FIN 565 (FIN565)

1. Question: (TCOA) A high home inflation rate relative to other countries would the home country's current 2. Question: (TCOA) The U.S. dollar is not ever used as a medium of exchange in any Latin American countries. 3. Question: (TCOB)Assume that Swiss investors are benefiting from CIA due to a high U.S.interestrate.Which force results from the act of this CIA? 4. Question: (TCOC) A strong dollar is normally expected to cause High unemployment and high inflation in the United States. 5. Q...

1. Question: (TCO A) A high home inflation rate relative to other countries would the homecountry'scurrentaccountbalance,otherthingsbeingequal.Ahighgrowthinthehome income level relative to other countries would the home country's current account balance, other things being equal. (Points :5) 2. Question: (TCO A) Assume the Canadian dollar is equal to $0.98 and the Brazilian real is equal to $0.28. The value of the Brazilian real in Canadian dollars is (Points : 5) 3. Question: (TCOB) Assume ...

FIN 565 Week 6 Case Study; Small Business Dilemma, Page 501, text

FIN-565 Week 4 Homework Solutions Question: Sources of Supplies and Exposure to Exchange Rate Risk Laguna Co.(aS. firm) will be receiving 4 million British pounds in one year. It will need to make a payment of 3 million Polish zloty in one year. It has no other exchange rate risk at this time. However, it needs to buy supplies and can purchase them from Switzerland, Hong Kong, Canada, or Ecuador. Another alternative is that it could also purchase one-fourth of the supplies from each of the fo...

1. Question: (TCOA) Which is an example of direct foreign investment? 2. Question: (TCOA) Which would likely have the least direct influence on a country's current account? 3. Question: (TCOF) As a result of the Smiths onian Agreement, the U.S. dollar was 4. Question: (TCOC)A large increase in the income level in Mexico along with no growth in the U.S. income level is normally expected to cause (assuming no change in interest rates or other factors)a(n) in Mexican demand for U.S. goods, and...

1. Question: Pricing a Foreign Target Alaska, Inc., would like to acquire Estoya Corp., which is located in Peru. In initial negotiations, Estoya has asked for a purchase price of 1 billion Peruvian new sol. If Alaska completes the purchase, it would keep Estoya’s operations for two years and then sell the company. In the recent past, Estoya has generated annual cash flows of 500 million new sol per year, but Alaska believes that it can increase these cash flows 5 percent each year by improvin...

1. Question: Banker’s Acceptances a. Describe how foreign trade would be affected if banks did not providetrade- related services. b. How can a banker’s acceptance be beneficial to an exporter, an importer, anda bank? 2. Question: Letters of Credit Ocean Traders of North America is a firm based in Mobile, Alabama, that specializes in seafood exports and commonly uses letters of credit (L/Cs) to ensure payment. It recently experienced a problem, however. Ocean Traders had an irrevocable L/...

1. Question: Host Government Incentives for DFI Why would foreign governments provide MNCs with incentives to undertake DFI there? 2. Question: DFI Location Decision Decko Co. is a U.S. firm with a Chinese subsidiary that produces smart phones in China and sells them in Japan. This subsidiary pays its wages and its rent in Chinese yuan, which is stable relative to the dollar. The smartphones sold to Japan are denominated in Japanese yen. Assume that Decko Co. expects that the Chinese yuan will ...

1. Question: Imperfect Markets a. Explain how the existence of imperfect markets has led to the establishment of subsidiaries in foreign markets. b. If perfect markets existed, would wages, prices, and interest rates among countries be more similar or less similar than under conditions of imperfect markets? Why? 2. Question: Benefits and Risks of International Business. As an overall review of this chapter, identify possible reasons for growth in international business. Then list the variou...

1. Question: Sources of Supplies and Exposure to Exchange Rate Risk Laguna Co.(a U.S. firm) will be receiving 4 million British pounds in one year. It will need to make a payment of 3 million Polish zloty in one year. It has no other exchange rate risk at this time. However, it needs to buy supplies and can purchase them from Switzerland, Hong Kong, Canada, or Ecuador. Another alternative is that it could also purchase one-fourth of the supplies from each of the four countries mentioned in the p...