All Matches
Solution Library
Expert Answer
Textbooks
Search Textbook questions, tutors and Books
Oops, something went wrong!
Change your search query and then try again
Toggle navigation
FREE Trial
S
Books
FREE
Tutors
Study Help
Expert Questions
Accounting
General Management
Mathematics
Finance
Organizational Behaviour
Law
Physics
Operating System
Management Leadership
Sociology
Programming
Marketing
Database
Computer Network
Economics
Textbooks Solutions
Accounting
Managerial Accounting
Management Leadership
Cost Accounting
Statistics
Business Law
Corporate Finance
Finance
Economics
Auditing
Ask a Question
AI Tutor
New
Search
Search
Sign In
Register
study help
business
international financial management
Questions and Answers of
International Financial Management
FHT GmbH a German MNC is considering its foreign sales policy. The following proposals have been made:a Manufacture and purchase inputs to manufacturing in Germany and export.b Import inputs,
What is offsetting? At a management meeting, a fellow manager argues that they should set up production abroad to benefit from offsetting their currency exposure.a Explain the rationale of their
FVG SA, a French company, is a supermarket chain that is seeking to expand abroad in a range of countries.Consider the costs and the currency risk exposure for the following, stating clearly your
RET (Pty) Ltd, a South African company, is seeking an international market. It decides to sell through the internet and prices its goods in rand. They argue that pricing goods in foreign currency
A fellow manager in DFT plc has just been reading about George Soros’s £10 billion short on the UK pound on 16 September 1992 (a short strategy profits from a fall) and made a profit of £1.1
DFT plc is considering raising funds on the French and New York stock exchanges to finance the development of its factories in Africa.a What data would you want to analyze in order to assess this
At a management meeting a non-financial manager argues that 'I think the euro will go up in value so we should work out all our future euro expenses and invest in a euro bank account now.'a Explain
DRJ GmbH processes coffee beans from Ghana.a Search online for 'Ghana Central Bank exchange rates' and export daily exchange rates (EURGHS) for one year and assess its variability.b Write a short
DRJ GmbH’s bank suggests that a five-year non-deliverable currency swap might be appropriate in dealing with its regular payments for coffee beans from Ghana. Explain how this would work and the
DRJ GmbH asks its bank to arrange a non-deliverable currency swap, but in the event the one offered is not attractive. Instead, the bank offers a cross-currency hedge with the Nigerian naira.a
As a financial adviser for ATG plc, a UK bank, you have been asked to visit companies and explain the benefits of taking out call and put options, outlining circumstances where it would be especially
A manager at a meeting argues that hedging is just delaying the inevitable and that it merely converts small changes into fewer large changes that is, if anything, more damaging. Reply to this
To overcome EU regulations a French company has asked you to guarantee a loan by your bank to its subsidiary and it will do the same for your subsidiary in France.a What type of transaction is this?b
What measures of the costs and benefits from hedging would you think appropriate to report in a monthly financial dashboard?
Compare and contrast market and non-market methods of hedging. What overall strategy would you advise?
Comparison of techniques for hedging receivables.a Assume that Carbondale Ltd expects to receive S$500,000 in one year. The existing spot rate of the Singapore dollar is £0.40. The one-year forward
Comparison of techniques for hedging payables. SMU Ltd has future receivables of NZ$4,000,000 (New Zealand dollars) in one year. It must decide whether to use options or a money market hedge to hedge
Devon Ltd manufactures plastic moulding machines. Annual company sales are £3 million in the UK and£12 million in the rest of Europe (invoiced in euros, average exchange rate £0.60:€1). The cost
Hedging with a bull spread (refer to Chapter 11). Evar Imports Ltd buys chocolate from Switzerland and resells it in the UK. It just purchased chocolate invoiced at CHF62,500. Payment for the invoice
Hedging with a bear spread (refer to Chapter 11). Marsden Ltd has customers in Canada and frequently receives payments denominated in Canadian dollars (C$). The current spot rate for the Canadian
Banter plc is an Ireland-based MNC that obtains 10 per cent of its supplies from US manufacturers. Of its revenues, 60 per cent are due to exports to the US, where its product is invoiced in dollars.
Explain how an MNC’s consolidated earnings are affected when foreign currencies depreciate.
The following website provides annual reports of numerous MNCs: www.annualreports.com. You may also access annual reports via the FT website www.ft.com and international reports via www.forbes.com,
a Create an Excel worksheet that replicates this income statement with the exchange rate as a variable (the calculations will therefore adjust correctly when the exchange rate changes).b Draw a
You learn that if the euro increases in value by 5 per cent your sales will fall due to European competitors in the EU buying cheap imports. Using the Excel model:a Calculate the effect on profits of
The sales director estimates that in the event of an increase in the value of the euro they could in view of greater competition reduce the euro price of their EU sales by ½ per cent for every 1 per
Recalculate your workings in Questions 7 and 8 to increase profits by redistributing expenses between euros and UK pounds.
Prepare a brief report on the effect of a decrease in the value of the euro and appropriate action taking into account the information in the previous questions.
From the data describe the nature of the production and sales operations of YTR.Questions 11 to 15 relate to the following income statement for YTR plc. GBPEUR 1.2 GBPBHD 0.51 Foreign s Bahraini
Draw up a sensitivity graph to changes in the exchange rate and explain why there is a difference in the sensitivity between the two currencies.Questions 11 to 15 relate to the following income
There is a proposal to hire foreign services on a monthly basis rather than the current long-term contracts at fixed foreign currency prices. Using past data, it is estimated that there will be a 5
Illustrate with a simple example the effect of offsetting between the exchange rates.Questions 11 to 15 relate to the following income statement for YTR plc. GBPEUR 1.2 GBPBHD 0.51 Foreign s Bahraini
From the Yahoo site for exchange rates (finance.yahoo.com › quote › GBPBHD=X uk.finance.yahoo.com/quote/GBPEUR=X/) calculate the daily standard deviation under the assumption that net cash flows
From a viewing of www.youtube.com/watch?v=WYqKUEGEeuc (Big Multinational Companies Leave China, Millions of Jobs Disappearing) consider the following:a What was the motive for the unilateral land
FDI valuation. XH plc is considering the following cash flows for project Y (mining rare earth) in country K that requires an initial investment of £2.5 million.a Calculate the NPV using the
What is the NPV analysis of this decision?The following applies to Questions 3 to 6: UKmart and Frenchmart are rival supermarkets with stores throughout the world. Recently, Frenchmart has opened up
What is the game theory analysis to this decision?The following applies to Questions 3 to 6: UKmart and Frenchmart are rival supermarkets with stores throughout the world. Recently, Frenchmart has
How might real options be relevant here?The following applies to Questions 3 to 6: UKmart and Frenchmart are rival supermarkets with stores throughout the world. Recently, Frenchmart has opened up a
Do you agree with the finance director. What further information is needed and if you follow their advice how should analysis be undertaken?The following applies to Questions 3 to 6: UKmart and
AQ plc is considering expanding its operations into Country X for a cost of £40 million. The following possibilities exist. A rival firm JQ plc also decides to expand its operations into Country X.
Consider the motives of Rio Tinto (RIO: London) plc for international investment by applying the Dunning model.
Use the bargaining model to consider how M&S might approach investing in an African country.
Use the conflict model to assess the dangers of an EU MNC investing in Africa.
For any one of the options in Questions 8, 9 and 10 use what you think appropriate from the Dunning, bargaining and conflict models to assess the issues and strategies facing investment in Africa.
Consider the possible negative consequences for a developing country of the clauses of the MAI.
For the OECD restrictiveness index assess the reasons why a country might seek to make the restrictions listed.
What are the potential issues in assessing a subsidiary company as a separate entity?
In South East Asia FDI by MNCs has promoted growth, in other countries this has not been the case. Using the models of FDI in this chapter (Dunning, bargaining and conflict in particular) consider
a Explain with examples of country risk what is meant by a binary event.b Why does a binary event cause difficulties for traditional investment analysis in an international context?
a Itemize and consider from an MNC perspective the labour problems in India.b Major hi-tech companies are nevertheless relocating to India. Investigate the reasons and assess the relative importance
The EU copyright directive Article 17 poses a country risk. Assess the nature of this risk and its potential impact for a company seeking to develop an internet presence in the EU.
Find an example of currency non-convertibility and consider its effect on foreign direct investment.
Find an example on the internet of bureaucratic restrictions on FDI ('red tape'). Outline the nature of the problem and difficulties in increasing efficiency (cutting red tape).
Take the EU or a country with which you are familiar and assess it (using the internet) on the factors rated by leading executives (Exhibit 15.2).
Describe the checklist approach. Is it sensible to weigh the items on the checklist? What other ways might there be of coming to an overall assessment having assessed the various risks? Illustrate
What are the risks faced by a takeaway chain seeking to invest in the EU? If in a group environment, apply the Delphi technique and compare your findings with another member and prepare an overall
Which is riskier: Country A with high political risk but relatively weak governance such that withdrawal should be easy; or Country B with a low political risk but a high level of governance making
How could firms with international sales have been better prepared for the COVID-19 pandemic?
From Exhibit 15.5 graph the ratings against the interest rate and estimate the effect of moving from one rating to another by means of a scattergram. What could be the reasons for the outliers?
Is it possible to combine an NPV calculation for an investment in an EMEA country with a sudden event such as a currency collapse or a military coup or the imposition of trade sanctions? Illustrate
How might an MNC reduce exposure to government takeovers?
Itemize the way in which India has encouraged inward investments and list the drawbacks of investing there (using the internet). Then form an overall assessment.
Prepare a brief report for an MNC in Europe on FDI in Africa addressing the issues raised in this chapter.
Evaluate the varying ways in which an MNCn could raise equity.
Take the interest rate on a 10-year bond from one year previously (go to tradingeconomics.com or search for‘tradingeconomics bonds’ online and the GBP quote rate for the base you have selected,
Describe how you would estimate the future cost of borrowing in a foreign currency.
The management accountants in WER plc are estimating the potential effect of changes in the exchange rate (below).Currently WER imports mostly from the EU with sales both in the EU and the UK. WER is
Go to the Bank of England currency website and download one year of daily exchange rates for any currency.Calculate the daily percentage change for each day.a What percentage of movements are
Take the exchange rate from the Bank of England site and the bond yield as in Question 2 for both the UK and a country of choice for one year previous. Calculate the synthetic forward rate as UK
GHJ plc is earning in Nigerian naira. Explain how an interest rate swap would help GHJ.
As a finance director for GHJ, explain to other directors how a parallel loan would work for their subsidiary in Nigeria and why it would be worthwhile. (Hint: you may want to investigate the
What are the advantages of issuing a bond denominated in SDR? What is the term used for such bonds?
WSD plc is thinking of financing a six-year project in Uganda by raising the funds locally. WSD is undecided as to whether to take out short-term funding (e.g. two-year funds rolled over) or six-year
ALP plc can borrow at a fixed rate of 3 per cent and a variable rate of SOFR + 1% whereas YJK plc can borrow at a fixed rate of 4 per cent and a SOFR rate of +1.25%. ALP wishes to borrow at a
Explain the logic of arranging a swap on non-existent loans between two parties.
Explain how the differing forms of swap make the commitment to swapping less risky.
What is meant by net payments on a swap?
Outline what is meant by a Special Purpose Vehicle and why it might be appropriate for a foreign investment project.
Banker’s acceptances.a Describe how foreign trade would be affected if banks did not provide trade-related services.b How can a banker’s acceptance be beneficial to an exporter, an importer and a
Export financing.a Why would an exporter provide financing for an importer?b Is there much risk in this activity? Explain.
Role of factors. What is the role of a factor in international trade transactions?
ECGD (UKEF).a What is the role today of the ECGD?b Describe the basis of the political opposition to the ECGD.
Bills of lading. What are bills of lading and how do they facilitate international trade transactions?
Forfaiting. What is forfaiting? Specify the type of traded goods for which forfaiting is applied.
Should the World Bank be in charge of providing finance for exports?
Government programmes. What motivates a government to establish/intervene in the credit markets?
Countertrade. What is countertrade?
Impact of a financial crisis. What steps should an MNC take if a crisis occurs in country X, which is a major exporting destination of the MNC?
Letters of credit. Channel Traders (UK) is a firm based in Grimsby that specializes in seafood exports and commonly uses letters of credit (L/C) to ensure payment. It recently experienced a problem,
Compare and contrast the web provision for exporters from the UK and the US. For the US provision visit www.exim.gov and for the UK provision visit
Is export finance a form of allowable export subsidy?
What do you think will be the impact of the internet and bitcoin on the export process? Explain and justify your views.
Historically, the ECGD’s portfolio has been dominated by Airbus sales to emerging economies and by arms exports, although the volume of the latter has declined from 57 per cent of the portfolio in
Financing from subsidiaries. Explain why an MNC parent would consider using finance from the currencies used by subsidiaries.
WER plc is planning to negotiate bank overdraft facilities in the local currency to pay for supplies from India and South Africa. It will then periodically convert UK pounds to these currencies to
Probability distribution. From the Bank of England website (refer to Question 2) and the US ‘FRED economic data site’ at fred.stlouisfed.org/series/FEDFUNDS, calculate the effective borrowing
Financing and exchange rate risk. How can a UK firm finance in euros and not necessarily be exposed to exchange rate risk?
Short-term financing analysis. Assume that Tilly Ltd needs £3 million for a one-year period. Within one year, it will generate enough British pounds to pay off the loan. It is considering three
Breakeven financing. Akron Ltd needs dollars. Assume that the local one-year loan rate is 15 per cent, while a one-year loan rate in euros is 7 per cent. By how much must the euro appreciate to cause
Effective financing rate. Boca, SA (Spain) needs 4 million euros for one year. It currently has no business in Japan but plans to borrow Japanese yen from a Japanese bank because the Japanese
Showing 1 - 100
of 768
1
2
3
4
5
6
7
8