### Forward hedge or a money market hedge

Assignment Help Finance Basics
##### Reference no: EM132137111

Kanab Co. and Zion Co. are U.S. companies that engage in much business within the U.S. and are about the same size. They both conduct some international business as well. Kanab Co. has a subsidiary in Canada that will generate earnings of about C\$20 million in each of the next 5years. Kanab Co. also has a U.S. business that will also receive about C\$1 million (after costs) in each of the next 5years as a result of exporting products to Canada that are denominatedin Canadian dollars.

Zion Company has a subsidiary in Mexico that will generate earnings of about 1 million pesos in each of the next 5years. Zion Co. also has a business in the U.S. that will receive about 300 million pesos (after costs) in each of the next 5years as a result of exporting products to Mexico that are denominatedin Mexican pesos.

The salvage value of Kanab's Canadian subsidiary and Zion's Mexican subsidiary will be zero in 5 years. The spot rate of the Canadian dollar is \$.60 while the spot rate of the Mexican peso is \$.10. Assume the Canadian dollar could appreciate or depreciate against the U.S. dollar by about 8% in any given year, while the Mexican peso could appreciate or depreciate against the U.S. dollar by about 12% in any given year.

Which company is subject to a higher degree of translation exposure? Explain.

1. Assume the following information: 90-day U.S. interest rate = 1.5% 90-dayPhilippine interest rate = 3% 90-dayforward rate of Philippine peso = \$0.020 Spot rate of Philippine peso = \$0.025

Assume your firm in the United States will need 300,000,000 Philippine pesos in 90 days. It wishes to hedge this payables position.

Would it be better off using a forward hedge or a money market hedge? Provide the mathematical analysis to justify your position.

#### You assess the rupee return dividend plus price of these

The stock of Gandaki Ltd. (GL) performs relatively well as compared to other stocks during recessionary periods. The stock of Tanahu Ltd. (TL), on the other hand, does well du

#### Write a short report that compares the business performance

Write a short report that compares the business' performance in 201X with that in 20XY regarding its liquidity, financial flexibility, operating capability and profitability

#### Identify the portfolio investment opportunities

FIN201 - Investment Management Assignment. You are required to select four emerging markets, identify the portfolio investment opportunities which they offer to funds manager

#### Explain accountant role in changing depreciation methods

ACC701 Financial Accounting Assignment Question. In your response highlight ethics & governance, accountant's role in changing depreciation methods, stakeholders and the impa

#### What is the present value of cash outflows

Fez Fabulous Fabrics wishes to acquire a \$100,000 multifacet cutting machine. What is the present value of cash outflows for each of these alternatives, using the after-tax c

#### How you would analyze the situation to settle the issue

Research an article on a current event that centers on a controversial issue where the two sides are claiming opposing views. Then describe how you would analyze the situati

#### Prepare a report for the couple answering the issues

FIN2IFP Introduction to Financial Planning - what price range is the couple reasonably able to afford and accordingly how much will they be required to borrow from a bank?

#### Prepare a report analysing the financial statements - tata

Prepare a report analysing the financial statements of a chosen company. Your financial analysis should focus on the profitability, turnover and financial position of the or