Pleas answer question 4. The company i used is Monsanto Company
Final (fall 2017) International Finance 1. How does Inflation effect exchange rates? Which foreign country's changes in inflation (among the ones covered in class) will have the strongest impact on your country's exchange rate with that country? Test for the Purchasing Power parity between your country and the said country. Data is available in the dropbox named Final. Please use the same dropbox to submit any spreadsheet you want to upload.(10+ 10+20) 2. You work for a US MNC in the CFO's office and have been tasked to hedge 10 million AUD, which your company will need to pay a supplier one year from today. Your CFO wants you to lock in the best rate that you will receive by using either futures, options or money market hedge. Compare the three possibilities using data on these three from Bloomberg. Which one would you choose and how many USD will you pay a year later? (5+5+10) Bloomberg functions: CRVF for interest rates, assume that you can borrow and invest at the same rates as the Central Bank. FRD to get the forward rate and for the premium on options] Assume that the tax bill goes through. How do think will it impact the future corporate structure of your MN. Explain your answer ilight of te following articles: 3. hups//wwnyrimes.com/211/22 business/taxes offshore rspatriationhtmE r wagss hml (20) 4. Identify the major exchange rate risk facing the MNC (whether it is transaction or translation)? Identify the amount of exposure (dollar value) and how it impacts the MNC (share price/ profit-loss, capex, How does the MNC eliminate the aforementioned risk? Does it use derivatives or natural hedges? Discuss whether the MNC is able to manage the risks well. How would you judge the efficacy of the hedging program? (30) Final (fall 2017) International Finance 1. How does Inflation effect exchange rates? Which foreign country's changes in inflation (among the ones covered in class) will have the strongest impact on your country's exchange rate with that country? Test for the Purchasing Power parity between your country and the said country. Data is available in the dropbox named Final. Please use the same dropbox to submit any spreadsheet you want to upload.(10+ 10+20) 2. You work for a US MNC in the CFO's office and have been tasked to hedge 10 million AUD, which your company will need to pay a supplier one year from today. Your CFO wants you to lock in the best rate that you will receive by using either futures, options or money market hedge. Compare the three possibilities using data on these three from Bloomberg. Which one would you choose and how many USD will you pay a year later? (5+5+10) Bloomberg functions: CRVF for interest rates, assume that you can borrow and invest at the same rates as the Central Bank. FRD to get the forward rate and for the premium on options] Assume that the tax bill goes through. How do think will it impact the future corporate structure of your MN. Explain your answer ilight of te following articles: 3. hups//wwnyrimes.com/211/22 business/taxes offshore rspatriationhtmE r wagss hml (20) 4. Identify the major exchange rate risk facing the MNC (whether it is transaction or translation)? Identify the amount of exposure (dollar value) and how it impacts the MNC (share price/ profit-loss, capex, How does the MNC eliminate the aforementioned risk? Does it use derivatives or natural hedges? Discuss whether the MNC is able to manage the risks well. How would you judge the efficacy of the hedging program? (30)
