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Determine whether the Canadian dollar or the Japanese yen was forecasted with more accuracy, based on the absolute forecast error .
Assume that the forward rate and spot rate of the Mexican peso are normally similar at a given point in time.
Explain the market based technique for forecasting exchange rates. What is the rationale for using market-based forecasts?
What are some limitations of using a fundamental technique to forecast exchange rates?
Explain how to assess performance in forecasting exchange rates.
The firm asks you to determine which currency was forecasted with greater accuracy.
Syracuse Corp. believes that future real interest rate movements will affect exchange rates, and it has applied regression analysis to historical data .
Each subsidiary is responsible for forecasting the future exchange rate of its local currency relative to the U.S. dollar.
If the forward rate is used to forecast exchange rates, what will be the forecast for the Singapore dollar's spot rate in 4 years?
Assume that foreign exchange markets were found to be weak form efficient. What does this suggest about utilizing technical analysis to speculate in euros?
Describe some potential benefits to an MNC as a result of direct foreign investment (DFI).
If the United States imposed long-term restrictions on imports, would the amount of DFI by non-U.S.
Some MNCs establish a manufacturing facility where there is a relatively low cost of labor, but they sometimes close the facility later .
Assuming that its production cost estimates are accurate, is Bronco's strategy sensible? Explain.
What are some risks of international business that may not exist for local business?
Assume that the Japanese yen strengthens against the U.S. dollar over time. How would this be expected to affect the profits earned by the Chinese subsidiary?
If the yen is expected to appreciate against the dollar and the rupee is expected to depreciate against the dollar.
Do you think Blades should wait until next year to undertake DFI in Thailand? What is the trade-off if Blades undertakes the DFI now?
The international Fisher effect exists between the United States and New Zealand.
A weaker dollar may discourage U.S. firms from importing foreign products because the cost will be higher.
The Fed could use indirect intervention by raising U.S. interest rates so that the United States would attract more capital flows.
If you were in Logan's position, would you spend time trying to decide whether to hedge the receivables each month, or do you believe that the results .
Explain the type of direct intervention that would place downward pressure on the value of the pound.
How many U.S. dollars will you need in 1 year to fulfill your forward contract?
You have $1,000. Can you use triangular arbitrage to generate a profit? If so, explain the order of the transactions that you would execute and the profit.