Recently, Wal-Mart established two retail outlets in the city of Shanzen, China, which has a population of 3.7 million. These outlets are massive and contain products purchased locally as well as imports. As Wal-Mart generates earnings beyond what it needs in Shanzen, it may remit those earnings back to the United States. Wal-Mart is likely to build additional outlets in Shanzen or in other Chinese cities in the future.
a. Explain how the Wal-Mart outlets in China would use the spot market in foreign exchange.
b. Explain how Wal-Mart might utilize the international money markets when it is establishing other Wal-Mart stores in Asia.
c. Explain how Wal-Mart could use the international bond market to finance the establishment of new outlets in foreign markets.