safe return. | b. | ownership in corporations. | c. | the most risk possible in the market. | d. | a pure, speculative gamble. | ANS: B Q.The nominal interest rate minus the expected inflation rate equals the a. | potential interest rate. | b. | natural interest rate. | c. | true interest rate. | d. | real interest rate. | ANS: D Q During the 2000s, banks became complacent about making mortgage loans because a. | there was not a single bank failure in the decade. | b.
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and explain how corporate and country characteristics are considered by an MNC when it establishes its capital structure. l l An MNC finances its operations by using a mixture of fixed interest borrowing and equity financing that can minimize the overall cost of capital (the weighted average of its interest rate and dividend payments). By minimizing the cost of capital used to finance a given size and risk of operations, financial managers can maximize the value of the company and therefore maximize
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Case Study on PepsiCo’s Use of Financial Derivatives 1. Introduction 1.1 PepsiCo’s History The Pepsi-Cola Company was incorporated in 1919 by Caleb Bradham, the inventor of the Pepsi-Cola soft drink. PepsiCo became a multinational beverage and snack food company in 1965 when Pepsi-Cola merged with Frito-Lay. Since the 1965 merger PepsiCo has expanded its operations by acquiring Quaker-Oats, Tropicana, and Gatorade brands. With sales of $66.86 billion in 2014 and with products sold in over 200
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Abstract INTRODUCTION When first looking at an exchange rates, and foreign exchange, there are a few questions which must be considered. What factors affect the demand and supply of Australian dollars in the foreign exchange markets? Distinguish between the possible causes and effects of currency depreciation and a currency appreciation on the Australian economy. What forces have come into play, if any, in the past few years that have affected the value of the Australian dollar? In addition
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integration, and, since the early 1990s, the opening and growth of Eastern European, Russian, Asian and Latin American markets. Cross-border acquisitions have been a particularly prevalent form of investment since 1980. American corporations, for example, increased their acquisitions of foreign targets by 160% between 1980 and 1990. Acquisitions of American targets by foreign companies rose about 50% during the same period. Some transactions, such as Matsushita Electric's $6.9 billion acquisition
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Inc. All Rights Reserved. Patents Pending. UVA-F-1222 DIVA SHOES, INC. In April 1995, Lisa Stone ended a conversation with Benjamin Bisno, the president and chief executive officer of Diva Shoes, Inc., concerning his firm’s growing exchange rate exposure. Since joining the foreign exchange desk at Merrill Lynch three years ago, Stone had worked with Bisno in executing relatively simple “forex” transactions for the company. She provided information and advice on the firm’s decision to increase
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and Floating Exchange Rates using IS-LM-BP Model In order to examine the degree in which fiscal policy can be used effectively in this model, the variables that directly influence the outcomes of its use need to be identified. These are, exchange rate regime whether fixed of flexible that is in place and the degree that capital is mobile. The level of capital mobility is how challenging or simple it is for private individuals or firms to move funds across borders. Exchange rate regimes fall into two
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collection. For example, when demand is low in the economy, the government can step in and increase its spending to stimulate demand. Or it can lower taxes to increase disposable income for people as well as corporations. Monetary policy relates to the supply of money, which is controlled via factors such as interest rates and reserve requirements (CRR) for banks. For example, to control high inflation, policy-makers (usually an independent central bank) can raise interest rates thereby reducing
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exchange market is a market in which currencies are bought and sold. It is to be distinguished from a financial market where currencies are borrowed and lent. General Features Foreign exchange market is described as an OTC (Over the counter) market as there is no physical place where the participants meet to execute their deals. It is more an informal arrangement among the banks and brokers operating in a financing centre purchasing and selling currencies, connected to each other by tele communications
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Eurocurrency Market Ray A. Gray II FIN/366 March 28, 2016 Todd Kucker Eurocurrency Market A eurocurrency is any currency banked outside of its country of origin. The term eurocurrency is actually a misnomer because a eurocurrency can be created anywhere in the world; the persistent euro- prefix reflects the European origin of the market. Eurodollars, which account for about two-thirds of all eurocurrencies, are dollars banked outside of the United States. Other important
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