into an increase in their price. Since AIFS does their banking with 6 different institutions, and maintains good, close relationships with each, AIFS is able to hedge with their lines of credit for each bank, rather than depositing funds in these banks to complete the transactions. This saves AIFS in transaction costs and the number of transactions since the banks know and trust them. The ultimate success of the hedging activities is determined...
Words: 745 - Pages: 3
...The American Institute for Foreign Study (AIFS) is an organization, which helps enable American students to travel abroad. The main service AIFS provides entails organizing educational and cultural exchange problems across the globe. As the case explains, AIFS has split their business into two major divisions that that serve American student’s studying abroad; the Study Abroad College division and the High School Travel division. The college division, which is controlled by Christopher Archer-Lock, sends American students all over the world on semester-long exchange programs. The high school division, which was founded as the American Council for International Studies (ACIS), is controlled by Becky Tabaczynski and sends high school students and their teachers on 1-4 week long trips. This nature of business involves a certain amount of bottom-line risk. AIFS focuses largely on American students studying abroad, therefore the majority of their revenue is in American Dollars (USD). However, AIFS costs’ are generally incurred in foreign currency (primarily Euros (EUR) and British Pounds (GBP)) because the services they arrange for happen abroad. Due to their business activities involving foreign currencies, an unfavorable change in the exchange rate could result in a higher cost base, and potentially a loss overall if the change is significant enough. Inherently, due to the nature of their business, AIFS is exposed to currency risk because they are dealing in multiple currencies...
Words: 1834 - Pages: 8
...Hines first joined the Australian Imperial Force (AIF) on 24 August 1915, falsely claiming to be 28 years of age.[7][8] In the year before he joined the Army he had worked as a seaman, engineer and shearer.[3] He was discharged from the AIF as medically unfit on 20 January 1916.[3][9] On 8 May Hines successfully rejoined the AIF, this time giving an age of 36 years and seven months.[10] By this stage of the war medical requirements were less strict due to the need for reinforcements to make good the AIF's casualties.[3] Hines was assigned to the 45th Battalion and departed Sydney for Europe onboard HMAT A18 Wiltshire on 22 August 1916.[11] After completing training in England, Hines joined the 45th Battalion on the Western Front in March 1917.[3][4] In June that year he captured a force of 60 Germans during the Battle of Messines by throwing hand grenades into their pillbox, and was later wounded.[3] He returned to his battalion in time for the Battle of Polygon Wood in September, where Frank Hurley photographed him on 27 September surrounded by the loot he had captured.[12][13] Hines was an aggressive soldier and it has been claimed that he killed more Germans...
Words: 614 - Pages: 3
... 3rd Squad 1. (U) Situation. a. (U) Area of Interest. The area north of our OBJ is very pro-American and is a potential strongpoint for US/CF success in the future. Both the local militias and citizens have shown very positive signs of wanting AIF removed from this area. This has also led to increased AIF targeting of both citizens and civic leaders. b. (U) Area of Operations. Sadr City is a predominantly Shiite area, urban in nature, having approximately 1 million inhabitants. Concerned citizens report an insurgent cell is operating out of the house of Ala Jamal in the southern part of Sadr City. IP and local government reports support this information. Sadr City is known as a center for insurgents including Jaysh al-Mahdi (JAM). (1) (U) Terrain. Road networks are somewhat improved but limited for traffic. Most roads remain trafficable, yet many roads are filled with broken down cars and trash. Most have holes and large craters from IEDs and VBIEDs. Outside of violence and combat operations, heat and rain damages and degrades the poorly constructed roads. Due to copious amounts of heavy rains in the afternoon and evenings, the terrain in the area will favor dismounted AIF. Road composition generally is concrete, asphalt, gravel or dirt. The softer grade roads such as asphalt, gravel and...
Words: 1638 - Pages: 7
...Higher Education Quality Enhancement Project HEQEP Operations Manual for Innovation Fund Second Edition evsjv‡`k wek¦we`¨vjqgÄyixKwgkb University Grants Commission of Bangladesh Ministry of Education Government of the People’s Republic of Bangladesh Operations Manual for Innovation Fund (2nded.) IFOM Preparation Committee: Professor Abdul Mannan, Chairman, UGC Professor Dr Mohammad Mohabbat Khan, Member, UGC Professor Dr AbulHashem, Member, UGC Professor Dr Md. AkhtarHossain, Member, UGC Professor Dr M. Yousuf Ali Mollah, Member, UGC Professor Dr DilAfroza, Member, UGC Dr Gauranga Chandra Mohanta, ndc, Project Director, HEQEP Mr Md. Korban Ali, AIF Coordinator, HEQEP Professor Dr M. MuhiburRahman, AIF Management Specialist, HEQEP Professor Dr AbutaherM.Ziauddin, AIF Management Specialist, HEQEP Mr Md. Gazi Nazrul Islam, Program Officer (Innovation), HEQEP Published by: Higher Education Quality Enhancement Project (HEQEP) Dhaka Trade Centre (8th Floor), 99 KaziNazrul Islam Avenue Karwan Bazar, Dhaka 1215, Phone: 8189020-24, Fax 8189021 E-mail: pd.heqep1@gmail.com, Web: www.heqep-ugc.gov.bd University Grants Commission of Bangladesh (UGC) UGC Bhaban, Plot No. E-18/A, Agargaon, Sher-e-Bangla Nagar, Dhaka 1207 Phone: 8128172,8128174,8128175,8128177; Fax: 8181615, 8181617, 9114707 E-mail: chairmanugc@yahoo.com, Web: www.ugc.gov.bd Disclaimer This Operations Manual (2nd ed.) should not be considered as a final document that cannot be revised, modified or updated...
Words: 57516 - Pages: 231
...In 1988 the Securities and Exchange Board of India (SEBI) was established by the Government of India through an executive resolution, and was subsequently upgraded as a fully autonomous body (a statutory Board) in the year 1992 with the passing of the Securities and Exchange Board of India Act (SEBI Act) on 30th January 1992. In place of Government Control, a statutory and autonomous regulatory board with defined responsibilities, to cover both development & regulation of the market, and independent powers have been set up. Paradoxically this is a positive outcome of the Securities Scam of 1990-91. The basic objectives of the Board were identified as: * to protect the interests of investors in securities; * to promote the development of Securities Market; * to regulate the securities market and * for matters connected therewith or incidental thereto. Since its inception SEBI has been working targetting the securities and is attending to the fulfillment of its objectives with commendable zeal and dexterity. The improvements in the securities markets like capitalization requirements, margining, establishment of clearing corporations etc. reduced the risk of credit and also reduced the market. SEBI has introduced the comprehensive regulatory measures, prescribed registration norms, the eligibility criteria, the code of obligations and the code of conduct for different intermediaries like, bankers to issue, merchant bankers, brokers and sub-brokers,...
Words: 2239 - Pages: 9
...Dynamical Contact Problems with Friction Walter Sextro Dynamical Contact Problems with MODELS, Friction METHODS, EXPERIMENTS AND APPLICATIONS With 133 Figures 123 Prof. Dr.-Ing. habil. Walter Sextro Graz University of Technology Institute of Mechanics Kopernikusgasse 24/III A-8010 Graz Austria E-mail: sextro@tugraz.at Originally published as volume 3 of the series Lecture Notes in Applied Mechanics, Springer-Verlag Berlin Heidelberg 2002. Library of Congress Control Number: 2006940067 ISBN-10 3-540-69535-4 Springer Berlin Heidelberg New York ISBN-13 978-3-540-69535-6 Springer Berlin Heidelberg New York This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilm or in any other way, and storage in data banks. Duplication of this publication or parts thereof is permitted only under the provisions of the German Copyright Law of September 9, 1965, in its current version, and permission for use must always be obtained from Springer. Violations are liable to prosecution under the German Copyright Law. Springer is a part of Springer Science+Business Media. springer.com © Springer-Verlag Berlin Heidelberg 2007 The use of general descriptive names, registered names, trademarks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt...
Words: 1471 - Pages: 6
...coming second battle of El Alamein. Change Slides. Rommel launched a last-ditch offensive in the closing days of August, in an attempt to push back the Allies and break through to Cairo. Despite the valiant effort of the Axis forces, the strength of the well-supplied Allies proved too great, and Axis forces were quickly thwarted. Rommel now began to reinforce his position for the expected Allied offensive. Change Slides. On the 23rd of October, the second battle of El Alamein began with the Allied offensive, which was supported by artillery barrages and tank divisions. The Allied infantrymen achieved most of their goals; however the tank divisions were not so successful. Change Slides. Montgomery then changed tacts, and sent the 9th division AIF into a northward attack. The valiant and determined fighting of the Australians in the north greatly concerned Rommel, who focused on reinforcing his northerly defences. This left the southern part of the German line more exposed to attack, and Montgomery capitalised on this weakness, ordering British tanks to attack in the south on the 2nd of November. The waning Axis forces were unable to repel the Allied tank divisions, so Rommel ordered the retreat of his forces. Change Slides. The Allied forces had successfully defended the Suez Canal and pushed the Axis forces out of Egypt and, in turn, out of North Africa altogether. This great victory is of immense historical significance and also had a great impact on the rest of the war in Europe...
Words: 1235 - Pages: 5
...TRABAJO TEMA 2: LA CONFERENCIA DE BRETTON WOODS El actual sistema monetario internacional es heredero del que se creo en julio de 1944, en Bretton Woods (New Hampshire) donde tuvo lugar una Conferencia Monetaria y Financiera de la que participaron 44 países. Las negociaciones para implementar el sistema partieron de una teoría desarrollada por John Maynard Keynes, que entendía que el crecimiento económico debía lograrse en un plano global, lo cual requería de cuatro instituciones fundamentales: 1.-‐Un banco central mundial, que estabilizara la economía mundial, incluso propuso la creación de una moneda mundial. 2.-‐Un fondo para la reconstrucción y el desarrollo, que otorgara créditos a países de bajos ingresos. 3.-‐Una organización internacional de comercio, que se ocupara especialmente de la estabilidad de los bienes de exportación primarios. 4.-‐Un programa “soft aid programme”...
Words: 909 - Pages: 4
