Essay about Financial Decision

4269 WordsNov 24, 201218 Pages
Contents 1) Find the distribution and report the mean and the standard deviation of the uncertain revenue in $ 1 2) What is the probability that this revenue will exceed $ 2,250,000? 1 3) What is the probability that this revenue will exceed $ 2,500,000? 1 4) What is the probability that this revenue will be less than $ 2,150,000? 1 5) What is the probability that this revenue will be less than $ 2,000,000? 1 6) HSBC offers to pay a sure sum of $2,150,000 in return for the revenue in local currencies. What do you think, is this a good offer for Corvette or not? 2 7) In Corvette, the Sales manager is willing to accept HSBC’s offer, but the CEO is not. Who is more risk-averse? 2 8) What other risks the…show more content…
What do you think, is this a good offer for Corvette or not? According to the Question 4’ answer, we can know the profitability of revenue less than the $2,150,000 that is 0, in other words, when t the firm to complete this project, it does not to assume every kinds of risk, during this process, Corvette do not worries about it will suffers any losses. When a project can get the least risk and at the same time, Corvette can get the relative perfect return. Thus HSBC’s offer is a good offer for Corvette. 7) In Corvette, the Sales manager is willing to accept HSBC’s offer, but the CEO is not. Who is more risk-averse? The CEO of Corvette is more risk reverse that does not want to face the high risk and prefer looking for safer investment with lower risk. 8) What other risks the bank is taking apart from the uncertainty in the exchange rates? Corvette sells luxury sport cars. It has just signed a contract to sell about 27 cars to the global countries in the twelve months from now. The bank also needs to bear some risks other than uncertainty exchange rate. What if Corvette could not make their target of sales? So that the company may not have enough cash to pay back return to the bank. And if the cars sold out have any quality problem, the reputation of company will decrease and as well as affect company’s sales. The uncertain return is a significant risk for the bank. 9) If the offer is to pay the sure sum
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