What will the government force exporter to do

Assignment Help Finance Basics
Reference no: EM13897886

1. Toward the end of 1999, the central bank (Reserve Bank) in Zimbabwe stabilized the Zimbabwe dollar, the Zim for short, at Z$38 > USD and privately instructed the banks to maintain that rate. In response, at the end of 1999, an illegal market developed wherein the Zim traded at Z$44 > USD. Are you surprised at rumors that claim corporations in Zimbabwe were "hoarding" USD200 million? Explain.

2. We described how exchange rate risk could be hedged using forward contracts. In pegged or limited-flexibility exchange rate systems, countries imposing capital controls sometimes force their importers and exporters to hedge. First, assuming that forward contracts are to be used, and an exporter has future foreign currency receivables, what will the government force him to do? Second, how does this help the government in defending their exchange rate peg?

Reference no: EM13897886

Questions Cloud

What is the dividend yield and capital gains yield today : What is the dividend yield and capital gains yield today
What are official international reserves of the central bank : What are official international reserves of the central bank? What is likely to happen if a central bank suddenly prints a large amount of new money?
What are the potential benefits of a pegged currency system : What are the potential benefits of a pegged currency system? What is the difference between a target zone and a crawling peg?
Is the robotic surgery investment financially acceptable : Is the robotic surgery investment financially acceptable
What will the government force exporter to do : An exporter has future foreign currency receivables, what will the government force him to do? Second, how does this help the government in defending their exchange rate peg?
Determine the current rate of return on risk-free assets : Determine the current rate of return on risk-free assets
Determine the exchange rate system croatia runs : Find the Web site of Croatia's central bank and determine the exchange rate system Croatia runs. Suppose the kuna weakens substantially relative to the euro.
How much energy must the ice absorb : How much energy must the ice absorb if it is to completely melt? If the ice were mixed with 360 grams of water initially at 30°C and the system is assumed to be closed, would the water be able to lose enough energy to melt all the ice? Show calc..
Explain the concepts of present value and future value : Explain the concepts of present value and future value. If the dollar interest rate is positive, explain why the value of $1,000,000 received every year for 10 years is not $10,000,000 today.

Reviews

Write a Review

Finance Basics Questions & Answers

  Identify the non-systematic or company-specific risks

Select some stocks and identify the non-systematic or company-specific risks for these stocks. How can you quantify these risks for a comparison with systematic risks?

  What is the probability that you will run out of stock

Daily demand is distributed normally with mean = 250 and standard deviation =.50. At the end of each morning, any leftover copies are worthless and they go to a recycle bin.

  The chief risk officer cro wants to estimate the banks

your bank is implementing the airb approach for credit risk the ama for operational risk and the internal model

  Estimate the project annual project free cash flow

Estimate the project's annual project free cash flow (FCF) for each of the next 20 years, as well as the initial cash outflow. Calculate the net present value (NPV) and internal rate of return (IRR) of the Blended Winglet project.

  What was residual income for the quarter

The average net book value of assets during the quarter was $1.5 million. If the company has a required rate of return of 15 percent on investment, what was residual income for the quarter?

  Complexities of the us financial system

The U.S. financial system has many complexities, and it is impacted by several environmental factors, including federal regulations and the economy.

  Bummel and strand corp has a gross profit margin of 337

bummel and strand corp. has a gross profit margin of 33.7 percent sales of 47112365 and inventory of 14595435. what is

  If i assume that both my salary and the inflation rate

tarek framborgia is considering the purchase of a disability policy. he is currently 35 years old and earns 50000 per

  Calculate the value of the bond if your required return is

research the current market data on bonds from atampt dell and ibm. assume each bond has a par value of 1000 unless

  What role does weak financial regulation and supervision

what role does weak financial regulation and supervision play in causing financial

  Expected the rates of return

Estimates the long-run future expected rates of return.

  How corporations are taxed on dividend income

Which of the following best describes how corporations are taxed on dividend income?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd