Translation Risk 3 Why do Companies Hedge? 3 2. COMPETITIVE CURRENCY EXPOSURE AT GM (2001: Using Case Info) 3 2.1 Performance 6 2.2 Automobile Market in USA 7 2. 3 Competitive Exposure Mechanism 8 2.4 Yen Exposure Quantified 9 3. APPROACHES TO MANAGE GM’s COMPETITIVE EXPOSURE 10 4. GM’s COMPETITIVE YEN EXPOSURE (993-2005) 13 4.1 GM’S US Car Sales Exposure 14 4.2 GM’S Market Share Exposure 15 4.3 GM’S Net Income Exposure 16 4.4Implication of result on hedging strategy 17 5. NEW GM’s COMPETITIVE
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be an issue of intermediate term (3-5 year) debt. Fixed vs. Floating rate: The short term and commercial paper debt that they already have suggests using fixed rate debt. Currency of financing: They do not have significant yen exposure that calls for exposure to yen liabilities Domestic vs. foreign markets: Their current issues of debt have been in the domestic market so the foreign markets if attractive should certainly be considered. Alternatives under consideration and their costs:
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8:00 am – 23:00 pm ，the electricity charge is one yuan per watt‚ then the power consumption and electricity consumption of an ordinary tube is as follows: Power Consumption per day: 40 W × 15 HS ÷ 1000 = 0.6 degrees /watt The electricity charge: 0.6 × 1 yuan / kWh = 0.6 yuan Year consumption: 0.6 × 365 days = 219 degrees The electricity charge: 219 × 1 yuan / kWh = 219 yuan The expenses on a common 40W fluorescent tubes T8 is 219 yuan a year! Now we use 18W LED tube T8 with the same
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attract Foreign Direct Investment (FDI) in order to gain access to technology and know-how. Yuan exchange rate regime could affect China’s economic growth also can through two aspects: the first is through the level changes‚ namely exchange rate appreciation and depreciation; the second is through the flexibility changes‚ namely the exchange rate fluctuation range expansion. Theoretically‚ the adjustment of Yuan exchange rate could impact China’s economy from various channels‚ and it could also be impacted
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value of the Yuan against the U.S. dollar? What were the benefits of doing this for China? What were the costs? Over the last decade‚ many foreign firms have invested in China and used their Chinese factories to produce goods for export. If the Yuan is allowed to float freely against the U.S. dollar on the foreign exchange markets and appreciates in value‚ how might this affect the fortunes of those enterprises? By some estimates‚ the decline of the dollar undervalued the Yuan by as much
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Political and Economic Comparisons of the Yuan and Il Khan From 1200-1500 CE the Mongol rule spread‚ dominating large regions of land‚ and through violent conquering initiated economic and political effects throughout Eurasia. Both the Yuan and the Il-Khan were militaristic and conquered land‚ which led to a tribute-based economy. The Yuan maintained a stable bureaucracy‚ whereas the Il-Khan had many economic troubles. The two khanates were developed upon similar economic and political foundations
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society. I. General Outlook In 2012‚ the gross domestic product (GDP)[2] of the year was 51‚932.2 billion yuan‚ up by 7.8 percent over the previous year. Of this total‚ the value added of the primary industry was 5‚237.7 billion yuan‚ up by 4.5 percent‚ that of the secondary industry was 23‚531.9 billion yuan‚ up by 8.1 percent and the tertiary industry was 23‚162.6 billion yuan‚ up by 8.1 percent. The value added of the primary industry accounted for 10.1 percent of the GDP‚ that of the secondary
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The Walt Disney Company’s Yen Financing International Financial Economics Universiteit van Amsterdam Question 1 Should Walt Disney Company hedge its yen exposure? Why? On April 1983 Tokyo Disneyland started to operate. The Japanese company that operated this park paid royalties on certain revenues to Walt Disney Productions. The Yen royalties receipts in 1984 already reached a height of 8 billion Yen. The director of finance of the Walt Disney Company expected a further growth of 10% to
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and instead shifted its plants offshore to engage in local production. The direct cause for the shift was the need to avoid trade friction‚ but producing locally soon opened manufacturers’ eyes to the merits of manufacturing close to local consumers. Yen appreciation as of the late 1980s too accelerated this shift to local production. Japan’simports depends on oil and most other resources and the manufacturing industry tends to be viewed as the key player in paying for these resources. But as we discussed
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exposure to currency risk‚ firms also have the very real strategic impact on their competitive position from competitive exposure. Apart from GM’s exposure to the yen which is reflected in their financial statements‚ their competitive position vis-à-vis Japanese manufacturers is affected by a potentially declining yen. This is because a declining yen reduces the Japanese manufacturers’ $ cost‚ enabling them to pass on some of the benefit to US customers and thus taking some of GM’s market share. This will
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