How does AIFS make money? Aifs is long in dollars and short in Euro’s. (has dollar revenues and euro costs) What happens when the dollar appreciates/depreciates? What is the currency risk? Why can’t they just pass-through to their customers? For simplicity in calculations: Focus on the $/€. Ignore the time value of the investment in the option premium. Analysis Provide background to the case: what the company does‚ how it sets prices‚ why they don’t pass-through exchange rate
Premium United States dollar Currency Dollar
from tax. The term Eurobond would initially influence readers into believing that it is a strictly European concept‚ however Eurobonds are traded worldwide. They are named after the currency they are denominated in‚ for example a bond denominated in dollars would be named Eurodollar. Autostrade‚ an Italian motorway firm‚ was the first to use this concept in 1963. There are numerous benefits to buying and holding Eurobonds. Henry Stephen (2007)‚ a Canadian investment consultant‚ points out that the
Premium Bond Bonds United States dollar
(Just 7 days) Definitely Dollar rate will come down. This is true. The value to dollar is given by petrol only.This is called Derivative Trading. America has stopped valuing its Dollar with Gold 70 years ago. Americans understood that Petrol is equally valuable as Gold so they made Agreement with all the Middle East countries to sell petrol in Dollars only. That is why Americans print their Dollar as legal tender for debts. This mean if you don’t like their American Dollar and go to their Governor
Premium Middle East United States United States dollar
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
Premium United States dollar Currency Forward contract
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
Premium United States dollar Currency Exchange rate
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
Premium United States dollar Foreign exchange market Dollar
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
Premium Foreign exchange market Exchange rate United States dollar
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
Premium United States dollar Currency Euro
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
Premium United States dollar Foreign exchange market Currency
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
Premium United States dollar Currency Dollar