How might the company hedge or deal with this risk

Assignment Help Finance Basics
Reference no: EM13255429

Multinational companies have a unique set of concerns. If they decide to do a project such as construct a factory, in a foreign country, the profits from that project are normally generated in that nation's currency (e.g. yuan, pounds etc). Currency exchange rate differences can impact the company.

For example, if an American firm wants to bring those profits back to the US to invest in a project, what risk does the company face?

How might the company hedge or deal with this risk?

 

Reference no: EM13255429

Questions Cloud

Explain what is meant by industrial nitrogen fixation : Explain What is meant by industrial nitrogen fixation. What is produced during this process
Determine the inductance in h-m and the inductive reactance : A 60 Hz, 765 kV three-phase overhead transmission line has four ACSR 1113 kcmil 54/3 conductors per phase. Determine the 60 Hz resistance of this line in ohms per km per phase at 50o C.
What pulse rate does the earth observer measure : An astronaut is traveling in a space vehicle that has a speed of 0.515c relative to Earth. The astronaut measures his pulse rate at 69.0 per minute. What pulse rate does the Earth observer measure
Determine the angle between the refracted blue and red rays : A ray of sunlight is passing from diamond into crown glass; the angle of incidence is 28.10°. Determine the angle between the refracted blue and red rays in the crown glass
How might the company hedge or deal with this risk : For example, if an American firm wants to bring those profits back to the US to invest in a project, what risk does the company face?
Define a particular first-order reaction has a rate constant : A particular first-order reaction has a rate constant of 1.35 × 102 s-1 at 25.0 °C. What is the magnitude of k at 75.0 °C if Ea=49.8 kJ/mol
How should you guard against being manipulated : The heart of discounted cash flows analysis is the assumptions behind the numbers. Once the mechanics of the tool are mastered, then one needs to focus on the assumptions behind the numbers.
Find the height of the building : A mercury barometer reads 735.0 mm on the roof of a building and 764.5 mm on the ground. determine the height of the building
What are the ethical dilemmas for the nurse : Discuss one experience from your practice in which the collaboration between two components of the healthcare team positively impacted a patient's outcome. How can you transfer those behaviors to other situations?

Reviews

Write a Review

Finance Basics Questions & Answers

  Question-business law and management ethics

Why should the definition of law emphasize enforcement? To what three factors do courts look for evidence of implied partnership?

  Calculate expected return, variance, and standard deviation

General Eclectic Company is planning three possible capital investment projects. The projected returns depend on the future state of the economy as given here.

  Calculation of net present value of convertible bond

Calculation of Net present value of convertible bond and what is the Aramis Inc.'s net present value of its interest savings

  Investment and opportunity cost-purchasing corvette

Select an asset you would like to purchase in five years. Compute how much you need to save for the next five years to purchase this asset

  Defining future value of money

You want to bank enough money to pay for 4 years of college at $20,000 per year for your child. The savings account will pay an effective rate of 5% per year.

  Find interest rate of the return on investment

Suppose you purchase a ten year bond with 6 percent annual coupons. You hold the bond for four years, and sell it immediately after receiving the fourth coupon.

  International accounting standards board

Explain the International Accounting Standards Board (IASB) and its purpose. What countries are subject to IASB? How is the IASB the same or different from FASB?

  Analyzing a portfolio

You have $100,000 to invest in a portfolio containing Stock X, Y and a risk-free asset. You must invest all of your money. Your goal is to create a portfolio that has an expected return of 13.5 percent and that has only 53 percent of the risk of the ..

  Departmental budgeting and reallocation

Suppose the role of a university president and describe what your macro budgetary focus would be.

  Calculate the arithmetic annual rate of return

During the last five years you owned two stocks that had the following yearly rates of return, calculate the arithmetic annual rate of return for each stock.

  Solving multiple choice finance questions

Determine which of the following typically would not affect the dividend policy of the firm?

  Purchasing stock on leverage

You have $40,000 to invest on Sophie Shoes, a stock selling for $80 a share. The intial margin requirement is 60%. Ignoring taxes & commissions,

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd