Question 1:
“Transaction, Translation and economic risks are significant for multinationals as they basically do business in foreign currencies”. Discuss (demonstrate with supporting instances).
Question 2:
“Study of parity relationships provides insights on how foreign exchange rates are determined and how to forecast them. For Parity relationships to hold, arbitrage equilibrium situations should be met”. Using numerical instances, discuss the international parity relationships.
Question 3:
“The easiest manner to manage political risk is to avoid it, and many firms do so by screening out investments in politically uncertain countries”. Discuss with regards to policies adopted by multinationals for political risk management.
Question 4:
“In real meaning, the markets for foreign bonds and Eurobonds operate in parallel with domestic national bond markets, and all three (3) market groups compete with one another.” Discuss and explain.