Explain how you will manage each of these situations. (a) Global gas prices have declined substantially. Your company is a major user of Australian gas.
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Explain how you will manage each of these situations.
(a) Global gas prices have declined substantially. Your company is a major user of Australian
gas.
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- If the countries that export oil (OPEC) to the rest of the world decide to increase the price per barrel of oil, explain what impact the increase will have on the price level of the following: -Sea and land transportation of products -Consumer goods and services -The electric energyAccording to the Solow model, how would each of the following affect steady-state (i) output per worker, (ii) consumption per worker, and (iii) the long-run growth rate of the total capital stock? Explain and provide graphical illustration using the graph of production function, saving function, and effective depreciation line. a. The destruction of a portion of the nation's capital stock in a war. b. An immigration wave of individuals that exhibit both higher saving and fertility rates than the current population. c. A one-time improvement in productivityA company in country X with currency XSD is analyzing a potential investment in country Y with currency YSD. The best estimate is that YSD will be devalued in the international markets at an average of 3%. If the MARR of this company in country X is 23% what is the MARR that the company should use in country Y?
- Consider the following information regarding a new investment that a company intends to undertake:. State of the Economy Probability Market Return Investment Return Expansion 0.30 40% 60% Normal 0.50 10% 25% Recession 0.20 -15% -40% b). Compute the correlation between the market the investment returnA UK-based firm has identified three variables that impacts its cash flow, hence risk associated with its cashflow. The identified variables are interest rates (INT), the euro/sterling exchange rate (EXCH), and the price of gas (GAS). The relationship between the variables can be expressed as follows: Change in cash flow = ₔ+ ß1 INT + ß2 EXCH + ß3 GAS + ҙ (a) Explain the relationship as expressed in the multiple regression analysis. (b) Identify the dependent variable and independent variables and type of risks associated to each variable and how to manage these risks. (c) How do you describe the relationship between the independent variables and the dependent variable. (d) Identify and briefly explain the three commonly used approaches to quantifying financial risks.1. If the economy is expected to enter a period of strong growth, which of the following would be the best course of action? A. Purchase Utility Stocks B. Purchase Treasury Bills C. Purchase stocks D. Purchase bonds 2. Which of the following sector rotations would likely occur if it is forecast that economic conditions will decline? A. rotate from discretionary to staples B. rotate from defensives to cyclicals C. rotate from staples to discretionary D. rotate from utilities to tech 3. When a industry is entering a period of rapid expansion, what is generally true of the valuation /multiple of stocks in that industry? A. Multiples / Valuation will increase B. Sales will likely contract C. Multiples / Valuation will decrease D. None of the listed answers are correct 4. Economic indicators can help us formulate our opinion about macro factors, which can help direct our investment decisions. Which of the following is true about economic indicators right now?…
- Given the following information, are there geographic arbitrage opportunities available? If so, what level of additional transaction costs in each market will eliminate this opportunity? (All quotes are at time 0). Quotes for the US dollar in South Korea: 1361-1385 Quotes for the South Korean Won in the US: 0.000741 - 0.000762.You are International Business Manager at a UK based company. Considering high demand your company plans a full-scale expansion. Your company has identified USA and Europe as potential markets. You are requested to analyse both projects and advise. In considering such large project, you must work out the risk of each project, cost of capital and NPV. Allocate discount rate for each project accordingly and justify why you allocated this rate in your discussion. Discuss how international risks can be managed. Projected cash flows in respective currencies: Year Net Cash Flow – USD USA Net Cash Flow - EUR Europe0 -20 million -20 million 1 2 million 2 million2 4 million 3 million3 5 million 4 million4 6 million 8 million5 8 million 8 million Instructions:a. Discuss viability of both projects in today’s global business context and allocate discount rate. b. How much investment is needed for each project and what is the NPV of each project? c.…Suppose that during a certain week the Fed announces a new monetary growth policy, Congress surprisingly passes legislation restricting imports of foreign automobiles, and Ford comes out with a new car model that it believes will increase profits substantially. How might you go about measuring the market’s assessment of Ford’s new model?
- The payoffs of an investment are dependent on the state of the economy. The economy can have two states, recession or growth, with equal probability. If the payoff in the event of growth is $140 and in the event of recession is $80, what is the expected payoff for the investment? a.$100 b.$130 c.$120 d.$110JES is the primary generator of electrical power and the sole distributor in country X One issue that any analysis of the Manufacturing Industry yields is the high and uncertain cost of energy. To avoid potential losses, manufacturers tend to inflate their prices for the expected fluctuations. It has been argued that if energy prices were more stable, the manufacturing industry could experience significant growth. In the context of the above statement, prepare a document explaining: i. Derivatives and THREE (3) of its potential benefits ii. The main features of FOUR (4) derivative instruments and if and how each could be used in achieving the goals desired in the above statement.The management of Kawneer North America is considering investing in a new facility and the following cash flows are expected to result from the investment: Year Cash Outflow Cash Inflow 1 $1,900,000 $100,000 2 550,000 200,000 3 360,000 4 480,000 5 510,000 6 600,000 7 590,000 8 300,000 9 250,000 10 250,000 a. what is the payback period of this uneven cash flow? b. does your answer change if year 10's cash inflow changes to $500,000?