Suppose InBev Corporation (a non-U.S. MNC) buys Anheuser-Busch Corporation (a U.S. corporation) by paying the U.S. shareholders in cash. Which of the following can be said of the US capital account?   Group of answer choices   The acquisition of cash by US shareholders will decrease foreign ownership, which will be recorded as a debit.   The US federal reserve will increase its currency reserves.   InBev's reduction in cash will be recorded as a debit on the U.S. capital account..   InBev's increased ownership of US assets is recorded as a credit.   U.S. shareholders increased ownership in InBev will be recorded as a credit.

A US manufacturing firm that produces cars in Mexico to sell in the US and the Eurozone would like to reduce the effect of currency fluctuations on its profits. Describe in words the hedging strategy that the company should take. Remember that a possible answer is that the company should not be hedging at all.

Pulaski Inc. wants to establish a new subsidiary in Colombia that will sell cell phones to Colombian customers and remit earnings back to the U.S. parent. The value of this project will be favorably affected if the value of the peso ____ while it establishes the new subsidiary and ____ when the subsidiary starts operations. appreciates; appreciates   depreciates; appreciates   appreciates; depreciates   depreciates; depreciates

Assume your firm has transferred you to Zurich Switzerland. You work in the triangular arbitrage division. View the following exchange rates. Is an arbitrage opportunity available? If not, explain why an opportunity does not exist. If so, from the Swiss point of view show how to exploit the opportunity. CHF .8976 = $1.00, $.0130 = INR 1.00, INR 92.7904 = CHF 1 Now say instead of working in Zurich, you were employed in Mumbai, India. How does that change your thinking on the arbitrage?     PLEASE ANWSER CORRECTLY AND SHOW WORK

A U.S. firm will be ________ by dollar _______ if its expenses are more susceptible to exchange rate movements than its revenue. A. unaffected; weakens B. benefited; strengthens C. benefited; weakens D. unaffected; strengthens

Which of the following reflects a hedge of net payables in British pounds by a U.S. firm? Group of answer choices a) purchase a currency call option in British pounds. b)  sell pounds forward. c)  borrower in US dollars, convert them to pounds, and invest them in a Britain. A and C

b. Why would one company with interest payments due in pounds sterling want to swap those payments for interest payments due in U.S. dollars? Write an example.

The U.S. dollar, Norwegian krone, Swiss franc and Japanese yen often are labelled “haven currencies.” During times of international stress, each of these currencies typically can be expected to: (a) depreciate; (b) appreciate; (c) be devalued; (d) yield fewer units of foreign currencies when traded in open markets.

Which of the following is an example of managing economic exposure by flexible sourcing policy?  An American company sells its products in Brazil and Portugal. Reduced sales in Brazil due to the dollar appreciation against the “real” can be compensated by increased sales in Portugal due to the dollar depreciation against the euro. If yen is strong, it is preferable for a Japanese company to open a manufacturing subsidiary in the U.S. to produce and sell its products there. An American IT company hires software developers in Ukraine because of the weak position of grivna against dollar. A Canadian company spends a lot of money for research & development activities to improve its reputation and gain more customers.

Suppose that Salem Co, a U.S.-based MNC that both purchases supplies from Canada and sells exports in Canada, is seeking to measure the economic exposure of its cash flows. Salem wishes to analyze how its cash flows might change under different exchange rates for the Canadian dollar (the only foreign currency in which it deals). Salem believes that the value of the Canadian dollar will be $0.70, $0.75, or $0.80, and seeks to analyze its cash flows under each of these scenarios. The following table shows Salem’s cash flows under each of these exchange rates. Use the table to answer the question that follows.   Exchange Rate Scenario   Exchange Rate Scenario   Exchange Rate Scenario C$1=$0.70 C$1=$0.75 C$1=$0.80 (Millions) (Millions) (Millions) Sales           (1) U.S. Sales $315   $315   $315 (2) Canadian Sales $3.50   $4.00   $4.00 (3) Total Sales in U.S. $ $318.50   $318.75   $319.00 Cost of Materials and Operating Expenses           (4)…