Mattel Toys is a multinational firm with global sales. Key operations are in Europe and the firm
Question:
Mattel Toys is a multinational firm with global sales. Key operations are in Europe and the firm receives strong euro-denominated revenues from sales in several European countries. In fact, Mattel completed a large sale to a distributor in Paris with a 90-day A/R of 80 Million euros. Please respond to the following questions
A. In anticipation of the receiving revenues in 90 days, what is the exposure of Mattel Toys? B. Mattel Toys decided to use a money market hedge. Please follow the steps required for
Mattel to contain future currency exposure and explain the outcome.
To provide you with the economic and market context pls review the table below that summarizes key exchange rates in the spot and forward market and key interest rates in both the Eurodollar and euro-area.
Current spot rate ($/) Credit Suisse 90-day forward rate ($/)Barclays 90-day forward rate ($/)Mattel Toys cost of capital % WACC ($)
$1.4158 $1.4172 $1.4195 9.600%
90-day euro dollar interest rate
4.000%
90-day euro interest rate 90-day euro dollar borrowing rate 90-day euro borrowing rate
3.885% 5.000% 5.000%
International Marketing And Export Management
ISBN: 9781292016924
8th Edition
Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr