4. Suppose a company has 3 subsidiaries. The following represents the amount that each subsidiary owes the other subsidiaries and also the amount each subsidiary should receive from the other subsidiaries. Pays Receives A3 6 B 45 C 2 4 For Example: C has brought items worth $6 over the period from A. In the most efficient payment system, what is the amount that should be transferred from C to B? A. C should pay B S5 B. B should pay C $4 C. C should pay B $I D. B should pay C $1 E. Answers A, B, C, and D are all false. 5. Given the following information, what will be the expected spot rate 2 years from Rand1200/S 8% /year 14% /year now? Current spot Interest rate in U.S. Interest rate in South Africa Interest rates will stay constant for the next 2 years in both countries. A. Less than Rand 1000/S B. Between Rand 1000/S and Rand 1100/S C. Between Rand 1100/S and Rand 1200/s D. Between Rand 1200/S and Rand 1300/S E. Greater than Rand 1300/S 6. Suppose there is an American owned company in England that imports raw materials from the U.s. and then sells the final product to both British customers and U.S customers. Assume the following: Exchange rate Total Sales-units pound 2/S 1 million U.. " 500,000 units at pound 10/unit U.S.-500,000 units at S 5/unit Tax rate Depreciation 50% pound 1 million/year Cost of goods sold 1. Raw materials for the U.S. (cost/unit) British labor costs S3 2. (cost/unit) pound 2 What are the cash flows from operations in dollars for the year? A. $1.5 million B. $.25 million C. S.75 million D. $1.25 million E. Answers A, B, C, and D are false. 7. The forward Australian dollar, relative to the U.S. dollar, given a spot rate of SA 1.5400/S and a three-month forward rate of SA 1.5600/S is closest to: [annual premium or discount]. a. b. C. d. e. A 5.13% premium A 5.13% discount A 5.20% premium A 5.20% discount A 2.65% discount 8. A "forward" transaction a. Means that delivery and payment must be made within one or two business days after the transaction date. b. Calls for delivery of a currency at a fixed future date at a fixed rate of exchange c. Sets the future date when delivery of currency must be made at an unknown spot exchange rate d. Is the same as a "spot" transaction is most cases e. None of the above