Term Paper on Blades Inc

Topics: Foreign exchange market, Futures contract, United States dollar Pages: 14 (4414 words) Published: January 6, 2013
December 19, 2012
Muhammad Enamul Haque
Assistant Professor
United International University

Subject: Submission of term paper on ‘’case analysis’’ Dear Sir,
We are pleased to submit the term paper on time letter. Here is the term paper on “case solution”, you asked us to conduct. As you are teaching us about the international business, as per the requirement of syllabus provided from United International University for B.B.A. course, considering its importance, you assigned this task. Sir, we appreciate having this chance to prepare the term paper, when accomplishing it, We have become skilled at valuable contents about business plan that will help to increase our contemplative power in practical use.

Sincerely Yours,

Md. Masud Rana Chowdhury
(on behalf the group)


Special thank goes to our respectable course teacher Muhammad Enamul Haque. The supervision and support he gave truly help the progression and smoothness of the report writing. The co-operation is much indeed appreciated.

My grateful thanks also go to my team mates for their wise ideas and appreciable thoughts throughout the term paper. All tasks during the term paper would be nothing without their co-operation and help. Besides, this term paper makes me realized the value of working together as a team and as a new experience in working environment, which challenges us every minute.

Last but not least, the great appreciation goes to all individuals belongs to this term paper, for their unforgettable help and support for making this assignment complete. The whole term paper really brought us together to appreciate the true value of friendship and co-operation of each other.

Executive Summary

In international trade ‘Currency Derivatives’ is a familiar thing, (Multinational Corporations) MNCs use forward contract is an agreement between a corporation and a commercial bank to exchange a specified amount of a currency at a specified exchange rate on a specified date in the future. When MNCs anticipate a future receive of a foreign currency, they can set up forward contracts to lock in the rate at which they can purchase or sell a particular foreign currency. Virtually all large MNC sues forward contracts. In international trade ‘Option’ is also a popular to MNCs_ which provide the right to purchase or sell currencies at a specified price. Option can be ‘Call Option’ or ‘Put Option’. The MNCs uses call option for many purposes, such as a) to hedge payables _ MNCs can purchase call option s on a currency to hedge future payables, Options may be more appropriate then futures or forward contracts for some situations. If an order is canceled, in option has the flexibility to let the option contract expire, and in forward contact it would be obligated to fulfill its obligation in the order was canceled. b) to hedge project bidding US. based MNCs that bid for foreign projects may purchase call options to lock in the dollar cost of the potential expenses, c) to hedge target bidding the MNCs firms can also use call options to hedge a possible acquisition. Put Option_ the owner of a currency put option receives the right to sell a currency at a specified price within a specified period of time. As with currency call options, the owner of a put option is not obligated to exercise the option. Therefore, the maximum potential loss to the owner of the put option is the price paid for the option contract. In international trade Exchange rate is a important issue, exchange rate system can be classified as fixed rate, freely floating, managed float and pegged. In a fixed exchange rate system, exchange rates are either held constant or allowed to fluctuate only within very narrow boundaries. In a freely floating exchange rate system, exchange rate values are determined by market forces without intervention. In managed float system, exchange rates are not restricted by boundaries but are subject to...
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