Dan Snyder wants sell his NFL franchise immediately (in USD), with no risk.He has one offer of
Question:
Dan Snyder wants sell his NFL franchise immediately (in USD), with no risk.He has one offer of JPY 100 Billion from a Japanese consortium, and another for GBP 700MM from a London group.Both offers will pay half immediately, and half in one year. Current bid-ask spot rates are 90-91 JPY/USD, and 1.5-1.6 USD/GBP. The U.S. interest rates for lending and borrowing are 9%-10%. The JPY rates are 1%-2%, and the GBP rates are 19%-20%.Evaluate the offers. Which offer should Snyder accept? Why? What should he do about hedging?
2.John want to buy a special pug from China that can cure the common cold.There is a one-year wait list, and the price is fixed at RMB 1MM. The current bid-ask spot rate is 6-7 RMB/USD, and the forward rate is 7-8 RMB/USD.U.S. interest rates are 10%, and Chinese rates are 20%, for borrowing or lending. What is the least amount of USD you need today to buy a risk-free pug in one year. Explain specifically and show your work! Due to a trade war, you may not buy or sell Chinese currency directly for USD.You can only borrow and lend USD at 10%, and cannot borrow or lend foreign currency. But, you may use Japanese forward contracts. The one-year bid-ask forward exchange rates are 100-110 JPY/USD, and 16-17 JPY/RMB. How can you get a special pug risk-free? How many USD do you need today?
International Marketing And Export Management
ISBN: 9781292016924
8th Edition
Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr