British Pound Exposure 1. How does the cross currency swap effectively hedge the three primary exposures McDonalds has relative to its British subsidiary. In general‚ cross currency swap is a contract to swap currencies of debt service obligation (Eiteman‚ Stonehill‚ & Moffett‚ p. 245). For example‚ McDonalds needs to swap pound denominated fixed interest rate and adopt floating interest rate from the US headquarter. The need to enter into swap agreement depends on the expected floating rate.
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Goodrich-Rabobank Interest Rate Swap In 1983‚ both B.F. Goodrich and Rabobank needed to execute external financing in order to raise 50 million dollars for ongoing operations. Goodrich wanted to raise the money through debt financing‚ but because their bonds were BBB- rated‚ they would have to pay a steep interest rate for a fixed rate. However‚ the Solomon brothers had an idea. Goodrich could borrow with a floating rate that was tied to LIBOR and then swap interest payments with a Euromarket
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Section_4pm/7pm Use the following table of swap quotes when you need it. Years 1 2 3 4 5 Euro Bid 2.99 3.08 3.24 3.44 3.63 Ask 3.02 3.12 3.28 3.48 3.67 Swiss franc Bid Ask 1.43 1.47 1.68 1.76 1.93 2.01 2.15 2.23 2.35 2.43 U. S. dollar Bid Ask 5.24 5.26 5.43 5.46 5.56 5.59 5.71 5.74 5.79 5.83 Japanese yen Bid Ask 0.23 0.26 0.36 0.39 0.56 0.59 0.82 0.85 1.15 1.18 1. （Fill out the answers， 7 pts） a. (Motivation of Interest rate swap) Caterpillar Inc has issued $200m Euro-dollar
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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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if WD is a relatively conservative company in the entertainment and recreation businesses and assuming it could buy insurance against exchange rate fluctuations at a fair price‚ then it should hedge. Long term planning might also be easier if the currency risk is hedged. On the other hand‚ it might be argued that WD has a different perspective on exchange rate movements. While WD might not have been able to predict exchange rate movements systematically‚ there seemed to be evidence in 1985 that
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Exposure 12.3 Economic Exposure 13. Techniques for Managing Exposure 13.1 Derivatives (a) Forwards-Based Derivatives (i) The Forward Contract (ii) Swaps (iii) Futures Contracts (b) Options 13.2 Money Market Hedge 13.3 Forward Market Hedge 13.4 Netting 13.5 Matching 13.6 Leading and Lagging 13.7 Price Variation 13.8 Invoicing in Foreign Currency 13.9 Asset and Liability Management 13.10 Arbitrage 14. Strategies for Exposure Management 14.1 Low Risk: Low Reward © The Institute of Chartered
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Chapter 12 – Operating Exposure Strategies for the management of operating exposure emphasize the structuring of firm operations in order to create matching streams of cash flows by currency. This is termed natural hedging. Expected versus Unexpected Changes in Cash Flows Operating exposure is far more important for the long run health of a business than changes caused by transaction or translation exposure. However‚ operating exposure is inevitably subjective because it depends on estimates
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We discuss the currency depreciation vs. devaluation. Also‚ discuss the impact of currency depreciation from Indian economy perspective. Currency Depreciation & Impact Rajesh Kanjani (34473) rajesh.kanjani@hotmail.com SIBM Exe. MBA (2011-2014) Currency Devaluation vs. Depreciation The devaluation and deprecation of currency go more or less hand in hand. Currency depreciation is an economic result‚ whereas devaluing a currency is an act that results in currency depreciation. Many a times
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economic conditions or actions by major oil-exporting countries. Price fluctuations can test our business assumptions‚ and can affect Shell’s investment decisions‚ operational performance and financial position. CURRENCY FLUCTUATIONS AND EXCHANGE CONTROLS As a global company‚ changes in currency values and exchange controls could affect our operational performance and financial position. ECONOMIC AND FINANCIAL MARKET CONDITIONS Shell companies are subject to differing economic and financial market
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The Indian rupee (symbol: INR; ISO code: INR) is the official currency of the Republic of India. The issuance of the currency is controlled by the Reserve Bank of India.[2] The modern rupee is subdivided into 100 paise (singular paisa)‚ though as of 2011 only 50-paise coins are legal tender.[3][4] Banknotes in circulation come in denominations of INR5‚ INR10‚ INR20‚ INR50‚ INR100‚ INR500 and INR1000. Rupee coins are available in denominations of INR1‚ INR2‚ INR5‚ INR10‚ INR20‚ INR50‚ INR60‚ INR75
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