financing and exchange rate topics: · Purchasing power parity and the Big Mac index · Currency hedging · Hard and soft currencies · Countertrade · Financing via letters of credit and EXIM Bank and commercial banks · Tariff and nontariff barriers · Roles of international financial institutions (e.g. IMF‚ World Bank‚ ADB‚ etc.) · Euro currency markets Define your selected topic. Explain how your topic is used in global financing
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Price of one country’s currency expressed in terms of another country’s currency. D) Amount of currency that can be purchased with 1 ounce of gold. Answer: C Type: Complex Understanding Page: 437 2. An exchange rate is: A) Always fixed. C) The price of one currency in terms of another. B) Tied to the price of gold. D) All of the above. Answer: C Type: Basic Understanding Page: 437 FOREIGN-EXCHANGE MARKETS 3. The U.S. demand for foreign currency represents: A) A demand
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linked AND mutually determined. Answer: TRUE Diff: 1 Topic: 8.1 Exchange Rate Determination: The Theoretical Thread Skill: Conceptual 3) The ________ approach states that the exchange rate is determined by the supply and demand for national currency stocks‚ as well as the expected future levels and rates of growth of monetary stock A) balance of payments B) monetary C) asset market D) law of one price Answer: B Diff: 1 Topic: 8.1 Exchange Rate Determination: The Theoretical Thread Skill:
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Horn and Emily Quanbeck‚ 2010‚ 5 Expert Takes on the U.S.-China Currency Tension‚ The Atlantic http://www.theatlantic.com/business/archive/2010/10/5-expert-takes-on-the-us-china-currency-tensions/65213/ 11) W 16) Robert E.Scott‚ 2007‚ The Walmart effect‚ Economic Policy Institute http://www.epi.org/publication/ib235/ 17) Sayali Bedekar Patil‚ 2012‚ Foreign Currency Hedging Strategies‚ Buzzle http://www.buzzle.com/articles/foreign-currency-hedging.html 18) Michael J. Marx‚ Ph.D.‚ 2004‚ Walmart: The Ultimate
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CONTENTS 1. PRE-SHIPMENT EXPORT CREDIT 1 1.1 Pre-shipment Credit in Foreign Currency (PCFC) 1 1.1.1 Definition 1 1.1.2 General 1 1.1.3 Scheme 1 1.1.4 Source of Funds for Banks 2 1.1.5 Spread 3 1.1.6 Period of Credit 3 1.1.7 Disbursement of PCFC 4 1.1.8 Liquidation of PCFC Account 4 1.1.9 Cancellation/Non-execution of Export Order 5 1.1.10 Running Account Facility for All Commodities 5
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P & G To: Purchasing strategy of P & G From: Junior Consultant‚ Liu Zuo Jun Subject: Purchasing 2 of 2 Date: 21 Jun 2012 Content 1. Introduction----------------------------------------------------------3 2. Negotiation-----------------------------------------------------------3 3. Suitable channels---------------------------------------------------4
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AACSB letter indicators (F‚ M‚ etc.) on the subject lines. True/False Easy: (27.3) Multinational financial management FT Answer: a EASY 1. Multinational financial management requires that financial analysts consider the effects of changing currency values. a. True b. False (27.3) Multinational financial management FT Answer: b EASY 2. Legal and economic differences among countries‚ although important‚ do NOT pose significant problems for most multinational corporations when they coordinate
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side‚ exchange rates can affect demand for a company’s products at home and abroad. A country such as Mexico may force down the value of its currency if its exports become too expensive owing to relatively high inflation. Even though inflation would cause the peso value of the Mexican products to rise‚ the devaluation means that it takes less foreign currency to buy the pesos‚ thus allowing the Mexican products to remain competitive. One interesting ramification of a peso depreciation is the impact
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This case shows us the problems faced by AIFS due to the fact that it receives most of its revenues in US-Dollars but with its costs incurred in foreign currencies (Euros and Pounds). AIFS uses currency hedging to protect their bottom line and to cope with changes in exchange rates which can increase cost base and also purchase foreign currency based on projected sales volume because they don’t know what future sales volume will be. In the event of the above risks‚ Tabaczynski considers three alternative
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Investment Likewise we can invest € 1000 in a foreign European market‚ say at the rate of 5.0% for 1 year. But we buy forward 1 year to lock in the future exchange rate at $1.20025/€ 1 since we need to convert our € 1000 back to the domestic currency‚ i.e. the U.S. Dollar. So € 1000 @ of 5.0% for 1 year = € 1051.27 Then we can convert € 1051.27 @ $1.20025 = $1261.79 Thus‚ in the absence of arbitrage‚ the Return on Investment (RoI) is same regardless of our choice of investment method. There
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