INSTRUCTOR’S MANUAL: MULTINATIONAL FINANCIAL MANAGEMENT‚ 9TH ED. CHAPTER 7 SUGGESTED ANSWERS TO CHAPTER 7 QUESTIONS 1. Answer the following questions based on data in Exhibit 7.5. a. How many Swiss francs can you get for one dollar? ANSWER. The indirect quote is $1 = SFr 1.0534. b. How many dollars can you get for one Swiss franc? ANSWER. The direct quote is SFr1 = $0.9493. c. What is the three-month forward rate for the Swiss franc? ANSWER. The three-month forward
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recession in the UK When the UK economy is doing well‚ its pound sterling is strong. However‚ having a strong pound actually discourage visitors from overseas because when they exchange their money in pound they will be getting less money‚ so it make visiting UK expensive and it deter inbound visitor from visiting UK. Regardless to that when UK is in a recession the sterling is weak which means that overseas visitor can get more pounds for their money and would find UK much more cheaper which encourage
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clearing agents‚ foreign exchange banks‚ etc. 5. Mutually acceptable currency: The currencies of importing and exporting countries generally are different. Therefore‚ it is necessary to find out a mutually acceptable currency. Generally‚ dollar and pound sterling are selected. These currencies are known as hard currencies because they are acceptable all over the world. 6. International rules and regulations: Businessmen engaged in international trade require knowledge
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Executive Summary: Jaguar PLC‚ 1984 This case explores the operating exposure of Jaguar PLC in 1984‚ just as the government is about to relinquish control and take the company public via an IPO. The primary concern of the CFO is that Jaguar sells over 50% of its cars in the US‚ while its production costs and factories are U.K.-based. This currency mismatch creates operating exposure for the firm that needs to be hedged. While the current trend in the USD has been higher‚ the markets are expecting
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cost of the project in British pounds is SoCo = £0.6667($7‚000‚000) = £4‚666‚900. The U.K. inflation rate is estimated at 4.5% per annum‚ or the mid-point of the 4%-5% range. The U.S. inflation rate is forecast at 3% per annum. Under the simplifying assumption that PPP holds [pic] = .6667(1.045)t/(1.03)t. The before-tax nominal contribution margin per unit at t=1 is $4.40(1.03)t-1. It is assumed that Dorchester will be able to sell one-fifth of the 290‚000 pounds of candy it presently sells to
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policy related to the title. Main Body 1.1Causes and effects of financial crisis Causes The interest of mortgage loan increased rapidly The housing market getting cooler Effects The UK Bank shrank‚ heavily debt A serious decline in the value of sterling It is difficult to survive for UK companies. People lost jobs. Society became unstable. 2.1 The measures For UK Tax reduction in VAT‚ the corporate tax and personal tax. tax increase‚ raised cigarette‚ wine‚ the fuel consumption tax rate
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to facilitate the exchange of currencies. Be specific. ANSWER: The Sports Exports Company would have an account with a commercial bank. As it receives payment in pounds each month‚ it would deposit the check at a bank that provides foreign exchange services. Each month‚ the bank would cash the check‚ and then convert the British pounds received into dollars for the Sports Exports Company at the prevailing spot rate. 2. Explain how the Sports Exports Company is exposed to exchange rate risk
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customisable options‚ there are virtually none. The casino is accepting of players based across the globe (not those based in the USA)‚ although they must conform to a strict English language‚ setup. Currency options include Canadian dollars‚ euros‚ UK pounds sterling‚ Australian dollars‚ South
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Have you ever wondered what it was like to live in London in the 1600 ’s? What did people learn? What kind of jobs did they do? I know you probably don ’t ever think about that‚ but maybe this presentation will leave you to walk away wondering: How could they live like that?!! Let ’s start with where we would be as children in London. The boys would be at a school getting a public education; the girls would be at home getting a private education from a tutor. Although a girl ’s education would usually
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however‚ had recently suggested that Carrefour consider borrowing in British pounds sterling in order to take advantage of a borrowing opportunity in that currency.With a debt-financing requirement of EUR750 million‚ the bond issue would be one of Carrefour’s largest. Now‚ in August 2002‚ the investment bankers expected that the 10-years Carrefour bonds would be priced at a coupon rate of 5 ¼ in euros ‚ 5 3/8 in British pounds‚ 3 5/8 in Swiss francs‚ or 5 ½ in U.S. dollars. Carrefour In 1963‚ Carrefour
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