Chapter 11 Questions 国际金融概要1.pptxVIP

Chapter11;Question 8 and 9;Purchasing or Selling on Open Account;Borrowing and Lending;Three types of transaction exposures;9. Cash Balances. Why does the holding of foreign currency cash balances not lead to transaction exposure? Because no legal obligation exists to move the cash from one country and currency to another. If such an obligation did exist, it would show on the books as a payable (for example, dividends declared and payable) or receivable and then be counted as part of transaction exposure.;Question11.10;;Mattel Toys.Mattel is a U.S.-based company whose sales are roughly two-thirds in dollars (Asia and the Americas) and one-third in euros (Europe). In September , Mattel delivers a large shipment of toys (primarily Barbies and Hot Wheels) to a major distributor in Antwerp. The receivable, €30 million, is due in 90 days, standard terms for the toy industry in Europe. Mattel’s treasury team has collected the following currency and market quotes. The company’s foreign exchange advisors believe the euro will be at about $1.4200/€ in 90 days. Mattel’s management does not use currency options in currency risk management activities. Advise Mattel on which hedging alternative is probably preferable. ; Read the problem carefully List the ways to hedge Compare all the result ;Forward Market Hedge;$40.5286m; Read the problem carefully List the ways to hedge Compare all the result ;Forward market hedge $42.5850M; Problem11.10 Farah Jeans; Remain Unhedged; Use Forward Market Hedge; Use Money Market Hedge; Result ;Problem 11.12 Chronos Time Pieces;a. Evaluate the hedging alternatives for Chronos if Manny is right (Case#1:$1.16/€) and if Manny is wrong (Case#2:$1.26/€). What do you recommend? 1.hedgeing alternative with 70% hedge With 70%, Chronos just use 70% of €1,560,000 (€1,560,000*70%= €1,092,000) to deliver them at the agreed forward rate ($1.2270/€)after 90 days. The other 30% will be exchange to dollar at that days rate after 90 days. 2.hedgeing alt