Chapter 1, Problem 13QA

Foreign exchange risk is a major risk for businesses which are involved in international business. What are the various tools and methods which you know which can be used to hedge and deal with foreign exchangerisk. Discuss with details

A4) Finance When companies decide to establish themselves in a specific market, they can experience a variety of barriers to entry, Assess the various types of trade restrictions that may affect the international business?

a. According to the OLI paradigm, foreign direct investment is explained by three conditions (ownership advantages, location advantages and internalization). Examine the factors that  influence firms to locate subsidiaries close to markets. b. Managers of multinational enterprises are advised to take advantage of their home region institutions such as the European Union. Assume you are the manager of a multinational enterprise in Belgium. Why is the institutional framework created by the EU pivotal for business?  c.

Which of the following statements regarding forfaiting is/are accurate? A. The costs associated with forfaiting are often higher than conventional financing B. Forfaiting is typically a short-term transaction, less than one year C. Forfaiting is readily available to small businesses D. Forfaiting eliminates commercial, political, and foreign exchange risks E. Both a and d are accurate In international trade disputes, this ADR relies on a third-party doing their analysis alone and imposing a binding decision A. Arbitration B. Mediation C. Litigation D. Conciliation

The foreign subsidiary of a U.S. firm is profitable when profits are measured in the foreign currency but those profits become losses when measured in U.S. dollars. This is an example of which one of the following?  A.  Interest rate disparities   B.  Short-run exposure to exchange rate risk   C.  Long-run exposure to exchange rate risk   D.  Political risk associated with the foreign operations   E.  Translation exposure to exchange rate risk

Investors and MNCs exporting or importing goods and services or making foreign investments throughout the global economy are faced with an exchange rate risk,which can have severe financial consequences on firms profitability,cash flows,and their market value,if not managed appropriately. MNC's use a number of external techniques  of risk(exposure)management and resort to contractual relationships outside thier companies in order to reduce (or redistribute)the risk of foreign exchange losses.What are the determinants of hedging currency risk or foreign exchange exposures which pose risks to MNC's cashflows,competitiveness,marker value and financial reporting.

Which one of these represents the most basic level of international participation by a business entity? Multiple choice question. Operating a single retail store in a singe foreign country Producing a single product in a foreign-built facility Importing and exporting goods and services Operating multiple facilities in various countries to spread risk

Question What causes balance sheet (or translation) exposure to foreign exchange risk? How does balance sheet exposure compare with transaction exposure?   In translating a foreign subsidiary's financial statements, what exchange rate should be used for the subsidiary's revenues and expenses?     How can a parent corporation determine the functional currency for a foreign subsidiary that conducts business in more than one country?   What concept underlies the temporal method of translation? What concept underlies the current rate method of translation? How does balance sheet exposure differ under these two methods? What are the major procedural differences in applying the current rate and temporal methods of translation?

QUESTION B Which of the following is NOT a factor direct investors look at when judging whether they will be able to operate in a foreign country? CA Trade policy and privatization policy. OB CC The functioning and efficiency of local markets. The quality of domestic accountability systems. Standards of treatment of foreign affiliates. OD.