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what are the benefits and drawbacks of financial hedging of the firmrsquos operating exposure vis-a-vis operational hedges like relocating
explain the implications of purchasing power parity for operating exposureanswer determine if the exchange rate changes are matched by the inflation
explain the determinants of operating exposureanswer the main determinants of a companyrsquos operating exposure area the structure of the
define the conversion and competitive effects of exchange rate changes on the companys operating cash flowanswer the competitive effect exchange
assume that your company has an equity position in a french firm explain the condition under which the dollarfranc exchange rate uncertainty does not
explain the statement ldquoexposure is the regression coefficientrdquoanswer exposure to currency risk can be suitably calculated by the sensitivity
how would you explain economic exposure to exchange riskanswer economic exposure can be illustrated as the opportunity that the firmrsquos cash flows
a life insurance company invested 10000000 in pure-discount us bonds in may 1995 while the exchange rate was 80 yen per dollar the insurance company
mr james k silber an avid international investor just sold a share of a french company for ff50 the share was bought for ff42 a year ago the exchange
explain how the advent of the euro would affect international diversification strategiesanswer as the euro-zone will have similar exchange-rate
what are the benefits of investing via international mutual fundsanswer the benefits of investing via international mutual funds consist ofa save
why do investors invest the lionrsquos share of their funds in domestic securitiesanswer investors invest greatly in their domestic securities since
why do you think closed-end country funds frequently trade at a premium or discountanswer cecfs closed-end country funds trade at a premium or
discuss the advantages and disadvantages of closed-end country funds or cecfs relative to the american depository receipts or adrs as a means of
would exchange rate changes all time increase the risk of foreign investment discuss the condition within which exchange rate changes may actually
explain how exchange rate fluctuations influence the return from a foreign market measured in dollar terms discuss the empirical proof on the effect
explain the concept of the sharpe performance measureanswer the sharpe performance measure abbreviated as shp is a risk-adjusted performance
explain the concept of the world beta of a securityanswer the world beta calculates the sensitivity of returns to a security to returns to the
security returns are found to be less correlated across countries than within a country why can this beanswer security returns are less
what factors are responsible for the recent surge in international portfolio investment ipianswer the recent surge in international portfolio
a company enters into a five-year interest rate swap along with a swap bank where it agrees to pay the swap bank a fixed-rate of 975 percent
suppose a company is quoting swap rates as follows 775 - 810 percent yearly against 6-month dollar libor for dollars and 1125 - 1165 percent
alpha and beta companies can borrow at the subsequent rates
if the cost benefits of interest rate swaps would similarly be arbitraged away in competitive markets what other descriptions exist to explain the
briefly discuss some variants of the basic interest rate and currency swaps answer in place of the basic fixed-for-floating interest rate swap