A U.S. company will receive payments of £1.25 million next month. It wants to protect these receipts against a drop in the value of the pound. It can use 30-day futures at a price of $1.6513 per pound or it can use a call (put) option with a strike price of $1.6612 at a premium of 1 cent (2 cents) per pound. The spot price of the pound is currently $1.6560., and the pound is expected to trade in the range of $1.6250 to $1.7010. How can the company use future or option hedge its risk? How many futures contracts will the company need to protect its receipts? How many options contracts? Diagram the company’s profit and loss associated with the option position and future position within the range of expected exchange rates. Ignore the transaction costs and margins. Show the total cash flow to the company using the options and futures contracts, as well as the unhedged position within range of expected future exchange rates. What is the break-even future spot price on the option contract? On the futures contract?

You are a senior manager in a U.S. automobile company who is considering investing in production facilities in China, Russia, or Germany. These facilities will serve the local market demand. Develop a summary that determines the benefits, costs, and risks associated with doing business in each nation. Which country seems to be the most attractive target for foreign direct investment? Why? The course is International Business and Global Strategy.

A foreign subsidiary of a U.S.-based company has been notified of a loss contingency with an estimated cost ranging between $220,000 and $250,000 which is probable of resulting in an actual loss. Each dollar amount within this range of cost is equally likely of being the actual outcome.

According to IFRS, what is the amount recognized as a provision for loss contingency?

Multiple Choice

• No amount will be recorded but an amount will be disclosed in the notes to the financial statements.

• $110,000

• $220,000

• $235,000

• $250,000

TV sets: According to the Nielsen Company, the mean number of TV sets in a U.S. household in 2013 was 2.24. Assume the standard deviation is 1.2. A sample of 80 households is drawn. Use the Cumulative Normal Distribution Table if needed. Part 1 of 5 What is the probability that the sample mean number of TV sets is greater than 2? Round your answer to four decimal places. The probability that the sample mean number of TV sets is greater than 2 is . Part 2 of 5 What is the probability that the sample mean number of TV sets is between 2.5 and 3? Round your answer to four decimal places. The probability that the sample mean number of TV sets is between 2.5 and 3 is . Part 3 of 5 Find the 20th percentile of the sample mean. Round your answer to two decimal places. The 20th percentile of the sample mean is . Part 4 of 5 Would it be unusual for the sample mean to be less than 2? Round your answer to four decimal places. It ▼(Choose one) unusual because the probability of the sample mean being less than 2 is . Part 5 of 5 Do you think it would be unusual for an individual household to have fewer than 2 TV sets? Explain. Assume the population is approximately normal. Round your answer to four decimal places. It ▼(Choose one) be unusual for an individual household to have fewer than 2 TV sets, since the probability is .

TV sets: According to the Nielsen Company, the mean number of TV sets in a U.S. household in a recent year was 2.24. Assume the standard deviation is 1.2. A sample of 85 households is drawn.

1. What is the probability that the sample mean number of TV sets is between 2.5 and 3?

2. Find the 30th percentile of the sample mean.

TV sets: According to the Nielsen Company, the mean number of TV sets in a U.S. household in 2013 was 2.24. Assume the standard deviation is 1.4. A sample of 80 households is drawn. Use the Cumulative Normal Distribution Table if needed. Part 1 of 5 What is the probability that the sample mean number of TV sets is greater than 2? Round your answer to four decimal places. The probability that the sample mean number of TV sets is greater than 2 is . Part 2 of 5 What is the probability that the sample mean number of TV sets is between 2.5 and 3? Round your answer to four decimal places. The probability that the sample mean number of TV sets is between 2.5 and 3 is . Part 3 of 5 Find the 40th percentile of the sample mean. Round your answer to two decimal places. The 40th percentile of the sample mean is . Part 4 of 5 Would it be unusual for the sample mean to be less than 2? Round your answer to four decimal places. It ▼(Choose one) unusual because the probability of the sample mean being less than 2 is . Part 5 of 5 Do you think it would be unusual for an individual household to have fewer than 2 TV sets? Explain. Assume the population is approximately normal. Round your answer to four decimal places. It ▼(Choose one) be unusual for an individual household to have fewer than 2 TV sets, since the probability is .

Peerless Corporation (a U.S. company) made a sale to a foreign customer on September 15, for 100,000 crowns. It received payment on October 15. The following exchange rates for 1 crown apply:

Prepare all journal entries for Peerless in connection with this sale, assuming that the company closes its books on September 30 to prepare interim financial statements. (If no entry is required for a transaction/event, select " No journal entry required" in the first account field.)

1.

2.

3

4.

TV sets: According to the Nielsen Company, the mean number of TV sets in a U.S. household in 2013 was 2.24 . Assume the standard deviation is 1.2 . A sample of 95 households is drawn. Use the Cumulative Normal Distribution Table if needed.

What is the probability that the sample mean number of TV sets is greater than 2? Round your answer to four decimal places.

What is the probability that the sample mean number of TV sets is between 2.5 and 3? Round your answer to four decimal places.

Find the 80th percentile of the sample mean. Round your answer to two decimal places.

Would it be unusual for the sample mean to be less than 2? Round your answer to four decimal places.

You are in charge of pricing for a California wine company. Because nearly 90% of U.S. wines are produced in California, you think that California wines might be perceived differently from those produced in other states, thus affecting the price. You decide to see how both wine rating and whether or not the wine is from California affect the pricing of wines in the U.S.

For this question, you will need to download the Wine Rating Data and then use the data analysis tool pack in Excel to run a regression. Note that for the dummy variable, you will need to use an IF command to make that column.

https://arizona.grtep.com/core/uploadfiles/components/287971/files/Wine%20Rating%20Data.xlsx (Wine Data)

Run a regression to estimate the following equation.

Price = β0+β1Rating + β2California + β3(Rating×California) + ε

“California” is a dummy variable that equals 1 if the wine is from California. Round your answers to 2 decimal places.

Priceˆ= ________ + ________ Rating− _______ California+ _______ Rating∗California

What was the reported R² of the model? Round your answer to 4 decimal place.

What would be the difference in predicted price of two wines that both have a rating of 93, but one is produced in California and one is produced in Oregon? Round your answers to 2 decimal places.

Hint, it might be helpful to write out the equation for when the California dummy variable equals 0 and then for when it equals 1 like we did in class for other dummy variables.

The California wine is $_______ higher than the Oregon wine.

Based on the model you estimated, at what rating do California wines become more expensive than wines from other states? Round your answers to 2 decimal places.

Headquartered in the U.S., Merck is a leading multinational pharmaceutical company that does business in more than 100 courtiers. More than 50 per cent of its sales are made abroad and foreign sales are billed in local currencies. Merck spends large sums of money on research and development which is critical or enhances its competitive strength. A major concern for the management is that unexpected foreign exchange losses could curtail its research and development outlays which are essential for its success. So, Merck‟s risk management programme is designed to reduce the likelihood of such an outcome.

a. Explain Merck addressed the issues through various steps when its risk management programme was put in place.

b. What are the various ways of minimizing foreign exchange losses