The Real Story Behind the Real Thing

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Unidad #6
16.-How would the following transactions be recorded in the IMF balance of payments? a. - IBM in New York has sold an $ 8 million mainframe computer to an insurance company in Singapore and has been paid with a check drawn on a Singapore bank. This transaction would be recorded in current account because it is an account that recorder import and export goods that means the net revenue on exports minus payments for imports. b. - A private investor in San Francisco has received dividends of $ 80, 000 for stock she holds in a British firm. (Current Account) This transaction would be recorded in current account because it is an account that recorder the rental payments generated by making investments that means the earnings on foreign investments minus payments made to foreign investors.

Unidad # 7
1.-If your firm had a subsidiary in Japan and about 100 million yen in exposed assets (that is, plant and equipment), how would you protect it against exchange risk?

Having decided that you want to manage the FX risk, it is important to identify what it is and how it affects your business by understanding when, how and why the risk arises. Possible risks you may encounter relate to exporting such as being paid in a foreign currency or importing and the need to pay suppliers in a foreign currency. Once the risk has been identified and quantified, a strategy should be devised to manage it and cash management optimization through currency swaps which make your current and future cash flow work harder for you, and examining the possibility of sourcing and selling in the same currency. Also, currency options may provide an alternative flexible hedging tool, particularly if volumes are significant.
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