Question
In: Finance
18. UCD (U.S. based MNC) will receive €250,000 (Note:€ is the symbol for euro) in one...
$285,000. $295,000 None of the above. |
$277,777.78 $238,425.93 $285,000.00 300,000.00 |
$289,850 $285,000 $300,150 |
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Disney is expecting to receive 250,000 Euro in one year. Disney expects the spot rate of...
Disney is expecting to receive 250,000 Euro in one year. Disney
expects the spot rate of euro to be $1.29 in a year, so it decides
to avoid exchange rate risk by hedging its receivables. The spot
rate of the euro is quoted at $1.31. The strike price of put and
call options are $1.34 and $1.33 respectively. The premium on both
options is $.03. The one-year forward rate exhibits a 3.5% premium.
Assume there are no transaction costs. What...
A U.S. MNC expects to receive ¥750 million from its customer one year from now. The...
A U.S. MNC expects to receive ¥750 million from its customer one
year from now. The current spot rate is ¥116/$ and the one-year
forward rate is ¥109/$. The annual interest rate is 3% on ¥ and 6%
on USD. The put option on ¥ at the strike price of $0.0086/¥ with
1-year expiration costs 0.012 cent/¥, while the call option on ¥ at
the strike price of $0.0080/¥ with 1-year expiration costs 0.009
cent/¥.
Construct forward hedging for the...
A U.S. MNC expects to receive ¥750 million from its customer one year from now. The...
A U.S. MNC expects to receive ¥750 million from its customer one
year from now. The current spot rate is ¥116/$ and the one-year
forward rate is ¥109/$. The annual interest rate is 3% on ¥ and 6%
on USD. The put option on ¥ at the strike price of $0.0086/¥ with
1-year expiration costs 0.012 cent/¥, while the call option on ¥ at
the strike price of $0.0080/¥ with 1-year expiration costs 0.009
cent/¥.
Construct forward hedging for the...
A U.S. based MNC has the following two sets of information, one for its domestic operations...
A U.S. based MNC has the following two sets of
information, one for its domestic operations and one for its global
operations:
Domestic:
Standard deviation of the company’s return = 18%
p.a.
Covariance of the company’s return with the U.S. stock
market returns = 270
Global:
Standard deviation of the company’s return = 24%
p.a.
Covariance of the company’s return with the global stock
market returns = 144
In addition, the following market information is
available:
U.S. stock market risk...
Backward Industries - a US based MNC - projects it will receive 50,000 Brazilian Real (BRZ)...
Backward Industries - a US based MNC - projects it will receive
50,000 Brazilian Real (BRZ) from a Brazilian customer in 3 months,
however, it is only 50% certain that the money will actually be
paid out as the customer is currently in financial distress.
Backward wants to reduce its exposure to foreign exchange rate
risk. Which of the following is the best option for Backward in
this situation?
A.
Tell your Brazilian customer not to pay
B.
Enter into...
Suppose that you work for a U.S. based MNC that exports items to both Canada and...
Suppose that you work for a U.S. based MNC that exports items
to both Canada and Mexico. 75% of all net cash inflows are
denominated in Canadian Dollars (C$) and 25% of all net cash
inflows are denominated in Mexican Pesos (MXN). Suppose that the
historical correlation between the Canadian dollar and Mexican peso
over the last three years has been 0.65. Also, assume that over the
same three-year time period the monthly standard deviation of the
Canadian dollar was...
Blore Inc., a U.S.-based MNC, has screened several targets. Based on economic and political considerations,...
Blore Inc., a
U.S.-based MNC, has screened several targets. Based on economic and
political considerations, only one eligible target remains in
Malaysia. Blore would like you to value this target and has
provided you with the following information:
Blore expects to keep the target for three years, at which time
it expects to sell the firm for 300 million Malaysian ringgit (MYR)
after any taxes.
Blore expects a strong Malaysian economy. The estimates for
revenue for the next year...
From the point of view of a U.S.-based MNC, what key tax factors need to be...
From the point of view of a U.S.-based MNC, what key tax factors
need to be considered? Minimum of 120 words please
Answer questions 11 and 12 based on the following problem. Problem: Suppose that a U.S. MNC...
Answer questions 11 and 12 based on the following problem.
Problem: Suppose that a U.S. MNC has a payable of EUR 10,000 due
in three months. The current spot rate of EUR is USD 1.2000, the
current 3-month forward rate of EUR is USD 1.1760, which is above
the MNC’s own expected future spot rate of USD 1.1755. The current
Americanstyle call option due in three months is USD 1.1750 and the
current American-style put option due in three months...
Consider a U.S.-based company that exports goods to Germany. The U.S. company expects to receive a...
Consider a U.S.-based company that exports goods to
Germany. The U.S. company expects to receive a payment of
€1,000,000 for the exports in one year. The U.S. company wants
to hedge against a possible decline in the value of the euro that
would lead to a drop in the dollar value of the euro receipt in one
year. The current spot exchange rate is $1.20/€ and the one-year
forward rate is $1.25/€. The annual interest rate is 5% in the...
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