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Suppose a firm has just made an investment in France that will generate $2 million annually in depreciation, converted at today’s spot rate.
What are some of the potential advantages and disadvantages of foreign contracting vis-a-vis manufacturing in a wholly owned foreign subsidiary?
How would the nature of the project—export oriented versus producing for the Mexican market—affect your revised cash flows?
What are the pros and cons of Deutsche Bank listing on the NYSE as a global share instead of an ADR?
Will increasing integration of national capital markets reduce the benefits of international diversifications?
Suppose that Mexican bonds are yielding more than 100% annually. Does this high yield make them suitable for American investors.
Why might Japanese (and other) investors still prefer to invest in domestic securities despite the potential gains from international diversification?
At the same time, the exchange rate went from £1:$1.76 to £1:$1.62. What was the total dollar return, in percent, on gilts for the year?
However, the Swiss franc rose by 8% against the dollar over this sixmonth period. Corresponding figures for France were 1.8% and 2.6%.
At the same time, the exchange rate went from $1 = ¥145 to $1 = ¥120. What was the total dollar return, in percent, on Toyota stock for the year?
In 1992, the Brazilian market rose by 1,117% in cruzeiro terms, while the cruzeiro fell by 91.4% in dollar terms. Meanwhile, the U.S. market rose by 8.5%.
Suppose that the dollar is now worth €1.1372. If oneyear German bunds are yielding 9.8% and one-year U.S. Treasury bonds are yielding 6.5%
What did Matsushita’s yen gain or loss translate into in terms of dollars? What accounts for the difference between this figure and your answer to part a?
Suppose that the standard deviation of the return on Nestle, a Swiss firm, in terms of Swiss francs is 19% and ´ the standard deviation of the rate.
How has the MSCI World Index performed in dollar terms since the beginning of 1999? How has it performed in terms of the euro?
What was the return on the U.S. Treasury bond index over the past year? How does this compare to the dollar return on U.K. gilts?
Identify the competitive advantages that a firm in each category must have to be a successful multinational.
What factors help determine whether a firm will export its output, license foreign companies to manufacture its products, or set up its own production.
What factors might determine whether it expands abroad via licensing or by investing in its own sales force and distribution network?
IBM wishes to raise $1 billion and is trying to decide between a domestic dollar bond issue and a Eurobond issue.
Daewoo Motors has been told it could issue $150 million face value in Euro-CP at a discount rate of 8.9% based on a 360-day year.
How much money has been raised in the past year in the Eurocurrency market? Eurobond market? Euronote market? Euro-commercial market?
What factors should be considered in deciding whether the cost of capital for a foreign affiliate should be higher, lower, or the same as the cost of capital.
In early 1990, major Tokyo Stock Exchange issues sold for an average 60 times earnings, more than four times the 13.8 price/earnings.
It is trying to decide whether to borrow dollars at 9% or Mexican pesos at 75%. What advice would you give it?