IntroductionExams serve as a fundamental tool in evaluating a student's understanding of a subject, particularly in fields as diverse as business, law, and mathematics. These disciplines not only have distinct
Solution Manual For
Multinational Business Finance 10th Edition BY David K. Eiteman Michael H. Moffett
Chapter 1-11
Chapter-1 Financial Goals & Corporate Governance 8
Problem # 1.1: Shareholder Returns……………………………………… 9
Problem # 1.2: Shareholder Choices…………………………………….. 9
Problem # 1.3: Microsoft's Dividend…………………………………….... 10
Problem # 1.4: Dual Classes of Common Stock………………………… 10
Problem # 1.5: Corporate Governance: Minority Shareholder Control… 11
Problem # 1.6: Price/Earnings Ratios and Acquisitions………………… 12
Problem # 1.7: Corporate Governance: Overstating Earnings…………. 13
Problem # 1.8: Carlton Corporation's Consolidated Results…………… 14
Problem # 1.9: Carlton's EPS Sensitivity to Exchange Rates………..…
Problem # 1.10: Carlton’s Earnings & Global Taxation…………….....…
Chapter-2 The International Monetary System (IMS) 19
Problem # 2.1: Frankfurt & New York................................................. 20
Problem # 2.2: Peso Exchange Rate Changes……………………….. 20
Problem # 2.3: Good as Sold……………………………………………. 22
Problem # 2.4: Gold Standard…………………………………………… 22
Problem # 2.5: Spot Rate Customer……………………………………. 22
Problem # 2.6: Forward Rate……………………………………………. 23
Problem # 2.7: Forward Discount on the dollars………………………. 23
Problem # 2.8: Forward Premium on the euro………………………… 24
Problem # 2.9: Iraqi Imports…………………………………………….. 26
Chapter-3 Balance of Payments (BOP) 28
Problems # 3.1 - 3.4: Australia's Current Account…………………… 29
Problems # 3.5 - 3.9: Uruguay's Current Account…………………… 30
Problems # 3.10 - 3.13: Myanmar's Balance of Payments……………. 31
Problems # 3.14 - 3.20: Argentina's Balance of Payments………….… 32
, Chapter-4 Foreign Exchange Market (FEM) 35
Problem # 4.1: Ringgit up or down?............................................... 36
Problem # 4.2: Forward Premium & Discounts……………………. 37
Problem # 4.3: Trading in Switzerland……………………………… 41
Problem # 4.4: Yen Forward Premium……………………………… 42
Problem # 4.5: Euro Forward Premium…………………………….. 43
Problem # 4.6: Traveling: Copenhagen to St. Petersburg……….. 44
Problem # 4.7: Riskless Profit on the Franc……………………….. 45
Problem # 4.8: Trans Atlantic Arbitrage……………………………. 47
Problem # 4.9: Wall Street Journal quotes and premiums………. 48
Problem # 4.10: Finanial Times quotes……………………………… 49
Problem # 4.11: Venezuelan Bolivar (A)…………………………….. 50
Problem # 4.12: Venezuelan Bolivar (B)…………………………….. 51
Problem # 4.13: Indirect Quotation on the Dollar…………………… 54
Problem # 4.14: Direct Quotation on the Dollar…………………….. 55
Problem # 4.15: Mexican Peso - European Euro Cross Rates…… 57
Problem # 4.16: Around the Horn……………………………………. 58
Chapter-5 Foreign Currency Derivatives (FCD) 60
Problem # 5.1: Peso Futures…………. 1
Problem # 5.2: Pounds Futures………………………………………. 62
Problem # 5.3: Hans Schmidt, euro Speculator…………………….. 63
Problem # 5.4: Hans Schmidt, Swiss franc Speculator……………. 65
Problem # 5.5: Katya & the yen………………………………………. 68
Problem # 5.6: Samuel’s bet………………………………………….. 70
Problem # 5.7: How much profit – calls?……………………………. 71
Problem # 5.8: How much profit – puts?......................................... 72
Problem # 5.9: Falling Canadian dollar………………………………. 73
Problem # 5.10: Braveheart's Put on Pounds………………………… 75
Problem # 5.11: Call Options on British pounds……………………… 78
Problem # 5.12: Put Options on euros………………………………… 79
Problem # 5.13: Solar Turbines and Venezuelan bolivares………… 80
Problem # 5.14: Vitro de Mexico……………………………………… 81
Problem # 5.15: Put Options on Chinese Renminbi………………... 82
Chapter-6 International Parity Conditions (IPC) 83
Problem # 6.1: Big Mac Hamburger Standard……………………… 84
IntroductionExams serve as a fundamental tool in
evaluating a student's understanding of a subject,
particularly in fields as diverse as business, law, and
mathematics. These disciplines not only have distinct
3
, Problem # 6.2: Exchange Rate Pass-Through…………………….. 85
Problem # 6.3: Argentine pesos…………………………………….. 87
Problem # 6.4: International Fisher Effect…………………………. 89
Problem # 6.5: Covered Interest Arbitrage (CIA) - Denmark I…… 92
Problem # 6.6: CIA Denmark B – Part (a) & Part (b)……………… 94
Problem # 6.7: CIA– Japan………………………………………….. 97
Problem # 6.8: Uncovered Interest Arbitrage – Japan……………. 98
Problem # 6.9: International Parity Conditions in Equilibrium……. 99
Problem # 6.10: Mary Smyth – CIA…………………………………… 102
Problem # 6.11: Mary Smyth – UIA…………………………………… 103
Problem # 6.12: Mary Smyth -- one month later…………………….. 105
Problem # 6.13: Langkawi Island Resort…………………………….. 106
Problem # 6.14: Covered Interest against the Norwegian krone…... 107
Problem # 6.15: Frankfurt and New York…………………………….. 109
Problem # 6.16: Chamonix chateau rentals…………………………. 110
Problem # 6.17: East Asiatic Company – Thailand…………………. 111
Problem # 6.18: Maltese Falcon: 2003-2004………………………… 114
Problem # 6.19: London Money Fund………………………………… 115
Problem # 6.20: The African Beer standard of PPP…………………. 118
Chapter-7 Foreign Exchange Rate Determination 120
Problem # 7.1: Current spot rates………………………………….… 122
Problem # 7.2: Purchasing power parity forecasts…………….…… 123
Problem # 7.3: International Fisher forecasts………………………. 125
Problem # 7.4: Implied real interest rates…………………………… 127
Problem # 7.5: Forecasting with real interest rates………….…….. 129
Problem # 7.6: Forward rates………………………………….……… 131
Problem # 7.7: Real economic activity and misery………….……… 133
Problem # 7.8: Balance of payments approach……………….……. 135
Problem # 7.9: Current accounts and spot rates…………………… 135
Problem # 7.10: Exchange Rate Trends and Bounds……………….. 135
Chapter-8 Transaction Exposure 136
Problem # 8.1: Lipitor in Indonesia…………………………………… 137
Problem # 8.2: Embraer of Brazil…………………………………….. 138
Problem # 8.3: Mattel Toys…………………………………………… 139
Problem # 8.4: Hindustan Lever……………………………………… 140
Problem # 8.5: Tek - Italian Account Receivable…………………… 141
Problem # 8.6: Tek - Japanese Account Payable………………….. 143
IntroductionExams serve as a fundamental tool in evaluating a student's understanding of a subject, particularly in fields as diverse as business, law, and mathematics. These disciplines not only have distinct
4
, Problem # 8.7: Tek - British Telecom Bid…………………………… 145
Problem # 8.8: Tek -- Swedish Price List…………………………… 146
Problem # 8.9: Tek -- Swiss Dividend Payable…………………….. 148
Problem # 8.10: Northern Rainwear…………………………………... 150
Problem # 8.11: Vamo Road Industries………………………………. 151
Problem # 8.12: Worldwide Travel……………………………………. 152
Problem # 8.13: Seattle Scientific, Inc……………………………….. 153
Problem # 8.14: Wilmington Chemical Company…………………… 154
Problem # 8.15: Dawg-Grip, Inc……………………………………..... 155
Problem # 8.16: Aqua-Pure……………………………………………. 157
Problem # 8.17: Botox Watch Company……………………………… 159
Problem # 8.18: Redwall Pump Company…………………………… 160
Problem # 8.19: Pixel's Financial Metrics……………………………. 162
Problem # 8.20: Scout Finch and Dayton Manufacturing (A)………. 163
Problem # 8.21: Scout Finch and Dayton Manufacturing (B)………. 165
Problem # 8.22: Siam Cement………………………………………… 167
Problem # 8.23: Aswan Project: Mitsubishi's Exp. (Part a & b)…… 168
Problem # 8.24: Aswan Project: Fluor's Exposure………………….. 171
Problem # 8.25: Aswan Project: DaSilva's Contingency Lever…….. 173
Chapter-9 Operating Exposure
Problem # 9.1: Carlton Germany - Case 4…………………………… 175
Problem # 9.2: Carlton Germany - Case 5…………………………… 176
Problem # 9.3: Denver Plumbing Company (A)……………………… 178
Problem # 9.4: Denver Plumbing Company (B)……………………... 178
Problem # 9.5: Hawaiian Macadamia Nuts………………………….. 179
Problem # 9.6: Cellini Fashionwear…………………………………… 180
Problem # 9.7: Autocars, Ltd………………………………………….. 181
Problem # 9.8: High-Profile Printers, Inc. (A)………………………… 182
Problem # 9.9: High-Profile Printers, Inc. (B)………………………… 183
Problem # 9.10: Hedging Hogs: Risk-Sharing at Harley Davidson…. 185
Chapter-10 Translation Exposure (Accounting Exposure) 187
Problem # 10.1: Carlton Germany (A)……………………………….. 188
Problem # 10.2: Carlton Germany (B)……………………………….. 189
Problem # 10.3: Carlton Germany (C)……………………………….. 191
Problem # 10.4: Carlton Germany (D)……………………………….. 192
Problem # 10.5: Montevideo Products, S.A. (A)……………………. 193
Problem # 10.6: Montevideo Products, S.A. (B)……………………. 194
IntroductionExams serve as a fundamental tool in
evaluating a student's understanding of a subject,
particularly in fields as diverse as business, law, and
mathematics. These disciplines not only have distinct
5
Solution Manual For
Multinational Business Finance 10th Edition BY David K. Eiteman Michael H. Moffett
Chapter 1-11
Chapter-1 Financial Goals & Corporate Governance 8
Problem # 1.1: Shareholder Returns……………………………………… 9
Problem # 1.2: Shareholder Choices…………………………………….. 9
Problem # 1.3: Microsoft's Dividend…………………………………….... 10
Problem # 1.4: Dual Classes of Common Stock………………………… 10
Problem # 1.5: Corporate Governance: Minority Shareholder Control… 11
Problem # 1.6: Price/Earnings Ratios and Acquisitions………………… 12
Problem # 1.7: Corporate Governance: Overstating Earnings…………. 13
Problem # 1.8: Carlton Corporation's Consolidated Results…………… 14
Problem # 1.9: Carlton's EPS Sensitivity to Exchange Rates………..…
Problem # 1.10: Carlton’s Earnings & Global Taxation…………….....…
Chapter-2 The International Monetary System (IMS) 19
Problem # 2.1: Frankfurt & New York................................................. 20
Problem # 2.2: Peso Exchange Rate Changes……………………….. 20
Problem # 2.3: Good as Sold……………………………………………. 22
Problem # 2.4: Gold Standard…………………………………………… 22
Problem # 2.5: Spot Rate Customer……………………………………. 22
Problem # 2.6: Forward Rate……………………………………………. 23
Problem # 2.7: Forward Discount on the dollars………………………. 23
Problem # 2.8: Forward Premium on the euro………………………… 24
Problem # 2.9: Iraqi Imports…………………………………………….. 26
Chapter-3 Balance of Payments (BOP) 28
Problems # 3.1 - 3.4: Australia's Current Account…………………… 29
Problems # 3.5 - 3.9: Uruguay's Current Account…………………… 30
Problems # 3.10 - 3.13: Myanmar's Balance of Payments……………. 31
Problems # 3.14 - 3.20: Argentina's Balance of Payments………….… 32
, Chapter-4 Foreign Exchange Market (FEM) 35
Problem # 4.1: Ringgit up or down?............................................... 36
Problem # 4.2: Forward Premium & Discounts……………………. 37
Problem # 4.3: Trading in Switzerland……………………………… 41
Problem # 4.4: Yen Forward Premium……………………………… 42
Problem # 4.5: Euro Forward Premium…………………………….. 43
Problem # 4.6: Traveling: Copenhagen to St. Petersburg……….. 44
Problem # 4.7: Riskless Profit on the Franc……………………….. 45
Problem # 4.8: Trans Atlantic Arbitrage……………………………. 47
Problem # 4.9: Wall Street Journal quotes and premiums………. 48
Problem # 4.10: Finanial Times quotes……………………………… 49
Problem # 4.11: Venezuelan Bolivar (A)…………………………….. 50
Problem # 4.12: Venezuelan Bolivar (B)…………………………….. 51
Problem # 4.13: Indirect Quotation on the Dollar…………………… 54
Problem # 4.14: Direct Quotation on the Dollar…………………….. 55
Problem # 4.15: Mexican Peso - European Euro Cross Rates…… 57
Problem # 4.16: Around the Horn……………………………………. 58
Chapter-5 Foreign Currency Derivatives (FCD) 60
Problem # 5.1: Peso Futures…………. 1
Problem # 5.2: Pounds Futures………………………………………. 62
Problem # 5.3: Hans Schmidt, euro Speculator…………………….. 63
Problem # 5.4: Hans Schmidt, Swiss franc Speculator……………. 65
Problem # 5.5: Katya & the yen………………………………………. 68
Problem # 5.6: Samuel’s bet………………………………………….. 70
Problem # 5.7: How much profit – calls?……………………………. 71
Problem # 5.8: How much profit – puts?......................................... 72
Problem # 5.9: Falling Canadian dollar………………………………. 73
Problem # 5.10: Braveheart's Put on Pounds………………………… 75
Problem # 5.11: Call Options on British pounds……………………… 78
Problem # 5.12: Put Options on euros………………………………… 79
Problem # 5.13: Solar Turbines and Venezuelan bolivares………… 80
Problem # 5.14: Vitro de Mexico……………………………………… 81
Problem # 5.15: Put Options on Chinese Renminbi………………... 82
Chapter-6 International Parity Conditions (IPC) 83
Problem # 6.1: Big Mac Hamburger Standard……………………… 84
IntroductionExams serve as a fundamental tool in
evaluating a student's understanding of a subject,
particularly in fields as diverse as business, law, and
mathematics. These disciplines not only have distinct
3
, Problem # 6.2: Exchange Rate Pass-Through…………………….. 85
Problem # 6.3: Argentine pesos…………………………………….. 87
Problem # 6.4: International Fisher Effect…………………………. 89
Problem # 6.5: Covered Interest Arbitrage (CIA) - Denmark I…… 92
Problem # 6.6: CIA Denmark B – Part (a) & Part (b)……………… 94
Problem # 6.7: CIA– Japan………………………………………….. 97
Problem # 6.8: Uncovered Interest Arbitrage – Japan……………. 98
Problem # 6.9: International Parity Conditions in Equilibrium……. 99
Problem # 6.10: Mary Smyth – CIA…………………………………… 102
Problem # 6.11: Mary Smyth – UIA…………………………………… 103
Problem # 6.12: Mary Smyth -- one month later…………………….. 105
Problem # 6.13: Langkawi Island Resort…………………………….. 106
Problem # 6.14: Covered Interest against the Norwegian krone…... 107
Problem # 6.15: Frankfurt and New York…………………………….. 109
Problem # 6.16: Chamonix chateau rentals…………………………. 110
Problem # 6.17: East Asiatic Company – Thailand…………………. 111
Problem # 6.18: Maltese Falcon: 2003-2004………………………… 114
Problem # 6.19: London Money Fund………………………………… 115
Problem # 6.20: The African Beer standard of PPP…………………. 118
Chapter-7 Foreign Exchange Rate Determination 120
Problem # 7.1: Current spot rates………………………………….… 122
Problem # 7.2: Purchasing power parity forecasts…………….…… 123
Problem # 7.3: International Fisher forecasts………………………. 125
Problem # 7.4: Implied real interest rates…………………………… 127
Problem # 7.5: Forecasting with real interest rates………….…….. 129
Problem # 7.6: Forward rates………………………………….……… 131
Problem # 7.7: Real economic activity and misery………….……… 133
Problem # 7.8: Balance of payments approach……………….……. 135
Problem # 7.9: Current accounts and spot rates…………………… 135
Problem # 7.10: Exchange Rate Trends and Bounds……………….. 135
Chapter-8 Transaction Exposure 136
Problem # 8.1: Lipitor in Indonesia…………………………………… 137
Problem # 8.2: Embraer of Brazil…………………………………….. 138
Problem # 8.3: Mattel Toys…………………………………………… 139
Problem # 8.4: Hindustan Lever……………………………………… 140
Problem # 8.5: Tek - Italian Account Receivable…………………… 141
Problem # 8.6: Tek - Japanese Account Payable………………….. 143
IntroductionExams serve as a fundamental tool in evaluating a student's understanding of a subject, particularly in fields as diverse as business, law, and mathematics. These disciplines not only have distinct
4
, Problem # 8.7: Tek - British Telecom Bid…………………………… 145
Problem # 8.8: Tek -- Swedish Price List…………………………… 146
Problem # 8.9: Tek -- Swiss Dividend Payable…………………….. 148
Problem # 8.10: Northern Rainwear…………………………………... 150
Problem # 8.11: Vamo Road Industries………………………………. 151
Problem # 8.12: Worldwide Travel……………………………………. 152
Problem # 8.13: Seattle Scientific, Inc……………………………….. 153
Problem # 8.14: Wilmington Chemical Company…………………… 154
Problem # 8.15: Dawg-Grip, Inc……………………………………..... 155
Problem # 8.16: Aqua-Pure……………………………………………. 157
Problem # 8.17: Botox Watch Company……………………………… 159
Problem # 8.18: Redwall Pump Company…………………………… 160
Problem # 8.19: Pixel's Financial Metrics……………………………. 162
Problem # 8.20: Scout Finch and Dayton Manufacturing (A)………. 163
Problem # 8.21: Scout Finch and Dayton Manufacturing (B)………. 165
Problem # 8.22: Siam Cement………………………………………… 167
Problem # 8.23: Aswan Project: Mitsubishi's Exp. (Part a & b)…… 168
Problem # 8.24: Aswan Project: Fluor's Exposure………………….. 171
Problem # 8.25: Aswan Project: DaSilva's Contingency Lever…….. 173
Chapter-9 Operating Exposure
Problem # 9.1: Carlton Germany - Case 4…………………………… 175
Problem # 9.2: Carlton Germany - Case 5…………………………… 176
Problem # 9.3: Denver Plumbing Company (A)……………………… 178
Problem # 9.4: Denver Plumbing Company (B)……………………... 178
Problem # 9.5: Hawaiian Macadamia Nuts………………………….. 179
Problem # 9.6: Cellini Fashionwear…………………………………… 180
Problem # 9.7: Autocars, Ltd………………………………………….. 181
Problem # 9.8: High-Profile Printers, Inc. (A)………………………… 182
Problem # 9.9: High-Profile Printers, Inc. (B)………………………… 183
Problem # 9.10: Hedging Hogs: Risk-Sharing at Harley Davidson…. 185
Chapter-10 Translation Exposure (Accounting Exposure) 187
Problem # 10.1: Carlton Germany (A)……………………………….. 188
Problem # 10.2: Carlton Germany (B)……………………………….. 189
Problem # 10.3: Carlton Germany (C)……………………………….. 191
Problem # 10.4: Carlton Germany (D)……………………………….. 192
Problem # 10.5: Montevideo Products, S.A. (A)……………………. 193
Problem # 10.6: Montevideo Products, S.A. (B)……………………. 194
IntroductionExams serve as a fundamental tool in
evaluating a student's understanding of a subject,
particularly in fields as diverse as business, law, and
mathematics. These disciplines not only have distinct
5
