You are trying to decide between two job offers. One consulting firm offersUSD 150,000 per year to work in its New York Office. A second consulting firmwants you to work in its London office and offers you GBP 100,000 per year.The price levrels in the US and UK are USD 1,400 and GBP 1,000 respectivelyand the current exchange rate is USD 1.65/GBP. Which offer shoul1 vou take,and why? (Assume you are indifferent between working in the two cities if thepurchasing power of your salary is the same).(a)you

Exchange rate and purchasing power should match with each other and there may exist parities based…

You are trying to decide between two job offers. One consulting firm of USD 150,000 per year to work in its New York Office. A second consult wants you to work in its London office and offers you GBP :00,000 p The price levels in the US and UK are USD 1,400 and GBP 1,000 resp and the current exchange rate is USD 1.65/GBP. Which offer shou!1 re and why? (Assume you are indifferent between working in the two citie purchasing power of your salary is the same).

You are trying to decide between two job offers. One consulting firm of USD 150,000 per year to work in its New York Office. A second consult wants you to work in its London office and offers you GBP :00,000 p The price levels in the US and UK are USD 1,400 and GBP 1,000 resp and the current exchange rate is USD 1.65/GBP. Which offer shou!1 re and why? (Assume you are indifferent between working in the two citie purchasing power of your salary is the same).

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter27: Multinational Financial Management

Section: Chapter Questions

Problem 11P: Boisjoly Watch Imports has agreed to purchase 15,000 Swiss watches for 1 million francs at today’s...

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Boisjoly Watch Imports has agreed to purchase 15,000 Swiss watches for 1 million francs at today’s spot rate. The firm’s financial manager, James Desreumaux, has noted the following current spot and forward rates: On the same day, Desreumaux agrees to purchase 15,000 more watches in 3 months at the same price of 1 million Swiss francs. What is the cost of the watches in U.S. dollars, if purchased at today’s spot rate? What is the cost in dollars of the second 15,000 batch if payment is made in 90 days and the spot rate at that time equals today’s 90-day forward rate? If the exchange rate for is 0.50 Swiss francs per dollar in 90 days, how much will Desreumaux have to pay (in dollars) for the watches?
You have called your Forex dealer and asked for quotations USD/EUR on the spot, 1 month, 3-month and 6-month forward rates. The trader has responded with the following: USD 1.284/98 3/5 8/7 13/10 What does this mean in terms of dollars per euro? If you wished to buy spot euros, how much would you pay in dollars? If you wanted to purchase spot USD, how much would you have to pay in euro?
IF 2c Your Canadian company processes raw sugar for sale in the United States, and thefirm has just received a container of raw material from the UK. You have an invoicethat asks you to pay £20,000 in 30 days. The current exchange rate is $1.75/£. c. If you could lock into a forward rate today of $1.85/£ for delivery in 30 days, whatshould you do?
IF 2b Your Canadian company processes raw sugar for sale in the United States, and thefirm has just received a container of raw material from the UK. You have an invoicethat asks you to pay £20,000 in 30 days. The current exchange rate is $1.75/£. b. If you thought the dollar would trade at $2.0/£ in 30 days, what should you do?
You are doing some consulting work for a communications firm in Thailand. You will be paid 355,734 (Thai Baht) seven months from now when the work is done. In order to hedge against an unfavorable exchange rate when you get paid, you decide to purchase a put option with a striking price of 33.12/$. The premium rate is 0.004 US cents per Thai Baht. A) Seven months from now, the exchange rate is 30.43/$. How much better off (in terms of US Dollars) are you AT THE MARGIN if you exercise the option versus if you were to exchange your paycheck on the spot market on the day you get paid? Enter a negative number if you're worse off. Round to two decimal places. B) This is a follow-up to the previous question. Would you have been better off having never purchased the option? Why or why not?
Suppose your company imports computer motherboards from Singapore. The exchange rate is $1.4073 per Singapore dollar. You have just placed an order for 35,062 motherboards at a cost to you of S158 Singapore dollars each. You will pay for the shipment when it arrives in 90 days. You can sell the motherboards for $113 each. Calculate your profit if the exchange rates goes down by 14.51% over the next 90 days.
You trade in two types of options. First, you purchase 7 call option contracts on the Euro with an exercise price of 1.25. Second, you sell 8 put option contracts on the Euro with an exercise price of 1.22. The fees/prices on the contracts are $.04 (calls) and $.03 (puts). Forward Rates for the Euro are 1.210-11 $/E. If contract sizes for Euros are 125,000 options per contract and the final price of Euros is 1.40. $/E, how much profit/loss have you made from participation in options?
You are an international shrimp trader. A food producer in the Czech Republic offers to pay you a 2.4 million Czech koruna today in exchange for a year's supply of frozen shrimp. Your Thai supplier will provide you with the same supply for 3.2 million Thai baht today. If the current competitive market exchange rates are 25.63 koruna per dollar and 41.18 baht per dollar, what is the value of this exchange to you? The cost of the shrimp from the Thai supplier in dollars is $_____. (Round to the nearest cent.)
Assume that the starting salary for a computer programmer in the United States is C$75,000 compared to C$50,000 in Canada (all values in Canadian dollars), that the starting age is 25, and that the person expects to be continuously employed until age 65. Assume, further, that earnings can be expected to grow at 6 percent per year in both jobs. A. Calculate the represent the value of earnings under the two alternatives, assuming a discount rate of 5 percent. How much would a potential migrant have to value living in Canada in order to stay? (I recommend doing this calculator in excel. You do not have to provide me with the calculations (i.e., your excel output), just the final answer. Y0u should NOT be using the approximation B. What factors can you identify (and possibly the value) that might offset the benefits of moving? 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.
You are an international shrimp trader. A food producer in the Czech Republic offers to pay you 2.4 million Czech koruna today in exchange for a year's supply of frozen shrimp. Your Thai supplier will provide you with the same supply for 2.9 million Thai baht today. If the current competitive market exchange rates are 25.26 koruna per dollar and 41.33 baht per dollar, what is the value of this exchange to you? The cost of the shrimp from the Thai supplier in dollars is =?
British Mobile placed an order for mobiles from Oman Mobile for which it has to pay in USD. The payment has to be made after 1 year. The price of each mobile is 100 USD As the finance manager of British Mobile you booked a forward contract today. GBP/ USD spot and forward rates are shown below Question: How much does British Mobile have to pay in GBP for each mobile? Question: Why book a forward contract ? Question: Don't you think it is better to book an option contract instead of a forward contract
Abigail lives in the UK and earns 40,000 pounds sterling per year. Her friend Barry lives in Japan and earns 8 million Japanese yen per year. The cost of a standardised consumption basket is 400 pounds sterling in the UK and 100,000 yen in Japan. The nominal exchange rate is Xy/s = 200, that is, one pound sterling can be exchanged for 200 Japanese yen Is the pound sterling overvalued or undervalued compared to the Japanese yen? Explain you calculations..