...Islamic banking and finance Submitted to: Sir Abubakar Siddique Submitted by: Atia Farooq Roll no: 4918 MBA 21(A) A sharia,h perspective of minimum account balance Requirement in Islamic banking Summary: This article describe sharia’h point of view weather its allow to Islamic banking to charge fee, cut profit and reduce free services when depositor have amount less the minimum requirement of amount in saving account and in current account. Conventional banks fix the minimum amount of saving account. Banks fix this amount to recover it service expenses. Mean amount of the interest (return on investment) must sufficient to recover its services expense. When depositor amount less the minimum requirement and due to which banks service charges increase as compare to interest then bank charge fee, or stop giving profit on saving account and also reduce providing free services. Some banks also have the same conditions for current banks but mostly not have such restrictions on current account, because banks not give any profit o current account so easily provide those free services. When saving account have amount less then minimum requirement bank convert these account in to current account and pay no profit on it. Bank also reduces the free services to savings account holder so When balance turn into zero then bank close the account of depositor. All banks whether conventional or Islamic suffer loss due to balance less...
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...Assignment 2 Blades, Inc. Case 1. One point of concern for you is that there is a trade-off between the higher interest rates in Thailand and the delayed conversion of baht into dollars. Explain what this means. ANSWER: If the net baht-denominated cash flows are converted into dollars today, Blades will not be obligated to depreciation in the future; in the end, there would be a decrease in the dollar cash flows and a depreciation of the baht. 2. If the net baht received from the Thailand operation are invested in Thailand, how will U.S. operations be affected? ANSWER: Essentially, Blades, Inc. will need to borrow additional funds in the United States due to the fact that in Thailand, the cash flow is used to support the U.S. operations. In order to do so, the funds will need to be at a 10 percent interest rate. Therefore, if the baht depreciates 10 percent over the next year, investments in Thai will yield 5 percent. This would then mean that the company would need to pay 10 percent interest on the funds that would be borrowed in the U.S. The baht, though, should be converted into dollars in order to be used in the United States. This will ultimately ensure that the people in Thailand will have a better-expected idea of the interest expenses. 3. Under the first plan, net baht-dominated cash flows (received today) will be invested in Thailand at 15 percent for a 1-year period, after which the bath will be converted to dollars… Does Holt’s plan seem superior...
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...intervention? Which type do you think would be more effective in increasing the value of the baht? Why? The intervention by the Thai government constituted nonsterilized intervention. In using a nonsterilized intervention, a central bank intervenes in the foreign exchange market without adjusting for the change in money supply. Using sterilized intervention, a central bank intervenes in the foreign exchange market while retaining the money supply. Since the Thai government exchanged dollar reserves for baht in the foreign exchange market, the dollar money supply is increased. An increase in the money supply may decrease U.S. interest rates, which may additionally weaken the dollar with respect to the baht. In this case, the nonsterilized intervention may compound the desired effects of the intervention effort. This would also be the most effective choice if it is the intentions of the Thai government is to increase the value of the baht. 3. If the Thai baht is virtually fixed with respect to the...
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...(2013-2015) CASE PRESENTATION IN INTERNATIONAL FINANCIAL MANAGEMENT The following cases are assigned to the groups for presentation on the 3rd of April, 2014. All the cases are from the Text Book and the respective page numbers of the text book are given for ready reference. The presentation would be in group and it is expected that each of the group prepares 10-15 slides per case and any one of the members could be asked to take up the questions. The case carries 10 marks, in which the group performance would be evaluated for 7 marks and each individual performance would be evaluated for 3 marks. GROUPS FOR CASE PRESENTATIONS GROUP | SECTION-B | CASE | 1 | 113101, 103, 108, 113, 121, | Flames Fixtures Inc. – Text Book – Page – 651 | 2 | 113102, 105, 107, 122, 128, 161 | Northstar Company – Text Book – Page – 659 | 3 | 113104, 123, 126, 127, 130 | Redwing Technology Company – Text Book – Page – 661 | 4 | 113133, 134, 135, 152, 153 | Zuber Inc. – Text Book – Page 650 | 5 | 113155, 156, 160, 101, 102 | Decision to Invest in Thailand – Blades Inc. – Text Book – Page - 440 | 6 | 113110, 111, 112, 114, 115 | Assessment of Cost of Capital – Blades Inc. – Text Book – Page - 525 | 7 | 113116, 118, 119, 131, 132 | Use of Long Term Financing – Blades Inc. – Text Book – Page – 551 | 8 | 113137, 138, 139, 142, 158 | Sabre Computer Corporation – Text Book – Page – 663 | 9 | 113143, 144, 146, 147, 148, 159 | International Cash Management – Blades Inc. – Text Book...
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...Introduction to International Finance Case Study Assignment credit 30% of the marks for the module are awarded for this case study. Date handed out: 21 March 2014 Maximum word length for reports: 1,500 (not including appendices) Report submission: 23 April 2014 You should produce a consultancy report rather than answer questions by questions. Blades, Inc. Case A. Decisions to Expand Internationally Blades, Inc, is a U.S.-based company that has been incorporated in the United States for three years. Blades is a relatively small company, with total assets of only $200 million. The company produces a single type of product, roller blades. Due to the booming roller blade market in the United States at the time of the company’s establishment, Blades has been quite successful. For example, in its first year of operation, it reported net income of $3.5 million. Recently, however, the demand for Blades’ “Speedo”, the company’s primary product in the United States, has not been performing well. Last year, it reported a return on assets of only 7 percent. In response to the company’s annual report for its most recent year of operations, Blades’ shareholders have been pressuring the company to improve its performance; its stock price has fallen from a high of $20 per share three years ago to $12 last year. Blades produces high-quality roller blades and employs a unique production process, but the price it charges is among the top five percent in the industry. In light...
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...FIN 535 – International Finance COURSE DESCRIPTION Presents international financial tools, applications, and concepts used in formulating effective financial management strategies. Examines fundamental international financial relationships and transactions among firms, foreign exchange rate determination and forecasting, foreign exchange risk and exposure, balance of payment accounting, and evolution of the international monetary system. Analyzes special topics such as working capital management strategies, capital budgeting, cost of capital, and optimal capital structure in the context of international operations. INSTRUCTIONAL MATERIALS Required Resources Madura, J. (2012). International financial management (11th ed.). Mason, OH: South-Western, Cengage Learning. Supplemental Resources Al Nasser, O.M. (2010). How does foreign direct investment affect economic growth? The role of local conditions. Latin American Business Review 11, 111-139. Kornecki, L. & E. M. Ekanayake. (2011). Inward FDI stock in the U.S. economy and state based determinants. Advances in Management, 4(6), 13-24. Ranjan, V. & Agrawal, G. (2011). FDI inflow determinants in BRIC countries: A panel data analysis. International Business Research, 4(4), 255-263. United Nations. (2011). Foreign Direct Investments in LDCs: Lessons learned from the decade 20012010 and the way forward. United National Conference on Trade and Development. COURSE LEARNING OUTCOMES 1. Compare multinational financial management...
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...Blade Case Blades case: Decision to Expand Internationally 1. What are the advantages Blades could gain from importing from and/or exporting to a foreign country such as Thailand? The advantages Blades could gain from importing from and/or exporting to Thailand includes 1. Decrease their cost of goods sold, and increase Blades’ net income since rubber and plastic are cheaper when imported from a foreign country such as Thailand. 2, Allow Blades to explore the option of exporting to Thailand by building relationships with some local suppliers. As far as exporting is concerned, Blades could become the first firm to seller roller Blades in Thailand. 3, Diversify their investment by opening option to export to other countries beyond Thailand to ensure company sustainability. 2. What are some of the disadvantages Blades could face as a result of foreign trade in the short run? In the long run? The disadvantages Blades could face as a result of foreign trade in the short run are: 1. Exchange rate risk. Blades would be exposed to currency fluctuation in the Thai baht if importation cost increase without Thai suppliers adjusting their price. 2. International economic condition; if Thailand’s economy undergoes recession, Blades would suffer from sales decrease in Thailand. In the long run, Blades should be aware of the political risk involved in operating in Thailand, such as any regulatory changes or tax increase may impact on Blade’s subsidiary. 3. Which theories...
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...Blades Inc., a U.S. roller blades manufacturer, began exporting their product to Entertainment Products Inc., a Thailand company. Shortly after exportation began, Asia developed weak economic conditions. This resulted in an excess supply of the Baht. To combat this, the Thai government decided to trade in baht reserves for dollar reserves and invest them in the foreign exchange market. The Thai government participated in direct intervention. Direct intervention is a process that the government uses to change the amount of money supply within a country. The government can exchange their home currencies for foreign currencies and invest in the foreign exchange market. For example, if the Thai government wanted to force the baht to depreciate they would exchange the baht for another currency and invest that currency within the foreign exchange market. If they wanted the baht to appreciate they would exchange foreign currencies for the baht in the foreign exchange market. Because the Thai government exchanged the baht for foreign reserves, they were causing the baht to depreciate in value. There are two different types of direct intervention; sterilized and nonsterilized intervention. Nonsterilized intervention happens “when the Fed intervenes in the foreign exchange market without adjusting for the change in the money supply” (Madura, 2010). The end result of nonsterilized intervention is a change in the money supply. Sterilized intervention occurs when “the Fed intervenes in...
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...University of Notre Dame Mendoza College of Business Department of Finance FIN 70500 – Multinational Financial Management Module 1, Fall, 2006 |Instructor: |Jerry G. Langley |Phone: |Office - (574) 631-6078 | | Office: |262 MCOB | |Home - (574) 234-1191 (before10PM) | |E-mail: |Jerry.Langley.3@nd.edu | | | | Office hours: I’m in my office most of the week, so stop by or call and set up a time to see me. | COURSE OBJECTIVES This course covers various aspects of the international side of finance, including organizational issues that impact the financial decision-making process. After an overview of the international financial environment companies operate in, we will learn how they organize themselves to do business internationally, the impact of volatile exchange rates and how they can be measured and managed to minimize effects on economic and reported results. In addition to looking at the theoretical underpinnings of international finance, we will also cover the practical side of financing decisions – how corporations actually use these tools to manage the potential impacts on their business that come from operating around the world. We’ll also...
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...the previous topic Globalization & Multinational Business Finance including the Discussion Note: Managing for Value - Yahoo’s Decision to Expand internationally / Finance function in a global corporation; Case study: Ranger Supply Company; and start with, Topic 2 International Financial System, BoP and Foreign Exchange Markets- Government Policies Managing for Value: Impact of Trade Policies on Firm; and How Yahoo!is exposed to Exchange Rate Systems and Intervention. Case study: MapleLeaf Paper Co., Self-evaluation Exercises: Applications: Point Counter-point; Blades Inc. Case; and Small Business Dilemma Readings: Topic 2 & 6 from Jeff Madura; & Topic 2 from Readings in IFM Handout) 10th Jul ‘11 – Session 5 We conclude Topic 2A International Financial System & Government policies; and introduce: Topic 3 International Financial Markets: Foreign Exchange Markets. Discussion Note 1: Managing for value – Intel’s currency trading; 2. Foreign Exchange Markets - Don’t Blame Speculators for Falling Currencies!? Self-assessment: Blades Inc.& Small Business Dilemma. Readings: Topic 3 from Jeff Madura; & Topic 3 from Readings in IFM Handout) Assignment-1(Individual): Article Review – Finance Function in a Global Corporation and Case study 1 Blades Inc.: Decision to Expand Internationally, is due on 7thJuly 2011, 5.30pm. Important Note: All students are required to come prepared as per the session plan given and as clarified surprise test element is part...
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...Case Study 6: Assessment of Economic Exposure 1. How will Blades be negatively affected by the high level of inflation in Thailand if the Thai customer renews its commitment for another three years? ANSWER: If the Thai customer renews its commitment for another three years, the price Blades receives in baht would continue to be fixed. Conversely, Blades’ cost of goods sold incurred in Thailand would be subject to the high level of inflation in Thailand. In addition, the high inflation may cause the baht to depreciate, which would reduce the dollars received from baht-denominated sales to Thailand. 2. Holt believes that the Thai importer will renew its commitment in two years. Do you think his assessment is correct? Why or why not? Also, assume that the Thai economy returns to the high growth level that existed prior to the recent unfavorable economic events. Under this assumption, how likely is it that the Thai importer will renew its commitment in two years? ANSWER: Before renewing its commitment to purchase a fixed number of products at a fixed price from Blades, the Thai importer would have to assess the advantages and disadvantages of such an arrangement. If the Thai level of inflation continues to be high, the retailer has the advantage of incurring costs denominated in baht that are not subject to the high level of inflation. However, if consumers in Thailand continue to reduce their spending on leisure products, the Thai firm may not be able to sell all of the...
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...Blades, Inc. Case Study Analysis PaperFactors of Foreign Exchange RatesExchange rates are the amount of one countrys currency needed to purchase one unit of another currency and the foreign exchange market is the monetary nexus between countries that makes it possible for global trade to be accomplished more efficiently than barter. The foreign exchange market is where one countries currency is exchanged for another because each nation uses its own monetary unit. Therefore, if people in one nation want to acquire goods in another nation, currency must be replaced from one country for the other country to accommodate the business deal. Foreign exchange rates, at the most basic level, are derived from long-term economic fundamentals. These variables weigh and measure the value of one currency to another. Over time, these economic fundamentals and macro-factors will lead to very long-term trends. From the fundamentalist's perspective, the main factors that affect foreign exchange rates are Interest rates, Trade balance, Inflation, GDP (Gross Domestic Product), and Employment Statistics. Case SummaryBlades, Inc. needed to order supplies two months ahead of the delivery date. The company considered an order from a Japanese supplier that required a payment of 12.5 million yen payable as of the delivery date. Blades had two choices to either purchase two call options contracts (since each option contract represented 6,250,000 yen) or purchase one futures contract (which represented...
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...Chapter 1 Case Questions: Blades, Inc. Case 1. The advantages of Blades importing and exporting to another country are that the costs would be lower when handling certain materials they might need. Another advantage is that because the assets are not just in one location, if the economy goes under in the United States the company won’t be completely hurt by the decline. 2. The disadvantages of Blades importing and exporting to another country is that jobs will be cut from the United States plant and employees might get upset and give the company a bad image. Another disadvantage is that it is a new country and rules will be different which might have huge fines attached to it if they aren’t followed. 3. One of the theories of international business that can have a long term effect on the company is exposure to exchange rate risk. Blades will convert everything to the currency that the plant is based in which means that if the economy changes and the rate for that currency declines then the business will suffer along with it which is a huge negative. International trade is a theory can has a short run effect on the company because it allows Blades to penetrate the market at very low risk which can save them money right away. 4. For a long term solution the company might want to either do acquisitions of existing operations or joint ventures. Doing acquisitions of existing operations would help immensely because the operation is already set up and the company just has to train...
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...Blades, Inc. Case, International Financial Management 1. The overall benefits from considering DFI in Thailand is maximizing profits and minimizing costs. Given the current situation, there are several things that would factor in a positive Direct Foreign Investment. First, Blades generates higher profit margin in Thailand. In addition, the cost of materials is significantly cheaper in Thailand. DFI in Thailand would diversify the risk. In other words, Blades would not be solely reliant on the U.S. economic conditions. Finally, Blades would increase its overall market share. 2. The main tradeoff is between the initial outlay required to invest and operating under uncertain economic conditions. If Blades were to engage in DFI now, the initial outlay will be low. However, the primary concern is that Thai consumers have not been affected by the unfavorable economic conditions, and the possibility that the economic conditions will not improve in the future. If this was to happen, Blades would pay a price. Nevertheless, if Blades waits one year and economy improves, the initial outlay required would be high, and there is a change there might be heavier competition. As a financial consultant for Blades, I would advise a analysis, as well as the series of other financial analysis by using various ratios, etc., prior to making this decision. Scenario analysis would be useful because we can see the possible outcomes and the changes for worst, best, and average...
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...MGM365-1501A-04: The Legal and Ethical Environment of Business Task Type: Individual Project Deliverable Length: 850–1,100 words There are many examples of how the actions of a company have negatively affected consumers. Product recalls, bans, and warning labels have helped to protect consumers and companies are focusing more today on social responsibility. Examine why has there been such a relatively high number of these incidences and what companies can do to protect consumers. Assignment Guidelines: * What legal and ethical responsibilities do companies have to their customers? * Cite and discuss in detail two cases in which a company endangered customers because of the manufacture or design of their products. How did the company address the issue? * What consequences did the companies in the cited cases face and were these consequences warranted? Why or why not? Compose your findings in a Word document (850–1,100 words), and be sure to cite your sources. Abstract There has been an increase in the number of product recalls, bans, and warning labels in recent years, which could be attributed to increased consumer awareness or better product testing. Consumers expect businesses to operate in both an ethical and legal manner. Businesses that are found to be operating outside of legal parameters will be subject to fines and other penalties enforceable under the Consumer Product Safety Act. W3 Individual Project In recent years, there has been...
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