How is the effective financing rate calculated? If IRP holds, what effect will this have on the effective financing rate for a domestic firm? What are the factors that influence exchange rates? How does each factor affect exchange rates? If a firm has inflows that exceed its outflows in a given foreign currency, how could the firm reduce its economic exposure? A firm can borrow C$10 million or $10 million. The C$ spot rate is $1.12, and the firm expects the spot rate in 180 days to be $1.08. The U.S. lending and borrowing rates are 6.5% and 7.5%, respectively. The Canadian lending and borrowing rates are 6.7% and 7.6%, respectively. What is the firm's dollar profit from speculating on this information? Firm A has inflows in MXP and AUS. Firm B has inflows in MXP and outflows in AUS. The MXP and AUS are highly correlated. Which firm has greater exchange rate risk exposure? We learned about currency options, forwards, and futures. How would you use each type of derivative to hedge payables? Receivables? Which represent obligations to the purchaser? Which are rights, but not obligations? How is an ADR priced? What are the three types of exchange rate risk MNC's are exposed to and how do they differ? What is the IFE? How is it calculated? How does it relate to IRP and PPP? What is the intuition behind IFE? What is the intuition behind IRP? The annual U.S. deposit and borrowing rates are 10% and 12%, respectively. The annual U.K. deposit and lending rates are 9% and 11%, respectively. Your firm will receive pound 500, 000 in 1 year. How would you execute a money market hedge? Today's spot rate is $1.20, and the spot rate in one year is $1.23. What is factoring, forfaiting, a letter of credit, and accounts receivable financing? Who assumes the risk with each type of financing