The effect of an appreciation in the home currency

Assignment Help Finance Basics
Reference no: EM131073137

Question 3- Exchange Rate Exposures

A domestic firm, Home Company, is evaluating the effect of an appreciation in the home currency on the firm's economic exposure. In each of the following categories of economic exposure, indicate whether the domestic currency appreciation is likely to have a positive or negative effect on Home Company's cash flow. State your conclusion and offer a one-sentence explanation for you conclusion as in the example shown for the first row.

Direct economic exposure:
1. Revenue from sales abroad: negative - foreign revenue worth less in home currency terms
2. Cost of inputs sourced (purchased) abroad
3. Profits repatriated from abroad
4. Foreign tax liabilities

Indirect economic exposure
1. Position vis-à-vis a competitor who sources abroad
2. Domestic competitor who sells abroad
3. Foreign competitor who sells in Home Co.'s country
4. Supplier who sources abroad
5. Customer who sells abroad
6. Customer who sources abroad

Reference no: EM131073137

Questions Cloud

Given the nature of criminal justice organizations : Given the nature of criminal justice organizations is the traditional model of employee supervision the best possible choice? Why or Why not?
Critically discuss the evolution of computer systems : COMP 0330 - System Software - Evaluate a range of tools and services provided by systems software and explain the relationships that exist between them.
Which one attribute do you think best defines quality leader : Compare and contrast the leadership qualities that Bratton practiced to the issues and qualities of leadership or non-leadership. Which one attribute do you think best defines a quality leader?
What is the initial price on each bond : Two 25-year old maturity mortgage- backed bonds are issued. the first bond has a par value of $10000 and promise to pay a 10.5% annual coupon while the second is a zero coupon bond that promises to pay $10000 (par) after 25 years, including accrue..
The effect of an appreciation in the home currency : A domestic firm, Home Company, is evaluating the effect of an appreciation in the home currency on the firm's economic exposure. In each of the following categories of economic exposure, indicate whether the domestic currency appreciation is likel..
Identify the significance of physical evidence : Identify the various types of physical evidence encountered at the crime scene. Describe the preservation and collection of the firearms evidence.
Prepare the journal entries in the records of white foam ltd : White Foam Ltd has been investigating the expansion of the company into new areas of development. Prepare the journal entries in the records of White Foam Ltd in relation to the above events
What are the three goals of the criminal justice system : The crime control model and the due process model-what are the three goals of the criminal justice system
How do the seductions of crime influence criminal behavior : Should our nation concentrate its efforts and funding on preventing crime, punishing crime, building more correctional facilities, or providing essential job training to those incarcerated?

Reviews

Write a Review

Finance Basics Questions & Answers

  Prepare a table that shows the assets-liabilities

Marketing strategy 1 What are the main products ( two paragraphs)

  Ultimate home appliance emporium is expanding its product

ultimate home appliance emporium is expanding its product offerings in order to satisfy a wider range of customertastes

  What is likely to happen to the number of gliders sold

What is likely to happen to the number of gliders sold if Emerson follows company policy and raises the glider price to that calculated in Part B?

  Identify the four basic financial statements

Discuss the objectives for Week One. How do they relate to the practice of accounting and its uses in business. Identify the four basic financial statements.

  What capital budgeting considerations be taking into account

As you continue discussing and providing examples of capital expenditure from your industry, as your colleagues describe their capital budgeting opportunities, read them as if you were a financial advisor to their companies. What other capital bud..

  Appropriate to predict future demand

After plotting demand for four periods, an emergency room manager has concluded that a trend-adjusted exponential smoothing model is appropriate to predict future demand. The initial estimate of trend is based on the net change of 30 for the three..

  What is the value of the stock to an investor

New age inc. paid a dividend yesterday of $2.00 per share, new age management expects the dividend to increase next year to $3.00 annually. if the dividend is expected to stay at $3.00 per yera for the foreseeable future.

  Distort or disrupt the capital budgeting process

Describe how each of the subsequent actions or problems can distort or disrupt the capital budgeting process. Over optimism by project sponsors. Inconsistent forecasts of industry and macroeconomic variables.

  Comparing machines with unequal lives

Vandalay Industries is considering the purchase of a new machine for the production of latex. If the company plans to replace the machine when it wears out on a perpetual basis, the EAC for machine A is $ and the EAC for machine B is $ . Therefore..

  Calculate how much project needs at the beginning

Calculate how much project needs at the beginning of the second year that would be necessary to cover its expected expenditures.

  Which of the following combinations of investments

Which of the following combinations of investments would provide the firm with the highest negative correlation?

  The campbell company is evaluating the proposed acquisition

the campbell company is evaluating the proposed acquisition of a new milling machine. the machines base price is 108000

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