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Assume that the forward rate premium of the euro was higher last month than it is today.
The forward rate of the New Zealand dollar is $.54. Is covered interest arbitrage feasible for U.S. investors?
Is there any reason why you should not attempt covered interest arbitrage in this situation?
Can a U.S. firm benefit from investing funds in Germany using covered interest arbitrage?
If the sales price of the subsidiary has not changed, explain why the divestiture may now be feasible.
Describe the general method for determining whether the divestiture is financially feasible.
Will today's adjustment in exchange rate forecasts increase, decrease, or have no effect on the net present value of a divestiture of this subsidiary.
If the long-term interest rate in the United States suddenly declines and all other factors are unchanged, will the NPV of the divestiture be larger.
An event occurred that caused the risk-free interest rate in the United States to increase.
Do you think this information about the decline in the U.S. risk-free interest rate will increase the net present value of the divestiture.
If Blades negotiates with Skates'n'Stuff, what is the maximum amount (in Thai baht) Blades should be willing to pay?
Did the intervention effort by the Thai government constitute direct or indirect intervention? Explain
How would the performance of the Sports Exports Company be affected by the Bank of England's policy of flooding the foreign exchange market .
Assume that the U.S. parent has just revised its projections of the Swedish krona's value downward.
Why do you think MNCs continuously assess possible forms of multinational restructuring.
Why might this action affect the regulations imposed on the subsidiary's business by the Singapore governmet?
Poki, Inc., a U.S.-based MNC, is considering expanding into Thailand because of decreasing profit margins in the United States.
If Rastell, Inc., acquires a private target in Russia, will it be able to avoid the impact of the high stock prices on business valuations in Russia?
Which target do you think will result in a higher net present value? Why?
Why are valuations of privatized businesses previously owned by the governments of developing countries more difficult.
Will Blore, Inc., be able to acquire the Malaysian target for a price lower than its valuation of the target?
Explain why a U.S.-based MNC might not have sold its Asian subsidiaries.
How might this action have affected the foreign flow of funds into the United States and affected the value of the dollar?
Why do foreign market participants monitor the Fed's direct intervention efforts?
The subsidiary sells mobile homes to local consumers in Australia, who buy the homes using mostly borrowed funds from local banks.