PART IV Managing the Risks of Multinational Operations Chapter 9 The Rationale for Hedging Currency Risk True/False 1. In a perfect financial market‚ financial contracts are zero-NPV investments. ANS: True. 2. If hedging currency risk is to add value to the stakeholders of the firm‚ then hedging must impact either expected future cash flows or the cost of capital or both. ANS: True. 3. If financial markets are informationally efficient‚ then corporate financial policy is
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President the legislative power to tax is contrary to republicanism. They insist that accountability‚ responsibility‚ and transparency should dictate the actions of Congress and they should not pass so the President the decision to impose taxes. They also argue that the law also effectively nullified the President’s power of control‚ which includes the authority to set aside and nullify the acts of her subordinates like the Secretary of Finance by mandating the fixing of the tax rate by the President upon
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idea everyone would like to buy the product in a voluntary exchange‚ which results in an extreme unequal distribution of income. Since there are no policies that follow the Pareto criterion‚ the question is if the government should shift to a progressive tax system to reduce inequality. He proceeds by presenting his argument of why he believes that is not the best option. In general Mankiw argues that the top one percent have high marginal productivity‚ in other words they receive as much as their
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Goods and service tax were first deliberated in 2005 with the intention to introducing it in 1st January 2007. However‚ it was withdrawn in the following year. In 2009‚ GST was revived with a proposed rate of 4% to replace current Sales Tax of 10% and Service Tax of 5% in a bid to diversify national revenues. However‚ the idea of GST still end up floating around as it has now been officially deferred. 2. Concept of GST Goods and Service Tax (GST)‚ also known as Value Added Tax (VAT)‚ is a broad
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unit of a good. additional cost to society resulting from a consumer consuming one more unit of a good. 2. Tax shifting ________ . is the way in which a tax is structured is the ultimate distribution of a tax’s burden occurs when taxes cause prices to increase‚ but wages to fall occurs when taxed agents can alter their behavior and do something to avoid paying a tax 3. The official poverty line in the United States is set ________ . equal to one-half the average income
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The different Labour law requirements between Mainland and Hong Kong The Labour Law of China is the law formulated in accordance with the Constitution in order to protect the legitimate rights and interests of laborers‚ readjust labor relationship‚ establish and safeguard a labor system suited to the socialist market economy‚ and promote economic development and social progress. This Law applies to all enterprises and individual economic organizations (hereinafter referred to as employing units)
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to pursue stabilization of the economy; it then explores the tools of government stabilization policy in terms of the aggregate demand-aggregate (AD-AS) model. Next‚ some fiscal policy measures that automatically adjust government expenditures and tax revenues when the economy moves through the business cycle phases are examined. Finally‚ problems‚ criticism‚ and complications of government’s fiscal policy are addressed. WHAT’S NEW The full-employment budget discussion has been revised and
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Hong Kong has designed a simple tax system that does very little damage to the economy. Unlike the United States‚ the taxation on the people is very generous‚ that most of the people owe little or no tax on salaries. Hong Kong has no tariffs on imports‚ no general sales or value – added tax and no personal tax on income from financial assets. It has something called a “Dual Tax” which is progressive tax rates on labor income. Also‚ the low tax on profits brings in a lot more revenue than
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national/government revenue and mitigate the heavy reliance on income tax and petroleum tax‚ in which income taxes contributed 44.4% of government revenue in 2010. Tax burden will not increase when income level increased. “Everyone” will pay tax and tax burden is spread over‚ instead of just relying on income taxes derived from 15% of the working population. Overcome the loopholes of current sales and services tax systems. Eliminate over-lapping tax at different stages‚ as GST is generally charged on the consumption
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4-2 (Key Question) Assume that the five residents of Econoville receive incomes of $50‚ $75‚ $125‚ $250‚ and $500. Present the resulting personal distribution of income as a graph similar to Figure 4.2. Compare the incomes of the lowest and highest fifth of the income receivers. The distribution of income is quite unequal. The highest 20 percent of the residents receive 10 times more income than the lowest 20 percent. 4‑4 (Key Question) What are the three major legal forms of business
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