Fin (IB) 3551: International Finance Homework Problem set #2 Problem Set 2 (problems only) – BOP, crisis, currency derivatives, corporate risk I
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1) Feedforward control would be the most effective type of control in this case. Knowing that this control takes place before the actual activity, it allows detecting and preventing possible issues. Since the first day for the T5 was very important for its reputation ,and that solving problems as they occur in an airport can take too much time and therefore cause frustration for passengers.(concurrent control) 2) Information controls, customer interaction controls, and benchmarking Information
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w rP os t S 908N13 PIXONIX INC. - ADDRESSING CURRENCY EXPOSURE op yo Karim A. Moolani wrote this case under the supervision of Professor Colette Southam solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. Ivey Management Services prohibits any form of reproduction
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จะเกิดอะไรขึน.. ถ้ าทุนสารองระหว่ างประเทศลดลง? ้ ทุนสารองระหว่ างประเทศใช้ ในการการันตีเสถียรภาพของประเทศ โดยมีจดประสงค์หลักเพื่อรักษาความผัน ุ ผวนของค่าเงินไม่ให้ ขยับตัวอ่อนค่าหรื อแข็งค่าเร็วเกินไป จนส่งผลกระทบต่อผู้สงออกและนาเข้ า ซึงเป็ นปั จจัยสาคัญ ่ ่ ของการขับเคลื่อนเศรษฐกิจของประเทศ ถ้ าทุนสารองลดต่าลงอย่างรวดเร็ว สามารถอนุมานได้ วา ความเชื่อมันของโลกต่อประเทศนันๆกาลังลดต่าลง ดังเช่น ่ ่ ้ ในช่วงไตรมาสสุดท้ ายของ ปี 2015 บริษัทมหาชนของประเทศจีนส่วนใหญ่ มีผลประกอบการที่แย่ลง
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three months later in December. Shiela Penny has collected the following financial market information for the analysis of her currency exposure problem: Spot Exchange rate: $1.5640 per British pound. 1,000,000 x 1.5640 = 1,564,000 Three month forward rate: $1.5549 per pound 1,000,000 x 1.5549 = 1,554,900 SALEM’s cost of capital: 16% U.K. Annual borrowing interest rate: 12.0% (or 3.0% per quarter) U.K. Annual investment interest rate: 10.0% (or 2.5% per quarter) U.S. Annual
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Transaction, Operating, & Accounting (Translation) Exposures Foreign Exchange Exposure – measures the potential for a firm’s profitability, net cash flow, and market value to alter because of a change in exchange rates. Q: What are the three main foreign exchange exposures? A: 1) Transaction Exposure 2) Operating Exposure 3) Accounting Exposure Transaction Exposure – measures changes in the value of outstanding financial obligations incurred prior to a change in exchange rates.
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Case Analysis International Financial Markets Peter MacKay February 21, 2002 Ryan Case Mark Duncanson Christopher McRoberts Jenn Nabb Rob Norr Due to past depreciation in the yen, Disney has decided to consider hedging future yen royalties paid by Tokyo Disneyland. Disney can enter into a currency swap to capitalize on its comparative advantage to borrowing in its local debt market and therefore obtain interest rates more favorable than the French utility could hope to obtain. Each party
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Chapter 6 Commodity Forwards and Futures Question 6.1. The spot price of a widget is $70.00. With a continuously compounded annual risk-free rate of 5%, we can calculate the annualized lease rates according to the formula: F0,T = S0 × e(r−δl )×T ⇔ F0,T S0 = e(r−δl )×T S0 = (r − δl ) × T F0,T 1 ln T S0 ⇔ ln F0,T ⇔ δl = r − Time to expiration Forward price Annualized lease rate 3 months $70.70 0.0101987 6 months $71.41 0.0101147 9 months $72.13 0.0100336 12 months $72.86 0.0099555 The
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currency of your receivables. - Interest rate differential could even be in your favor. CEEI November 2007, Vienna Hedging exchange rate risks 4 How to hedge on the FX markets ERSTE GROUP − You want to fix the exchange rate - Hedging by a Forward or a Future - Costs: Interest rate differential − You want to have an insurance against adverse movements
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What is the difference between forward and futures contracts? Fundamentally, forward and futures contracts have the same function: both types of contracts allow people to buy or sell a specific type of asset at a specific time at a given price. However, it is in the specific details that these contracts differ. First of all, futures contracts are exchangetraded and, therefore, are standardized contracts. Forward contracts, on the other hand, are private agreements between two parties and are not
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