International Financial Management
14th Edition
ISBN: 9780357130698
Author: Madura
Publisher: Cengage
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Explain how you will manage each of these situations.
The major export markets of your company have suffered a substantial depreciation in
their currency rates compared to the AUD.
A shift to expecting depreciation in the domestic currency will lead to:
a.
an inflow of capital to domestic economy
b.
an increase in the demand for domestic country currency- denominated financial assets
c.
uncovered interest parity
d.
a decrease in the demand for domestic country currency denominated financial assets
What happens over time to the currencies of countries with higherinflation rates than that of the United States? To those with lowerinflation rates?
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- If a country devalues its currency, that will immediately improve its trade deficit.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_forwardWhen the value of a currency rises due to demand and supply factors, is it correct to say that the currency has undergone revaluation? Explain briefly.arrow_forward
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