Assignment:
Q1 Discuss the general functions involved in international cash management. Explain how the MNC's optimization of cash flow can distort the profits of each subsidiary
Q2 Explain the benefits of netting. How can a centralized cash management system be beneficial to the MNC?
Q3 How can an MNC implement leading and lagging techniques to help subsidiaries in need of funds?
Q4 Why would a U.S. firm consider investing short term funds in euros even when it does not have any future cash outflows in euros?
Q5 Fort Collins, Inc. has $1 million in cash available for 30 days. It can earn 1% on a 30 day investment in the U.S. Alternatively, if it converts the dollars to Mexican pesos, it can earn 1 1/2% on a Mexican deposit. The spot rate of the Mexican peso is $.12. The spot rate 30 days from now is expected to be $.10. Should Ft. Collins invest its cash in the U.S. or in Mexico? Substantiate your answer.