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Use this table embedded in the question below to answer it and the three questions that follow..

Question 1 (1 point)

The market for Australian Dollars in Term of U.S. dollars (along with the indirect quote) is given below. MacDonald's (the fast food restaurant) has contracted to receive 10,000 of beef at A$2.00 per pound payable immediately. How many U.S. dollars will the 10,000 pounds cost the company?

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Question 2 (1 point)

Referring to the previous question, if a GE sells a certain model of locomotive rail engines for US$1,500,000. How many Australian dollars does an Australian rail company have to pay for one, assuming spot market currency conversion?

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Question 3 (1 point)

The table of the previous questions above indicates that the Australian dollar,

Question 3 options:

	a) Is depreciating over time.
	b) Is appreciating over time.
	c) Is a high interest rate currency relative to the U.S..
	d) Is a low interest rate currency relative to the U.S.
	e) Both A & C.
	f) Both B and D.

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Question 4 (1 point)

Still referring to the information of the previous three questions, Boeing Aircraft expects to receive a check for A$100,000,000 from Quantas Airlines a year from now. Boeing does not like its exposure to the Australian dollar so it decides to hedge. A year from now the Australian dollar is trading at US$/A$ 0.9610 (A$/US$1.0406). Boeing will receive

Question 4 options:

	a) A$107,140,000
	b) A$105,060,000
	c) A$ 100,000,000
	d) A$96,110,000
	e) A$93,340,000
	f) US$ 100,000,000
	g) US$ 97,000,000
	h) US$96,010,000
	i) US$93,340,000

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Question 5 (1 point)

This question is a place holder so I can disolay an airplane which is relevant to the next question.

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The table regarding Brazilean Reals is to be used for two questions.

Question 6 (1 point)

You are the director of cash management for an industrial leasing company. Your company owes BRL 10,000,000 (Brazilian Reals) to Embraer, a Brazilian manufacturer of small planes that has just delivered a plane your firm ordered six months ago. Payment is due in 90 days. The market for Brazilain Reals is given above. Your job is to hedge your company's exposure to the Brazilian Real . You would,

Question 6 options:

	a) Pick up the phone and buy BRL 10,000,000 for USD 5,000,000 from your bank which is also a dealer for delivery in 90 days. At the same time arrange for the bank to redirect the BRL 10,000,000 to the Brazilian aircraft manufacturer in 90 days in payment of the amount due
	b) Pick up the phone and buy BRL 10,000,000 for USD 5,000,000 from a dealer for delivery in 90 days. At the same time arrange for your bank to withdraw USD 5,000,000 from your account in 90 days (or draw down on your line of credit in 90 days), delivering that sum to the dealer against BRL 10,000,000 and then redirect the BRL 10,000,000 to the Brazilian aircraft manufacturer in 90 days.
	c) Pick up the phone and buy BRL 10,000,000 from a dealer for USD 5,000,000. Arrange for your bank to deliver the US$5,000,000 (by either withdrawing from a checking account or drawing down on a line of credit) against the BRL 10,000,000 and then keep the BRL 10,000,000 in your account for 90 days until it is needed to make the payment to the aircraft manufacturer.
	d) Pick up the phone and buy BRL 10,000,000 from a dealer for USD 4,926,000, using you bank account to make delivery of the USD 4,926,000 by either withdrawing from your checking account or drawing down on your line of credit against BRL 10,000,000. Deposit the BRL 10,000,000 in your bank for 90 days, instructing your bank to withdraw the BRL 10,000,000 from your account and send them to the aircraft manufacturer in 90 days.
	e) Pick up the phone and buy BRL 10,000,000 from a dealer for USD 4,926,000 for delivery in 90 days, using your bank to make delivery of the USD 4,926,000 in 90 days, by instructing it to either withdraw that amount from your checking account or draw down on your line of credit and deliver USD 4,926,000 to the dealer against BRL 10,000,000 and then have your bank send the BRL 10,000,000 to the aircraft manufacturer.
	f) Pick up the phone and buy BRL 10,000,000 from a dealer for USD 20,000,000, using you bank account to make delivery of the USD 20,000,000, deposit the BRL 10,000,000 in a bank for the 90 days, instruct the bank to withdraw the BRL 10,000,000 from your account and send them to the watch maker in 90 days.
	g) Pick up the phone and buy BRL 10,000,000 from a dealer for USD 20,299,000, using you bank account to make delivery of the USD 20,299,000, deposit the BRL 10,000,000 in a bank for the 90 days, instruct the bank to withdraw the BRL 10,000,000 from your account and send them to the watch maker in 90 days
	h) Pick up the phone and buy BRL 10,000,000 from a dealer for USD 20,299,000 for delivery in 90 days, using your bank to make delivery of the USD 20,299,000 in 90 days, by instructing it to either withdraw that amount from your checking account or draw down on your line of credit and deliver USD 20,299,000 to the dealer against BRL 10,000,000 and then have your bank send the BRL 10,000,000 to the aircraft manufacturer.

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Question 7 (1 point)

Referring to the same market above, your outdoor equipment manufacturing firm has sold an order of lightweight backpacking tents to a Brazilian wholesaler of outdoor equipment for BRL2,000,000 due in 180 days. As the director of cash management it is your job to hedge your exposure to the Brazilian Real. You would,

Question 7 options:

	a) Pick up the phone and sell BRL 2,000,000 to a dealer for USD 1,000,000 for delivery in 180 days, instructing the your bank to receive BRL 2,000,000 from the wholesaler, deliver it to the dealer and receive USD 1,000,000 in return and then have your bank keep the USD 1,000,000 in your account (or pay down on your line of credit).
	b) Pick up the phone and sell BRL 2,000,000 to a dealer for USD 971,200 for delivery in 180 days, instructing your bank to receive BRL 2,000,000 from the wholesaler in 180 days, deliver it to the dealer against receipt of USD 971,200 and then have your bank deposit keep the USD 971,200 in your account (or pay down on your line of credit).
	c) Pick up the phone and sell BRL 2,000,000 to a dealer for USD 1,000,000, using your bank to take delivery of the BRL 2,000,000, deposit the BRL 2,000,000 in a bank for the 180 days, instruct the bank to withdraw the BRL 2,000,000 at the end of 180 days and deliver it to the dealer against the USD 1,000,000 and then deposit the USD in your account (or pay down on your line of credit)..
	d) Pick up the phone and sell BRL 2,000,000 to a dealer for USD 971,200, use you bank account to take delivery of the USD 971,200, deposit that amount in your account for the 180 days and then use it to complete the transaction with the dealer.
	e) Pick up the phone and sell BRL 2,000,000 for USD 1,000,000 to the dealer for delivery in 180 days and keep the $1,000,000 on deposit at your bank until then, withdrawing it at the end of 180 days to complete the transaction as the BRL arrives from the wholesaler.
	f) Pick up the phone and sell BRL 2,000,000 for USD 1,000,000 to the dealer for delivery in 180 days and keep the $1,000,000 on deposit at your bank until then, withdrawing it at the end of 180 days to complete the transaction as the BRL arrives from the wholesaler.

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Question 8 (1 point)

The USD/PEN (Peruvian New Sol) spot rate is 0.3600 (36) . Expected Peruvian inflation rates are higher than those in the U.S. While the five-year inflation rate for the U.S. is forecast to be 3%, the Peruvian inflation rate is forecast to be 6% over five years. What will the spot USD/PEN be at the end of five years according to the relative Purchasing Power Parity theory?

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Question 9 (1 point)

This question is a place holder for a table relevant to the next six questions. For years your firm has operated the U.S. and the city-state of Singapore making highly customized electronic components as a subcontractor to cad-cam machine tool makers in the U.S. You are concerned about the fluctuation of the exchange rate between the US$ and the Singapore dollar (S$ or SGD). Displayed is a partial income statement. The "Base Case" is the median expected case and is displayed in both actual currency units and in U.S. Dollar units where US$/S$ = 0.75. Complete the table below by decomposing all of the flows from the base case (US$/S$ = 0.75) of the previous table into US$ cash flows or S$ cash flows (stated in terms of US$).

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Question 10 (1 point)

Complete the table by decomposing all of the flows from the base case (US$/S$ = 0.75) of the table displayed in the previous question into US$ cash flows or S$ cash flows (stated in terms of US$). In the the number "(7)" should be replaced by,

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Question 11 (1 point)

Referring to the previous tables "(8)" should be replaced by,

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Question 12 (1 point)

Referring to the previous tables "(9)" should be replaced by,

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Question 13 (1 point)

Referring to the previous question "(19)" should be replaced by,

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Question 14 (1 point)

Referring to the previous tables "(20)" should be replaced by,

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Question 15 (1 point)

With reference to the previous tables, some of the practical things that this company should consider to reduce its vulnerability to currency exchange fluctuations is (CHECK ALL THAT APPLY),

Question 15 options:

	a) Pay down USD debt and increase SGD debt.
	b) Pay down SGD debt and increase USD debt.
	c) Reduce US CGS by moving more sourcing activity to Singapore.
	d) Reduce Singapore CGS by moving more sourcing activity to the US.
	e) Invoice more sales in Singapore dollars.
	f) Reduce Singapore sales.
	g) Increase USD sales.
	h) Move fixed costs from Singapore to the US.
	i) Move fixed costs from the US to Singapore.
	j) Move gross margin from Singapore to the US.
	k) Move gross margin from the US to Singapore.
	l) Move more EBIT from the US to Singapore.
	m) Move more EBIT from Singapore to the US.
	n) Reduce USD variable costs by increasing SGD variable costs
	o) Reduce SGD variable costs by increasing USD variable costs.

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Use the following T accounts that appear in the next question to answer it and the following three.

Question 16 (1 point)

Consider the recently established U.K. Subsidiary of an American firm. Below are two "T" accounts that represent the subsidiary's balance sheet at the end of the first year of operation. Use the balance sheet below, right to translate the Assets, the Liabilities and Equity from GBP (Great British Pounds or ) to US$ for purpose of the consolidated balance sheet. The number "(1)" should be replaced by the number-

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Question 17 (1 point)

Referring to the previous question the number "(2)" should be replaced by the number

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Question 18 (1 point)

Referring to the previous question the number "(3)" should be replaced by the number

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Question 19 (1 point)

Referring to the previous question the number "(4)" should be replaced by the number

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Use the table that appears in the next question to answer it and the seven that follow.

Question 20 (1 point)

Consider the above U.K. Subsidiary of an American firm only now a year has passed since it was established. The British pound has depreciated to USD/GBP 1.50. Below are two "T" accounts that represent the subsidiary's balance sheet at the end of the first year of operation. All profits from operations have been transferred to the home office. Use the format below to show how the balance sheet would now look in units of both British Pounds and U.S.Dollars. The number "(5)" should be replaced by the number

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Question 21 (1 point)

Referring to the previous question the number "(6)" should be replaced by the number

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Question 22 (1 point)

Referring to the previous question the number "(7)" should be replaced by the number

Question 22 options:

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Question 23 (1 point)

Referring to the previous question the number "(8)" should be replaced by the number

Question 23 options:

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Question 24 (1 point)

Referring to the previous question the number "(9)" should be replaced by the number

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Question 25 (1 point)

Referring to the previous question the number "(10)" should be replaced by the number

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Question 26 (1 point)

Referring to the previous question the number "(11)" should be replaced by the number

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Question 27 (1 point)

Use the space below to suggest a strategy for minimizing the effect of foreign currency fluctuations on balance sheet translation.

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Question 28 (1 point)

Right now the spot price of a Canadian dollar (US$/C$) is 0.9600. Ten-year U.S. dollar denominated (Treasury bond) rates are 1.62%. Ten-year Canadian bond interest rates are 3.60%. What is the US$/C$ spot rate expected ten years from now according to the theory of interest rate parity?

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