International Financial Management
14th Edition
ISBN: 9780357130698
Author: Madura
Publisher: Cengage
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Following an unanticipated dollar appreciation, would you recommend that a domestic manufacturing company such as Cummins Engine sell foreign assets? Yes or No
Golden Ltd is an exporting company and it will have receivables in Malaysian ringgit in coming years. It expects the Malaysian ringgit to depreciate against the US dollar over time. It wants to get rid of its transaction exposure by denominating the exports in US dollars but that it is still subject to operating exposure. The long-term hedging techniques are constrained and it does not know how much Malaysian ringgit it will receive in the future, so it is difficult even if a long-term hedging method was available. How can Golden Ltd lessen its exposure in the case?
ell International can estimate the amount of loss that will occur if a foreign government expropriates some company property. Expropriation is considered reasonably possible. How should Bell report the loss contingency?
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- Explain how the present value of the salvage value of an American subsidiary will be affected (from the Philippine's parent’s perspective) by (a) an increase in the risk of the foreign subsidiary and (b) an expectation that US’s currency (dollar) will depreciate against the dollar over time. *arrow_forwardWhich of the following best represents the primary economic and financial benefit to the U.S. from NAFTA? It led to increased tariffs on U.S. exports to Canada and Mexico. U.S. consumers had access to a wider variety of products. It resulted in the relocation of major U.S. corporations to Europe. The U.S. benefited from low-price manufacturing, low-priced labor, and reduced shipping and logistics costs.arrow_forwardIf Blades does not enter into the agreement with the British firm and continues to export to Thailand and import from Thailand and Japan, do you think the increased correlations between the Japanese yen and the Thai baht will increase or decrease Blades’ transaction exposure?arrow_forward
- During 2004 till 2008, Malaysian exchange rate faced a depreciation. Based on this situation, what is the reason of the depreciation happen in that year?arrow_forwardIf the U.S. dollar were to appreciate substantially, what steps could a domestic manufacturer such as Cummins Engine Co. of Columbus, Indiana, take in advance to reduce the effect of the exchange rate fluctuation on company profitability?arrow_forwardShera Corporation has extensive liabilities denominated in pounds resulting from imports from UK. However, Shera's revenues are denominated solely in U.S. dollars. Which of the following is probably not true? A. Shera would benefit from a depreciation of the British pound. B. Shera has at least some economic exposure. C. All of the options are true. D. Shera has at least some transaction exposure. E. Shera has at least some translation exposure.arrow_forward
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