1. Over the last couple of decades the Euro has been as low as $0.85 and...

1. Over the last couple of decades the Euro has been as low as $0.85 and as high as $1.51. It is currently at $1.10. How do currency movements affect Porsche's profitability? Give a detailed example using a single, new Porsche 911. You are welcome to come up with your own estimates of selling price. Use realistic currency fluctuations and time periods for manufacturing and selling a car.

2 . Hedging vs Speculating

a. What is a speculator in the context of futures markets?

b. Are speculators bad for the futures markets or our economy?

c. At what point does Porsche move from being a hedger and become a speculator?

d. As a stockholder, how would you react to Porsche speculation?

Expert Solution

1) WHAT IS A SPECULATOR IN THE CONTEXT OF FUTURE MARKETS?

A) Speculators are primary participants in the future markets.A Speculator is any individual or firm that accepts risk in order to make profits.speculators can achieve these profits by selling low and high none the less speculators aiming profits in the future markets in variety of types and it exceeds the low and high value of speculation.

2)Are speculators bad for the futures market or our economy?

A) NO, it is a speculation to state that the market rates will deplete and understand the risks and return with respect to understand the capital and return with the future market in the economy.It might be high or low but the lower the hedging or speculation is dealt with the way it occurs.

3)AT WHAT POINT DOES PORSCHE MOVE FROM BEING A HEDGER AND BECOME A SPECULATOR?

A) It is one of the best selling cars in the world but the hedging came in the year with the high rate inflation as the prices went sky rocketing and for the sake lets keep the cost of the car as 1.95 crore and the prices goes high rate as the inflation strikes the economy at the point of time and it went down as hedging.Before point they think that it was speculations as they thought it was of great performance so can be sold well but hedging keep pegging away at every point so it insists the point.

4)AS A STOCK HOLDER HOW WOULD YOU REACT TO PORSCHE SPECULATION?

A)It is quite under estimated as the rate is at the sale to purchase but the speculation made the things to scramble and it resists the market so it was quite difficult to get back.

jeff jeffy answered 7 months ago

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