A UK-based MNC has a contract to import raw materials in which it agreed to pay in Philippine peso. The UK-based MNC's pound cash flows are favourably affected if the O (a) Peso appreciates O (b) Peso depreciates (c) Pound depreciates O (d) both b & c

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
icon
Related questions
Question

Multiple Choice Questions 

Surely upvote if you provide all

#its complete and clear question. 

 

 

A UK-based MNC has a contract to import raw materials in which it agreed to
pay in Philippine peso. The UK-based MNC's pound cash flows are favourably
affected if the
(a) Peso appreciates
(b) Peso depreciates
(c) Pound depreciates
(d) both b & c
When government intervention is used to weaken the USD, the weak dollar can
the economy of USA by
the US demand for imported items and
boosting the foreign
for US goods.
stimulate; decreasing; demand
stimulate; increasing; demand
stimulate; increasing; supply
stimulate; decreasing; supply
ABC Corporation manufactures electronic goods for which substitute goods are
produced in all countries. Appreciation of the firm's local currency should:
increase local sales as it reduces foreign competition in local markets.
increase the firm's exports denominated in the local currency.
increase the returns earned on the firm's foreign bank deposits.
increase the firm's cash outflow required to pay for imported supplies denominated in
a foreign currency.
none of the above
If inflation rates in Japan are consistently below the rates in USA, then for the PPP
to hold:
JPY would often appreciate against the USD.
JPY would often depreciate against the USD.
JPY would appreciate in some periods and depreciate in other periods, but on average
have a zero rate of appreciation.
JPY would remain constant most of the time.
To hedge
a forward contract can be obtained to
the foreign currency
forward. Alternatively, a
option contract can be used.
receivables; buy; call
receivables; buy; put
payables; buy; call
payables; sell; call
ABC Corp. is based in Canada. It exports products to Turkey that are priced in
Canadian dollars, and its competitors are located in Turkey. Which of the
following statements is not incorrect?
the example reflects economic exposure
the example reflects transaction exposure
the example reflects translation exposure
the example reflects both transaction and economic exposure
O O
Transcribed Image Text:A UK-based MNC has a contract to import raw materials in which it agreed to pay in Philippine peso. The UK-based MNC's pound cash flows are favourably affected if the (a) Peso appreciates (b) Peso depreciates (c) Pound depreciates (d) both b & c When government intervention is used to weaken the USD, the weak dollar can the economy of USA by the US demand for imported items and boosting the foreign for US goods. stimulate; decreasing; demand stimulate; increasing; demand stimulate; increasing; supply stimulate; decreasing; supply ABC Corporation manufactures electronic goods for which substitute goods are produced in all countries. Appreciation of the firm's local currency should: increase local sales as it reduces foreign competition in local markets. increase the firm's exports denominated in the local currency. increase the returns earned on the firm's foreign bank deposits. increase the firm's cash outflow required to pay for imported supplies denominated in a foreign currency. none of the above If inflation rates in Japan are consistently below the rates in USA, then for the PPP to hold: JPY would often appreciate against the USD. JPY would often depreciate against the USD. JPY would appreciate in some periods and depreciate in other periods, but on average have a zero rate of appreciation. JPY would remain constant most of the time. To hedge a forward contract can be obtained to the foreign currency forward. Alternatively, a option contract can be used. receivables; buy; call receivables; buy; put payables; buy; call payables; sell; call ABC Corp. is based in Canada. It exports products to Turkey that are priced in Canadian dollars, and its competitors are located in Turkey. Which of the following statements is not incorrect? the example reflects economic exposure the example reflects transaction exposure the example reflects translation exposure the example reflects both transaction and economic exposure O O
When a country's inflation rate rises relative to that of another country,
decreased
and increased
_depress the
country's currency.
imports; exports; high-inflation
expense; revenue; low-inflation
exports; imports; high-inflation
exports; imports; low-inflation
Let's assume that Interest Rate Parity holds. MNM Co., a U.S. firm, plans to use a
money market hedge to hedge its receivables of 260,000 Canadian dollars (C$).
The amount will be received after one year. The spot rate of the Canadian dollar
is C$1.1730, while the one-year forward rate is C$1.2012. What is the total implied
home-currency value of this receivable if the company decides to implement
money market hedge?
C$ 234,600
$ 312,312
$ 221,654
$ 161,134
$ 216,450
Which forecasting method produces the best forecasts if markets are efficient?
Fundamental
Technical
Market-based
Zero-line
Transcribed Image Text:When a country's inflation rate rises relative to that of another country, decreased and increased _depress the country's currency. imports; exports; high-inflation expense; revenue; low-inflation exports; imports; high-inflation exports; imports; low-inflation Let's assume that Interest Rate Parity holds. MNM Co., a U.S. firm, plans to use a money market hedge to hedge its receivables of 260,000 Canadian dollars (C$). The amount will be received after one year. The spot rate of the Canadian dollar is C$1.1730, while the one-year forward rate is C$1.2012. What is the total implied home-currency value of this receivable if the company decides to implement money market hedge? C$ 234,600 $ 312,312 $ 221,654 $ 161,134 $ 216,450 Which forecasting method produces the best forecasts if markets are efficient? Fundamental Technical Market-based Zero-line
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Market Efficiency
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education