Ontario Teacher’s Pension Plan Board: Hedging Foreign Currency Exposure Ontario Teacher’s Pension Plan Board: Hedging Foreign Currency Exposure Issue Identification The Ontario Teacher’s Pension Plan (OTPP) is a defined contribution plan that was created in 1917 to provide and administer a pension plan for Ontario school teachers. Sponsored by the Ontario Government and the Ontario Teacher’s Federation‚ the plan currently supports 343‚000 teachers‚ former teachers and pensioners. The recent
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how much a currency worth in terms of other currency. If currency is free floating‚ which allows the exchange rate vary against other currencies determined by the market forces of supply and demand. Some countries may use fixed/pegged exchange rate system to stabilize the exchange rate. Linked exchange rate system is a kind of exchange rate regime to link the exchange rate currency to others. Mole (1996) said Hong Kong Monetary Authority (HKMA) introduced this system though the currency board system
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dollar bought only 0.63 euros. Why do currency exchange rates fluctuate? The U.S. economy has become attractive to foreign investors. What determines the amount of international borrowing and lending? dolar Euro neye göre artar azalır? neden? Foreign Exchange Market To buy goods and services produced in another country we need money of that country. Foreign bank notes‚ coins‚ and bank deposits are called foreign currency. We get foreign currency in the foreign exchange market.
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from the United States to the global economy in 2008‚ to the jitters caused across the world‘s financial markets by recent tensions in the Euro Area‚ with surges of inflows into fast growing emerging markets‚ and more recently into ―safe haven‖ currencies‚ it is clear that the world economy has a strongly interconnected financial system. The stability of this system can be considered a global public good. As with many public goods‚ global stability is “undersupplied.” This is partly due to market
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for whom‚ and why? 4. Key issues: a) Were the increased costs due to currency fluctuations covered by the open-price term? b) Had the exchange rate risk had rendered performance under the contract commercially impracticable? 5. Reasons: a) In theory‚ the currency fluctuation may be covered by the open-price term when both two parties use different kinds of currency. However‚ in this case‚ the currency fluctuation may not be covered by the open-price term in the contract between
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trades foreign currencies. Based on the supply and demand for a countries currency‚ the value of that currency changes‚ which causes the price to shift. If a business is doing a transaction in a foreign currency‚ they will need to exchange it back to their home currency after the transaction is complete. The fluctuation in exchange rates creates a foreign exchange risk on businesses doing international business. Accounts Receivable Companies expecting to be paid in a foreign currency at some point
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following‚ exchange rates depend the most upon relative a) monetary systems b) political systems c) trade deficits d) inflation rates between nations Ans: d Section: The nature of money and currency values Level: Easy 2.4 ______ is another name for the complete replacement of the local currency with the U.S. dollar. a) Seignorage b) Dollarization c) Depreciation d) Appreciation Ans: b Section: Dollarization Level: Easy 2.5 To some U.S. manufacturers and labor unions‚ a cheap yuan
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China’s perspective Chinese officials argue that their currency policy is not meant to favor exports over imports‚ but instead to foster economic stability through currency stability. The policy reflects the government goals of using exports as a way of providing jobs to Chinese workers and to 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
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B Diff: 1 Topic: 9.1 Types of Foreign Exchange Exposure Skill: Recognition 5) ________ exposure is the potential for accounting-derived changes in owner ’s equity to occur because of the need to translate foreign currency financial statements into a single reporting currency. A) Transaction B) Operating C) Economic D) Accounting Answer: D Diff: 1 Topic: 9.1 Types of Foreign Exchange Exposure Skill: Recognition 8) MNE cash flows may be sensitive to changes in which of the following? A)
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Think prices to the customers Think affordability to customers Think economic growth in the country Currency Identify the currency we have within the UK compared to the currency in Germany. What benefits/ drawbacks does having the (£) mean for Sub Xpress? Think about costs Think about raw materials and suppliers Think about the size of the impact of having the (£) as a currency In a second paragraph underneath What benefits/ drawbacks does having the Euro mean to BMW? Think transaction
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