Explain the nature of the exchange rate risk

Assignment Help Financial Management

Reference no: EM131213556

Explain the nature of the exchange-rate risk for each of the following, from the perspective of the U.S. firm or person. In your answer, include whether each is a long or short position in foreign currency.

a. A small U.S. firm sold experimental computer components to a Japanese firm, and it will receive payment of 1 million yen in 60 days.

b. An American college student receives a birthday gift of Japanese government bonds worth 10 million yen, and the bonds mature in 60 days.

c. A U.S. firm must repay a yen loan, principal plus interest totaling 100 million yen, coming due in 60 days.

Reference no: EM131213556

Questions Cloud

Reduce the effect they have on the phosphorus cycle : What are some ways that humans can reduce the effect they have on the phosphorus cycle?

Compute the shortest path between two cities : Use the above planner to compute the shortest path between two cities. Define a function {Best Plan City1 City2} that returns the shortest path.

Construct a projected balance sheet and income statement : Sales for 2016 were $350 million, while net income for the year was $10.5 million. Construct a projected Balance Sheet and Income Statement for the year-ended 12/31/2016.

Identify key metrics that you propose for your organization : Using the balanced scorecard approach as detailed in Chapter 14 (Figure 14.1), identify four key metrics that you would propose for your organization's supply management system and how you propose to measure those 4 key metrics in your supply chai..

Explain the nature of the exchange rate risk : Explain the nature of the exchange-rate risk for each of the given, from the perspective of the U.S. firm or person.

Desirable properties of the relational computation model : For this exercise, investigate how to remove this restriction while maintaining the desirable properties of the relational computation model, i.e., its simple logical semantics and efficient implementation.

What is the expected rate of return of the stock : What is the expected rate of return of the stock? If an investor's required rate of return is 10 percent, what is the value of the stock for the investor?

Key issues in supply chain management : Some of the key issues in supply chain management are obstacles to process integration along the supply chain. Using Table 13.2 in Chapter 13, identify one obstacle that you have encountered in your experience, and how that obstacle could have bee..

Examine the relationship between abort and failure : In what cases can you give a transactional meaning to a relational program or a relational meaning to a transactional program? Can you design a computation model that combines the abilities of the transactional and relational models?

User Account

All Pages