1.Identify and discuss the major financial concepts you have learned in this course,AND how they relate to maximizing the value ofan MNC.Be specific for maximum credit; examples are recommended.

2.Assume the following information:

spot rate for Mexican peso$.100

180day forward rate of Mexican peso$.098

180day Mexican interest rate8%

180day U.S.interest rate5%

Is covered interest arbitrage possible for Mexicaninvestors?explain and answer

3.Assume that Catapillarexpects to receive S$500000 in one year from a Singapore firm. The existing spot rate is $.60 for a Singapore dollar.The one year forward rate of the Singapore dollar is $.62.Catapillarcreated a probability distribution for the future spot rate in one year as follows:

Futurespot rateProbability

$.6120%

.6350

.6730

Assume that one year put options on Singapore dollars are available, with an exercise price of $.63 and a premium of $.04 per unit.One year call options on Singapore dollars are available with an exercise price of $.60 and a premium of $.03 per unit.Assume the following money market rates:

U.S.Singapore

Deposit rate8%5%

Borrowing rate96

a.Given this information, determine whether a forward hedge, a money market hedge, or a currency options hedge is most appropiate.

b.Then compare this strategy with an unhedgedstrategy.Should Catapillarhedge? explain ans answer