The XYZ company is a US-based MNC & deals with various financial instruments as its core business activity. Among its various courses of action, the firm deals with financial derivatives (like forward, future, options, etc) & acts as a hedger, arbitrage, and speculator as well. To be competitive in the market, it has to observe and analyze different economic scenarios in different places/countries and formulate the strategy accordingly to nurture the available business opportunity. With this reference, assuming your team is one of the core business teams of the XYZ Company & based on your understanding of the subject matter kindly respond & answer to following question: How can currency futures be used by the XYZ Company as an arbitrageur & as a speculator?

The XYZ company is a US-based MNC & deals with various financial instruments as its core business activity. Among its various courses of action, the firm deals with financial derivatives (like forward, future, options, etc) & acts as a hedger, arbitrage, and speculator as well. To be competitive in the market, it has to observe and analyze different economic scenarios in different places/countries and formulate the strategy accordingly to nurture the available business opportunity. With this reference, assuming your team is one of the core business teams of the XYZ Company & based on your understanding of the subject matter kindly respond & answer to following question: How can currency futures be used by the XYZ Company as an arbitrageur & as a speculator?

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter17: Multinational Capital Structure And Cost Of Capital

Section: Chapter Questions

Problem 2ST

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The XYZ company is a US based MNC & deals with various financial instruments as its core business activity. Among its various courses of action, the firm deals with financial derivatives (like forward, future, options etc) & acts as hedger, arbitrager and speculator as well. To be competitive in the market, it has to observe and analyze different economic scenarios in different places/countries and formulate the strategy accordingly to nurture the available business opportunity. With this reference, assuming your team is one of the core business teams of the XYZ Company & based on your understanding of subject matter that you have learned in this course, kindly respond & answer to following different scenarios: Scenario 1: How can currency futures be used by the XYZ Company as an arbitrageur & as a speculator? Scenario 2: Forward versus Currency Option Contracts 1) What are the advantages and disadvantages to the XYZ Company if it uses currency options on euros…
Today, the US dollar is the currency of choice in Cross-Border Trade and Investment activities. In this context, what are some of the pros and cons associated with the dollar?If you were the CFO for Global Operations at Lutar International, a Phoenix based multinational company, would you prefer to use a strong or weak dollar in your global operations? Why?
Statoil, the national company in Norway, is a large, sophisticated, and active participant in both the currency and petrochemical markets. Although it is a Norwegian company, because it operates within the global oil market, it considers the U.S. dollar ($), rather than the Norwegian krone (Nok), as its functional currency. Ari Karlsen is a currency trading strategist for Statoil. In a daily meeting, the Chief Financial Officer (CFO) gave Ari the following table of market rates: Spot exchange rate: Yen 106/$U.S. dollar interest rate: per annum 10%Japanese Yen interest rate: per annum 6% and told Ari that the company’s financial analyst expected the Japanese Yen to depreciate against the U.S. dollar by 3.46% in 90 days. Assume there are 360 days in a year, and all interest rates are simple interest rates. If the financial analyst’s prediction about the US dollar and Japanese Yen turned out to be true: What would the spot exchange rate (Yen/$) be in 90 days?
Statoil, the national company in Norway, is a large, sophisticated, and active participant in both the currency and petrochemical markets. Although it is a Norwegian company, because it operates within the global oil market, it considers the U.S. dollar ($), rather than the Norwegian krone (Nok), as its functional currency. Ari Karlsen is a currency trading strategist for Statoil. In a daily meeting, the Chief Financial Officer (CFO) gave Ari the following table of market rates Spot exchange rate: Yen 106/$ U.S. dollar interest rate per annum 10% Japanese Yen interest rate per annum 6% and told Ari that the company’s financial analyst expected the Japanese Yen to depreciate against the U.S. dollar by 3.46% in 90 days. Assume there are 360 days in a year, and all interest rates are simple interest rates. If the financial analyst’s prediction about the US dollar and Japanese Yen turned out to be true: What would the spot exchange rate (Yen/$) be in 90 days?…
Statoil, the national company in Norway, is a large, sophisticated, and active participant in both the currency and petrochemical markets. Although it is a Norwegian company, because it operates within the global oil market, it considers the U.S. dollar ($), rather than the Norwegian krone (Nok), as its functional currency. Ari Karlsen is a currency trading strategist for Statoil. In a daily meeting, the Chief Financial Officer (CFO) gave Ari the following table of market rates: Spot exchange rate: Yen 106/$U.S. dollar interest rate: per annum 10%Japanese Yen interest rate: per annum 6% and told Ari that the company’s financial analyst expected the Japanese Yen to depreciate against the U.S. dollar by 3.46% in 90 days. Assume there are 360 days in a year, and all interest rates are simple interest rates. If the financial analyst’s prediction about the US dollar and Japanese Yen turned out to be true: Would Ari make a profit by borrowing 1 million US dollar and investing in the money…
The pros and cons of a Mexican firm taking the route of an Initial Public Offering (IPO), the Global Bond Market, and Eurobonds are all important considerations for a Mexican firm looking to raise capital. An IPO can provide a large influx of capital, but it also comes with the risk of losing control of the company. The Global Bond Market and Eurobonds can provide a more stable source of capital, but they also come with their own risks such as foreign exchange risk and transaction fees. Ultimately, it is important for a Mexican firm to weigh the pros and cons of each option before making a decision. please help reply to discussion
As a national of CARICOM, and a student of International Business Management, you have been invited to make a presentation on Foreign Direct Investments to an Investment team. (d) The forces driving FDIs inflows. (e) The influence that FDI’s have on Balance of payments (BOP) statistics and public attitudes. (f) The advantages and disadvantages of FDIs to the host country.
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Due to globalization and liberalization, many global corporates or multi- national companies wish to pursue business in more than one nation by producing, investing and operating across the globe through engaging various business activities. Thus, they confront a high degree of exchange rate risk in their commercial transactions. To minimize their risk those companies try toemploy diversified techniques. Identify any technique available in Omani FOREX market to support those companies in hedging the exchange rate risk and explain its operating approach.
Statoil, the national company in Norway, is a large, sophisticated, and active participant in both the currency and petrochemical markets. Although it is a Norwegian company, because it operates within the global oil market, it considers the U.S. dollar($), rather than the Norwegian krone(Nok), as its functional currency.Ari Karlsen is a currency trading strategist for Statoil. Answer the following question: In a daily meeting, the Chief Financial Officer (CFO) gave Ari the following table of market rate Spot exchange rate: Yen 106/$ U.S. dollar interest rateper annum 10% Japanese Yen interest rateper annum 6% and told Ari that the company’s financial analyst expected the Japanese Yen to depreciate against the U.S. dollar by 3.46%in 90 days.Assume there are 360 days in a year, and all interest rates are simple interest rates.If the financial analyst’s prediction about the US dollar and Japanese Yen turned out to be true: Required for part B 1) What would the…
Over recent decades, there has been a steady increase in cross-border financial flows around the world. First, various financial institutions including banks and institutional investors have expanded their activities geographically. In this process, they acted as an intermediary to channel funds from lenders to borrowers across national borders.Second, the more mature securities markets have gained a clear cross-borderorientation. In many instances, newly issued securities are designed and offered to the public in such a way as to maximise their appeal to international investors. (Issing, O., 2001). What is meant by globalisation of financial markets. Using evidencef rom literature, to what extent does globalisation benefit the financial sector?