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If the net baht received from the Thailand subsidiary are invested in Thailand 1. There is a tradeoff between the higher interest rates in Thailand and the delayed conversion of baht into dollars. Explain what this means. 2. If the net baht received from the Thailand subsidiary are invested in Thailand, how will U.S. operations be affected? Business Management Assignment Help, Business Management Homework help, Business Managem ...

Other / Other 22 Apr 2016

Jim decided to use the excess cash to pay off the British 1. If Jim invests the excess cash in U.S. Treasury bills, would this reduce the firm’s exposure to exchange rate risk? 2. Jim decided to use the excess cash to pay off the British loan. However, a friend advised him to invest the cash in British Treasury bills, stating that “the loan provides an offset to the pound receivables, so you would be better off investin ...

Other / Other 22 Apr 2016

Would the British investment provide an effective yield 1. Effective Yield. Rollins, Inc., has $3 million in cash available for 180 days. It can earn 7% on a U.S. Treasury bill or 9% on a British Treasury bill. The British investment does require conversion of dollars to British pounds. Assume that interest rate parity holds and that Rollins believes the 180-day forward rate is a reliable predictor of the spot rate to be realized 180 da ...

Other / Other 22 Apr 2016

Explain the conditions that would cause your business to be adversely affected One of the best methods of learning broad concepts in this text is to put yourself in the place of an MNC manager or board member, and apply the concepts to make financial decisions. Board members do not normally make the decisions that are discussed here, but must have the conceptual skills to monitor the policies that are implemented by the MNC’s ma ...

Other / Other 22 Apr 2016

Why would a firm consider investing in a portfolio of foreign currencies 1. Investing in a Currency Portfolio. Why would a firm consider investing in a portfolio of foreign currencies instead of just a single foreign currency? 2. Interest Rate Parity. Dallas Co. has determined that the interest rate on euros is 16 percent while the U.S. interest rate is 11 percent for one-year Treasury bills. The one-year forward rate of the euro has ...

Other / Other 22 Apr 2016

What does this imply about the forward premium One of the best methods of learning broad concepts in this text is to put yourself in the place of an MNC manager or board member, and apply the concepts to make financial decisions. Board members do not normally make the decisions that are discussed here, but must have the conceptual skills to monitor the policies that are implemented by the MNC’s managers. Thus, they must frequent ...

Other / Other 22 Apr 2016

Why would a U.S. firm consider investing short-term funds in euros 1. Investing Strategy. Tallahassee Co. has $2 million in excess cash that it has invested in Mexico at an annual interest rate of 60 percent. The U.S. interest rate is 9 percent. By how much would the Mexican peso have to depreciate to cause such a strategy to backfire? 1 + 9% 1 + 60% -1 = - 31.875% 2. Investing Strategy. Why would a U.S. firm consider investing shor ...

Other / Other 22 Apr 2016

What is the expected value of the effective yield based on this information 1. Impact of September 11. Palos Co. commonly invests some of its excess dollars in foreign government short-term securities in order to earn a higher short-term interest rate on its cash. Describe how the potential return and risk of this strategy may have changed after the September 11, 2001 terrorist attack on the U.S. 2. Investing in a Portfolio. Pittsburgh ...

Other / Other 22 Apr 2016

How can an MNC implement leading and lagging techniques 1. Leading and Lagging. How can an MNC implement leading and lagging techniques to help subsidiaries in need of funds? 2. International Fisher Effect. If a U.S. firm believes that the international Fisher effect holds, what are the implications regarding a strategy of continually attempting to generate high returns from investing in currencies with high interest rates? B ...

Other / Other 22 Apr 2016

Construct a spreadsheet that compares the cash flows 1. Construct a spreadsheet that compares the cash flows resulting from two plans. Under the first plan, net baht-denominated cash flows (received today) will be invested in Thailand at 15 percent for a one-year period, after which the baht will be converted to dollars. Under the second plan, net baht-denominated cash flows are converted to dollars immediately and 60 percent of the fu ...

Other / Other 22 Apr 2016