translates its foreign currency financial statements into dollars‚ how would a falling Brazilian real affect Dell Mercosur’s financial statements? What about a rising real? Dell imports about 97 percent of its manufacturing costs. What type of exposure does that create for it? What are its options to reduce that exposure? Describe and evaluate Dell’s exposure management strategy. Build a graph on the value of the real against the dollar by quarter since the third quarter of 2002 using the spot
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or loss‚ the transaction could have Answer: b. Been denominated in U.S. dollars. 4. In Post’s 2014 consolidated income statement‚ how much should it report as a foreign exchange loss? Answer: c. $15‚000. 5. In its 2014 income statement‚ what amount should Houghton include as a foreign exchange gain or loss on the note? Answer: d. $10‚000 loss. 6. Did the foreign currencies increase or decrease in dollar value from the date of the transaction to the settlement date? Answer: d
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Chapter 1 Answers to End of Chapter Questions 1. Agency Problems of MNCs. a. Explain the agency problem of MNCs. ANSWER: The agency problem reflects a conflict of interests between decision-making managers and the owners of the MNC. Agency costs occur in an effort to assure that managers act in the best interest of the owners. b. Why might agency costs be larger for an MNC than for a purely domestic firm? ANSWER: The agency costs are normally larger for MNCs than purely domestic firms for the following
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CHAPTER-04 OPERATION OF FOREIGN REMITTANCE IN NBL KAWRAN BAZAR BRANCH 4.1 FOREIGN EXCHANGE: Foreign Exchange Department is the international department of a bank. It deals globally. It facilities international trade through the various modes of services it possess. If the branch is an authorized dealer in foreign exchange market‚ it can remit foreign exchange from home country to foreign countries. The department mainly deals with foreign currencies. Hence it is called foreign exchange department
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American dollars. When AIFS got major percentage of its revenue in American Dollars it has to expend most in Euros and British Pounds. If there will be any exchange rate volatility‚ there will be currency mismatch. This gives currency exposure at AIFS. Ans-2 If Archer-Lock and Tabaczynski would not hedge at all‚ they had to face the below three risks. i) Bottom line risk: When there will be an adverse move of the exchange rate‚ there may be an increase in the cost base. If dollar depreciates
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have a convincing argument for the weakness of the dollar? Why or why not? How would you interpret the evidence? The controller of the Irish division does have a valid point when stating that the U.S. dollar is in a vulnerable position due to the fact that its trade deficit is currently in excess of $100 billion and growing. (see Exhibit 1). While Universal Circuits’ chief financial officer‚ Joe Merrill‚ is correct when stating that the dollar is in the middle of its twenty-year range‚ he never
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purchased twenty Boeing 737 jets at a hefty price of $25‚000‚000 per for a total transaction of $500‚000‚000. The term of the purchase is for Lufthansa to pay the entire amount in U.S. dollars upon delivery one year later in January 1986. As of Jan. 1985‚ the conversion rate stood at DM 3.2/$ and with the U.S. dollar on a rise against the German DM since 1980‚ Ruhnau had several financial hedging options to undertake in order to minimize Lufthansa’s foreign exchange exposure risk for the next 12
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you’ve learned about currency exchange rates. To find the amount of U.S. dollars that any given amount of currency will buy‚ simply multiply the currency by the exchange rate provided. (5 points) 1. Two college students went to Guadalajara‚ Mexico‚ on their spring breaks. One took the vacation in 2002‚ while the other went in 2006. Each student had $500 to spend. In 2002‚ the exchange rate of MXN/USD (Mexican pesos to U.S. dollars) was 9. In 2006‚ the exchange rate was 11. A hotel room in Guadalajara
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final dollar exchange rate gives rise to the currency exposure risk. Prices are set 1 year ahead of time so any fluctuation in the exchange rate will potentially cause a loss or savings to AIFS when the currency is exchanged. 2. If the exchange rate remains constant at $1.22/euros then AIFS will not incur a loss or a gain. It would cost $1220 per participant at this exchange rate. If actual dollar costs were above this level‚ then there would be a negative impact. If actual dollar costs were
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myself‚ “If minimum wage for my job with Gap Inc was going to raise to ten dollars and I am currently making that amount as a supervisor then I am back at the bottom of the pyramid.” As much as raising minimum wage sounds like an excellent gesture it is not a good thing. The reason why minimum wage is not a good idea is because fewer jobs will be available‚ costs of living will be affected‚ and ultimately the value of the dollar will plummet. There would be fewer jobs available because when companies
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