3209AFE INTERNATIONAL FINANCE Tutorial 5 Answers Chapter 10 10. Translation Exposure. Consider a period in which the U.S. dollar weakens against the euro. How will this affect the reported earnings of a U.S.-based MNC with European subsidiaries? Consider a period in which the U.S. dollar strengthens against most foreign currencies. How will this affect the reported earnings of a U.S.-based MNC with subsidiaries all over the world? ANSWER: The consolidated earnings will be increased
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Problem Set 2 International Finance Shrikhande Fall 2006 SUGGESTED SOLUTIONS TO CHAPTER 4 PROBLEMS 1. From base price levels of 100 in 1987‚ West German and U.S. price levels in 1988 stood at 102 and 106‚ respectively. If the 1987 $/DM exchange rate was $0.54‚ what should the exchange rate be in 1988? In fact‚ the exchange rate in 1988 was DM 1 = $0.56. What might account for the discrepancy? (Price levels were measured using the consumer price index.) Answer. If e1981 is the dollar
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pounds per dollar under this fixed exchange regime was A) £4.8665/$. B) £0.2055/$. C) always changing because the price of gold was always changing. D) unknown because there is not enough information to answer this question 3. The post WWII international monetary agreement that was developed in 1944 is known as the ________. A) United Nations. B) League of Nations. C) Yalta Agreement. D) Bretton Woods Agreement. 4. Which of the following led to the eventual demise of the fixed currency exchange
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True/False ____T__ 1. Multinational financial management requires that financial analysts consider the effects of changing currency values. __F__ 2. Legal and economic differences among countries‚ although important‚ do NOT pose significant problems for most multinational corporations when they coordinate and control worldwide operations and subsidiaries. Comment: Legal and economic differences among countries do affect the worldwide operations and subsidiaries. ___T_ 3. When the value
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level (the policy should take place if the output is above or below the full-employed level) Question 6: If a Government initially has a balanced budget but then cut taxes‚ it is running a deficit that it must somehow finance. Suppose people think the government will finance its deficit by printing the extra money it now needs to cover its expenditures. Would you still expect the tax cut to cause a currency appreciation? Initial time: Government has balanced budget and then cut taxes increase
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prospects. c. Both a and b. d. Should be strongly affected by a nation’s balance of trade. e. Should be strongly affected by current relative income‚ relative prices‚ and relative interest rates. 4. The current international flow model of exchange rate determination says that the spot rate should: a. Follow a random walk. b. Be affected primarily by a nation’s long-run economic prospects
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Avicular Controls‚ ACI‚ should win this deal to expand its market in Asia. Based on the data provided by International Air Transport Association’s (IATA)‚ the report indicated that passenger and cargo traffic would double in Asia by the year of 2010. The increase in the demand of air transportation is an opportunity for Avicular Controls to expand the market in Asia. Not only would the deal benefit ACI from lifting its prestige‚ but also generating the long term revenue of maintenance. In addition
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3209AFE INTERNATIONAL FINANCE Tutorial 4 Questions Chapter 10 2. Assessing Transaction Exposure. (Page 331) Your employer‚ a large MNC‚ has asked you to assess its transaction exposure. Its projected cash flows are as follows for the next year: | | | |Current Exchange Rate in U.S. | |Currency |Total Inflow |Total Outflow |Dollars |
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SIBM Bangalore – MBA EE – Semester IV International Finance Take-Home Assignment - 1 – 01.05.2013 You may use the issues discussed in the case of ‘Lufthansa – to hedge or not to hedge” to submit this assignment. 1. Assume that Lufthansa placed an order to Boeing to buy 10 jets of Boeing 787-9 model on 1st December 2012. The transaction is invoiced in Euros using the spot USD-EUR exchange rate prevailing on 1st December. 2. The payment terms: Lufthansa has to make the payment in USD to Boeing
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Importance of FDI in Agriculture in the past 4 years 7 • Capital: 7 • Technology: 8 • Market Access: 8 4. Factors Impairing FDI’s in Tanzania 8 • Poor Infrastructure 8 • Capacity 8 • Bureaucracy 8 • Corruption 9 • Seasonality 9 • Access to finance 9 • Regulatory framework 9 5. Recommendation to attract more FDI’s 10 6. Conclusion 10 References. 12 1. Introduction: Tanzania’s Economy Tanzania is one of the world’s poorest economies in terms of per capita income
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