Chapter 2, Problem 1IEE

Based on the table below, which currencies depreciated between January and March? Name of Currency Exchange Rate JANUARY $1 = Exchange Rate MARCH $1 = Romanian Leu 4.37 4.30 South African Rand 16.14 18.18 Swedish Krona 9.15 9.10 Tunisian Dinar 2.88 2.92   a. South African Rand   b. Tunisian Dinar   c. Romanian Leu   d. Swedish Krona

a) The Business and Financial Times currently has given the following quotes between ¢:$ as:Spot = 0.7200 – 0.72501 month forward = 0.0014 – 0.0016 premium1 month forward rate = 0.7186 – 0.7234 i. Your company currently has GH¢32,500 and wishes to import goods from America. Assuming you are the financial advisor of such company, what will be your advice?  ii. Should they import now or a month’s time, assuming prices will remain constant?  b) Agency problem is pervasive and exists in practically every organization whether a business, church, club, or government. Organizations try to solve it by instituting measures but no organization can remedy it completely.How would you analyze this statement within the context of a limited liability company and what are the possible remedies to this problem?

A US firm does business in Australia.  In attempting to assess its economic exposure, it compiled the following information: Its U.S. sales are somewhat affected by the value of the Australian dollar (AU$), because it faces competition from Australian exporters.  It forecasts the U.S. sales based on the following three exchange rate scenarios:   Revenue from U.S. Business Exchange Rate of AU$ (in millions) AU$ =  $.70 $100 AU$ = $.75 105 AU$ =  $.80 110 Its Australian dollar revenues from sales in Australia invoiced in Australia dollars are expected to be AU$600 million Its anticipated cost of materials is estimated at $200 million from the purchase of U.S. materials and AU$100 million from the purchase of Australia materials Fixed operating expenses are estimated at $30 million Variable operating expenses are estimated at 20% of total sales (after including Australian sales, translated to a dollar amount) Interest expense is estimated at $20 million on existing U.S. loans, and the…

make a guess on the exchange rate of Eur/Usd from November 23 30. And tell me what are the reasons and evidences based on practices..

Based on the information provided in the table below, calculate the contribution to total performance from currency, country and stock selection for the manager. All exchange rates are expressed as units of foreign currency that can be purchased with 1 U.S. Dollar. EAFE Weight Return on Equity Index (%) Currency Appreciation E1 / E0 - 1 Manager’s Returns Manager’s Weight (%) Europe 0.3 10 10 0.35 8 Australia 0.1 5 -10 0.10 7 Far East 0.6 15 30 0.55 18

Finance The US and Australia operate floating exchange regimes, and they trade with each other. Early this month, the RBA increased the cash rate and, as a result, the AUD is appreciating. Explain in detail why the AUD is appreciating in reaction to higher cash rate. Your explanation must emphasise the actions of US residents and Australian residents in relation financial assets.

Based on the table below, which currencies appreciated between January and March? Name of Currency Exchange Rate JANUARY $1 = Exchange Rate MARCH $1 = Polish Zloty 4.5 4.08 Mozambique Meticals 62.5 66.00 Albanian Lek 109.08 111.60 Australian Dollar 1.85 1.67   a. Mozambique Metical   b. Polish Zloty   c. Albanian Lek   d. Australian Dollar

On December 20, 2015, Butanta Company (a U.S. company headquartered in Miami, Florida) sold parts to a foreign company at a price of 50,000 ostras. Payment received on January 10, 2016, Currency exchange rates for 1 ostra are as follows: December 20, 2015 $1.05, December 31, 2015 $1.02 and January 10, 2016 $0.98. How does the fluctuation in exchange rates affect Butanta's 2015 income statement? How does the fluctuation in exchange rates affect Butanta's 2016 income statement?