### Would this proposal eliminate the exchange rate risk

Assignment Help Finance Basics
##### Reference no: EM13255889

Assume your U.S. firm currently exports to Mexico on a monthly basis. The goods are priced in pesos. Once raw materials are received from a source, they are quickly used to produce the product in the United States and then the product is exported to Mexico. Currently, you have no other exposure to exchange rate risk. You have a choice of purchasing the raw materials from Canada (denominated in C\$), from Mexico (denominated in pesos), or from within the United States (denominated in U.S. dollars). The quality and your expected cost are similar across the three sources. Which source is preferable, given that you prefer minimal exchange rate risk? Using the information in the previous question, consider a proposal to price the exports to Mexico in U.S. dollars and use the U. S. source for raw materials. Would this proposal eliminate the exchange rate risk? Why or why not?

### Previous Q& A

#### Explain copper is obtained from ores containing the minerals

Copper is obtained from ores containing the minerals, azurite,Cu3(CO3)(OH)2, chalcocite, Cu2S, chalcopyrite CuFeS2

#### Is blood moving toward or away from the transducer

Suppose it is known that a 5MHz transducer axis makes an angle of 30 degrees relative to the direction of motion of blood in a vessel. If the Doppler frequency is measured to be +500Hz, what is the velocity of the blood

#### Is there an arbitrage opportunity here

An 8-month forward contract on a stock is currently priced at \$84. The stock currently sells for \$80. Assume that the risk-free rate of interest (with continuous compounding) is 10% per annum. Assume that dividends of \$0.90 per share are expected ..

#### Determine the maximum magnitude of the electric force

A stationary particle of charge q = 2.4 × 10-8 C is placed in a laser beam (an electromagnetic wave) whose intensity is 2.7 × 103 W/m2. Determine the maximum magnitude of the electric force

#### For what range of six-month forward prices of gold

For what range of six-month forward prices of gold does the trader have no arbitrage opportunities? Assume there is no bid-offer spread for forward prices.

#### Explain which has the same structure as solid silicon

Predict the distance between Si atoms in solid silicon. How does this compare to the distance between C atoms in diamond, Which has the same structure as solid silicon

#### Determine the darkness profile of the bars after imaging

Suppose the field to be imaged contains 3 parallel bars of width W mm, spread nonuniformly, with the darkness profile. Determine the darkness profile of the bars after imaging. Can you still tell all the bars apart

#### Exploit the profitable arbitrage opportunity

How does your answer change if storage costs of 2% per annum are incurred? What is the profit (per ounce)?

#### Define how many grams of dry nh4cl need to be added

How many grams of dry NH4Cl need to be added to 2.30 L of a 0.100 M solution of ammonia,NH3, to prepare a buffer solution that has a pH of 9.00

#### Determine he peak value of the electric field

A light bulb emits light uniformly in all directions. The average emitted power is 150.0 W. At a distance of 6 m from the bulb, determine he peak value of the electric field

### Similar Q& A

#### Calculate certainty equivalent cash flow

A project has a forecasted cash flow of \$110 in one year & \$121 in year 2. The interest rate is 5 percent, the estimated risk premium on the market is 10%, and the project has a beta of 0.5.

#### Inflation forecast

On August 1st 2009 USD/SAR exchange rate was SAR9.20 per USD. On August 1st 2010 (1 year later), USD/SAR rate moved up to USD/SAR9.80.

#### Estimate project npv

A proposed nuclear power plant will cost \$2.2 billion to build and then will produce cash flows of \$300 million a year for fifteen years.

#### Ppp theory on the price of beef in great britain

Assume the price of beef is anticipated to rise to \$3.10 in United States and to £4.65 in Britain. What should the one-year forward \$/£ exchange rate be?

#### Markets a least semi strong

You do a study and find out that on average stock prices for firms decrease 3 percent evfor every 5 percent decrease in inside ownership.

#### Solve the capital budgeting multiple choice questions

Solve the Capital budgeting multiple choice questions and how much is collected from accounts receivable in February

#### What is the current value of this swap to your company

On the other hand, the 3 month LIBOR rate 2 months ago (when the last cash exchange occurred) was 4.00% per annum with quarterly compounding.

#### Determine the minimum cost of capital point

The Millennium Charitable Foundation, which is tax exempt firm, issued debt last year at 8 percent to help finance a new playground facility in Chicago.

#### Determine the expected dividend for next three years

Suppose your broker offers to sell you some shares of Swift and Company common stock that has just paid an yearly dividend of \$2(yesterday). You expect the dividend to grow at the rate of 5 percent a year for the next 3 years,

#### Information about computing future value of deposit

Mary just deposited \$33,000 in an account paying 7% interest. She plans to leave the money in this account for 8 years. How much will she have in account at the end of seven years.

#### Represent the return on your investment

In a mutual fund 401(k)that you have through work, you notice that for every dollar you invest, your firm also invests a dollar. You are able to invest up to 5 percent of your yearly income,

#### Computation of emi of the loan

Computation of EMI of the loan and suppose you have decided to start saving money to buy a motorcycle for your loving spouse's