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FIN 565 Week 2 Analytical Application

For more classes visit www.snaptutorial.com Factors Affecting Exchange Rates a.Identify the most obvious economic reason for the persistent depreciation of the peso. b.High interest rates are commonly expected to strengthen a country’s currency because they can encourage foreign investment in securities in that country, which results in the exchange of other currencies for that currency. Yet the peso’s value has declined against the dollar over most years, even though Mexican interest rates are typically much higher than U.S. interest rates. Thus it appears that the high Mexican interest rates do not attract substantial U.S. investment in Mexico’s securities. Why do you think U.S. investors do not try to capitalize on the high interest rates in Mexico? c.Why do you think the bid/ask spread is higher for pesos than it is for currencies of industrialized countries? How does this affect a U.S. firm that does substantial business in Mexico? **************************************************

FIN 565 Week 5 Analytical Application 1

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DFI Strategy ABC Co. has recognized numerous opportunities to expand in foreign countries and has assessed many foreign markets, including Brazil, Greece, Mexico, Portugal, Singapore, and Thailand. It has opened new stores in Europe, Asia, and Latin America. In each case, the firm was aware that it did not have sufficient understanding of the culture of each country that it had targeted. Consequently, it engaged in joint ventures with local partners who knew the preference of the local customers. a. What comparative advantage does ABC have when establishing a store in a foreign country, relative to an independent variety store? 2)By spreading its store throughout in the foreign market it has created more international diversification , so that its overall performance is not as heavily influenced by U.S economic conditions Now suppose that ABC establishes a Chinese subsidiary that produces cell phones in China and sells them in Japan. This subsidiary pays its wages and its rent in Chinese Yuan, which is stable against the dollar. The cell phones sold to Japanese marketed are denominated in Japanese yen. Assume that ABC expects that the Chinese Yuan will remain stable against the dollar. The subsidiary’s main goal is to generate profits for itself, and it reinvests those profits. It does not plan to remit any funds to the U.S. parent. a. Assume that the Japanese yen strengthens against the U.S. dollar over time. How would this be expected to affect the profits earned by the Chinese subsidiary? **************************************************

FIN 565 Week 7 Course Project

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www.snaptutorial.com FIN 565 Week 7 Course Project **************************************************

FIN 565 Competitive Success--snaptutorial.com  

For more classes visit www.snaptutorial.com Factors Affecting Exchange Rates

FIN 565 Competitive Success--snaptutorial.com  

For more classes visit www.snaptutorial.com Factors Affecting Exchange Rates

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