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- a) A U.S. firm that exports most of its products to Canada. Initially its products were invoiced in Canadian dollars to accommodate the importers. After a few more years of continual concern about possible exchange rate movements, it requested its Canadian customers to pay for future orders with U.S. dollars instead of Canadian dollars. The customers decided to oblige, since the number of Canadian dollars to be converted into U.S. dollars when importing the goods from the U.S. firm was still slightly smaller than the number of Canadian dollars that would be needed to buy the product from a Canadian manufacturer. Based on this situation, has transaction exposure changed for the U.S. firm? Has its economic exposure changed? Explain. b) A U.S. firm which has no other international business, plans to create and finance a subsidiary in Mexico to produce computer components at a low cost and export them to Caribbean islands and will invoice the products in U.S. dollars. The…Define conversion to constant dollarsA corporate treasurer tells you that he has just negotiated a five-year loan at a competitivefixed rate of interest of 5.2%. The treasurer explains that he achieved the 5.2% rate byborrowing at six-month LIBOR plus 150 basis points and swapping LIBOR for 3.7%. He goeson to say that this was possible because his company has a comparative advantage in thefloating-rate market. What has the treasurer overlooked? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
- Because of general price inflation in our economy, the purchasing power of the dollar shrinkswith the passage of time. If the average generalinflation rate is expected to be 8% per year for theforeseeable future, how many years will it take forthe dollar’s purchasing power to be one-half of whatit is now?If Z~N(0,1), then what is Pr(Z > -0.11)? Round your answer to three decimal places, e.g. 0.491.Assume U.S.: $20.67/ounce of gold and U.K.: £4.2474/ounce of gold What should be the $/£ parity?
- How could (2) the acquisition of a Moldovan soft drinks company by a US company for 5 million dollars in 2018 and (3) annual profits from the US investment in Moldova at 145.000 $ in 2019 be recorded in the balance payments in Moldova and the USA in 2018 and 2019. (Please answer 2 and 3 seperately.)Today the euro costs $1.35. If the dollar gains strength against the euro at a rate of 3% per year, how much will the euro cost (in dollars) after five years (a) $1.20 (b) $1.41 (c) $1.16 (d) $1.09.please solve this two quetions
- If the expected inflation rate is 5% and negotiators agree that the real wages should rise by 7%, the two sides will agree to an increase in the money wage of A. 2% B. 5% C. 7% D. 12%J 7 Q1. An economy is experiencing inflation at an annual rate of 5.6%. If this continues, what will a P500 bill in 2008 be worth in 2020 in terms of 2008s Peso value? Q2. Krista deposits P20,000 in a bank account at 4.4% compounded quarterly for 5 years. If the inflation rate of 5% per year continues for this period, calculate the purchasing power of the original principal.The current spot rate ($/Peso) is .0704. Assume that relative PPP holds, and U.S. inflation is expected to be 3% per year for the next two years while Mexican inflation is expected to be 9% per year over the same period. XYZ Corp of USA has a 20 million peso payable at the end of two years. Calculate the expected amount of dollars needed to make the payment at the end of two years.