Grupo Bimbo, although Mexican by incorporation, evaluates all business results, including financing costs, in U.S. dollars. The company needs to borrow $ 10,000,000 or the foreign currency equivalent for one year.  For all issues, interest is payable once per year (annual compounding), at the end of the year. Available alternatives are: Issue Japanese yen bonds at par yielding 3% per annum. The current exchange rate is ¥106/$, and the yen is expected to strengthen against the dollar to ¥100/$. Issue euro-denominated bonds at par yielding 7% per annum. The current exchange rate is $1.15/€, and the euro is expected to weaken against the dollar to $1.1/€. Issue U. S. dollar bonds at par yielding 5% per annum. Which course of action do you recommend Grupo Bimbo take?

Sun Bank USA has purchased a 16 million one-year Australian dollar loan that pays 12 percent interest annually. The spot rate of U.S. dollars for Australian dollars (AUD/USD) is $0.757/A$1. It has funded this loan by accepting a British pound (BP)-denominated deposit for the equivalent amount and maturity at an annual rate of 10 percent. The current spot rate of U.S. dollars for British pounds (GBP/USD) is $1.320/£1. a. What is the net interest income earned in dollars on this one-year transaction if the spot rate of U.S. dollars for Australian dollars and U.S. dollars for BPs at the end of the year are $0.715/A$1 and $1.520/£1, respectively? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers in dollars, rather than in millions of dollars. Round your final answer to the nearest whole dollar. (e.g., 32)) b. What should the spot rate of U.S. dollars for BPs be at the end of the year in order for the bank to earn a net interest…

PT Kirana is a company engaged in the export and import sector. January 1, 2020 PT Kirana borrowed a total of IDR 150,000,000 from Bank Pelangi for 3 years with a fixed interest rate on the loan of 9% with changes in effective interest rates, while for 2021 and 2022, the effective interest rate uses the formula “Bank Indonesia interest rates. + 2% ”as the basis for determining the loan interest rate. To avoid interest rate fluctuations, PT Kirana signs a variable-payment contract, accepts the effective interest rate (market interest) swaps with a speculator.   Requested:a) Make journals to record transactions related to this swaps contract!b) In accordance with the transaction, the transaction is called a transaction? And in what kind of approach?

Star Alien (US company) sold equipment to Heavy Metal Industry (Italian company) for 1-million-euro receivable in one year. The current spot rate is $1.15/€ and the one-year forward rate is $1.20/€. The annual interest rate is 5 percent in Italy and 8 percent in the United States. Star Alien can also purchase a one-year put option on the euro at the strike price of $1.18 per euro for a premium of 9 cents per Euro. What is the future dollar proceeds of this sale using the money market hedge? Question 1 options: $1,180,000. $1,102,800. $1,150,000. $1,118,056. $1,200,000. $1,182,857.

TNB has a 10-year, ¥50 million loan outstanding with a Japanese bank. The Yen loanhas a 2.5% annual interest rate. The loan was taken 5 years ago and so has 5 more yearsto go. Daibochi, a Japanese plastics maker with operations in Malaysia has justnegotiated a RM 5 million, 5-year loan with Maybank at 7.5% annual interest. Bothcompanies are worried about the foreign exchange exposure. Design a currency swapthat will enable both companies to manage exchange rate risk. (Assume debt servicingwill be on 6-monthly basis, the spot Yen/Ringgit rate is 10 Yen/Ringgit).

You are working for an imports-exports company. In the current financial year, your company has a net income of $851,000 and plans to use a part of it as retained earnings for a new project which will cost $500,000 next year. The company’s stock is currently listed and actively traded on ASX. Required: Your company has an extra cash of A$216 000. The AUD/USA exchange rate in New York is 0.77923. The USD/AUD rate in Sydney is 1.29135. Is there any arbitrage profit possible? Set up an arbitrage scheme with the extra cash, disregarding bid-ask spread. What is the potential gain in AUD dollar?

You are US company, 500,000 BP (British Pound) payable to UK in one year. Answer in terms of US$.   Information for Forward Contract: Forward exchange rate (one yr): 1.54 $/BP   Information for Money Market Instruments (MMI): Current exchange rate: 1.50 $/BP Investment return at Aerion Fund Management (in UK): 6% annual Interest rate of borrowing from Bank of America (in USA): 2% annual   Information you need for Currency Options Contract: Options premium: 0.015 $/BP Interest rate of borrowing from Bank of America (USA): 2% annual Allowed to exercise options at 1.54 $/BP   What are the costs of MMI? (Answer in US$ of course. You are US company!)

Star Alien (US company) sold equipment to Heavy Metal Industry (Italian company) for 1-million-euro receivable in one year. The current spot rate is $1.15/€ and the one-year forward rate is $1.20/€. The annual interest rate is 5 percent in Italy and 8 percent in the United States. Star Alien can also purchase a one-year put option on the euro at the strike price of $1.18 per euro for a premium of 9 cents per Euro. Assuming that the forward exchange rate is the best predictor of the future spot rate, what is the expected future dollar revenue when the option hedge is used? $1,200,000. $1,150,000. $1,297,200. $1,180,000. $1,180,000. $1,082,800. $1,102,800.

After all foreign and U.S. taxes, a U.S. corporationexpects to receive 2 pounds of dividends per share from a British subsidiary this year.The exchange rate at the end of the year is expected to be $1.29 per pound, and the poundis expected to depreciate 5% against the dollar each year for an indefinite period. The dividend(in pounds) is expected to grow at 10% a year indefinitely. The parent U.S. corporationowns 10 million shares of the subsidiary. What is the present value in dollars of its equityownership of the subsidiary? Assume a cost of equity capital of 11% for the subsidiary.