Part three is a continuation of the project. Answer the following questions concerning your MNC identified in Part 1.
Monitoring Exchange Rate Trends
WRITE THIS ESSAY FOR ME
Tell us about your assignment and we will find the best writer for your paper.
Get Help Now!1. Use an online source to determine how the value of the foreign currency of concern has changed in each of the last five weeks. Does it appear that there is a trend over the last five weeks? If you believed that the currency’s value would continue following the recent trend, would it appreciate or depreciate in the near future?
Recognizing Exposure to Exchange Rate Risk
Recall that when you created your business idea, it was assumed that your receivables would be denominated in the foreign currency of concern upon the sale of your products.
1. Describe your exposure to exchange rate risk. That is, describe the exchange rate conditions affecting the performance of your business.
2. Is your business subject to transaction exposure? Economic exposure? Translation exposure? Explain why your business is or is not subject to each of these types of exposure.
Hedging with Forward Contracts
1. Given your exposure to exchange rate risk, explain how you could use forward contracts to hedge.
2. Explain how you could use currency options to hedge your exposure.
3. Review the currency options quotations for the foreign currency of concern from an online source, and determine the premium that would be paid to be able to sell the currency at today’s spot rate. (If the currency option data are not available for the currency of concern, skip this question.)
Denominating Receivables in U.S. Dollars
1. Recall that it was assumed that your receivables would be denominated in the foreign currency of concern. For this question only, assume that you could switch your pricing policy so that the receivables would be denominated in dollars instead of the foreign currency.
How would this switch affect the transaction exposure and the economic exposure of your business? Explain the conditions that could still cause the performance of your business to be affected by exchange rate movements.
Establishing a Subsidiary in Foreign Country
1. Identify the disadvantages associated with establishing a small subsidiary for your specific business in the foreign country of concern.
Deriving a Required Rate of Return for an International Project
1. Consider a possible project that would result in expansion of your international business. Describe how you would derive a required rate of return for this project.
Estimating Cash Flows of an International Project
1. If you seriously considered whether to implement your international business idea, you would have to measure the costs and benefits of this idea. Describe how you would estimate the dollar revenue to be received from your business.
2. Describe how you would estimate the expenses associated with your business.
3. Describe how you would estimate the net cash flows (in dollars) of your business.
4. Explain why your estimate of the net cash flows (in dollars) could be overestimated.
Introducing our Online Essay Writing Services Agency, where you can confidently place orders for a wide range of academic assignments. Our reputable homework writing company specializes in crafting essays, term papers, research papers, capstone projects, movie reviews, presentations, annotated bibliographies, reaction papers, research proposals, discussions, and various other assignments. Rest assured, our content is guaranteed to be 100% original, as every piece is meticulously written from scratch. Say goodbye to concerns about plagiarism and trust us to deliver authentic and high-quality work.
