14 Jun IDENTIFY THE TOOLS THE FIRM CURRENTLY USES IN MITIGATING THE FOREIGN EXCHANGE RATE RISK
Company Proposal and Background: Provide a brief historical background on the firm you have selected, including the nature of its products or services.
II. Foreign Exchange Risk Management Analysis: Analyze the firm’s transactions, its foreign exchange rate risk exposure, and the tools the firm currently uses to mitigate the risk.
a) Explain the firm’s specific transactions, which are the accounts payable and accounts receivable, and how these transactions expose the firm to foreign exchange rate risk. Some firms could be exposed to both of the accounts because they import raw materials from foreign countries, add value to the product, and then re-export the product to other foreign countries. However, the net exposure must be only one account.
b) Identify the tools the firm currently uses in mitigating the foreign exchange rate risk. Occasionally, firms utilize more than one tool to hedge the risk. Some examples of tools are using foreign debt to hedge the foreign income, or using derivatives such as currency swaps, futures, forwards, or options.
c) However, most of the time, the company does not fully hedge its exposure to the foreign currency. You must explain the percentage hedge of its exposure as well as the hedging time length. Then, you must provide the potential risk to which the company could still be exposed from the foreign exchange rate.
III. Investments/Subsidiary Expansion: Choose a country to enter to create a new subsidiary. Determine the capital structure of your new subsidiary, including the source of funding.
a) Provide an explanation of the country in which you chose to create a new subsidiary. It is possible that the country you selected already has a subsidiary of your MNE, which is fine.
b) Explain what the capital structure for this new subsidiary should look like. Should it be the same as the mother company’s? Why? If your subsidiary should have debt, determine the source of the debt and explain your rationale for choosing the source.
IV. Repatriations of Funds: Once your subsidiary turns a profit, evaluate how you will repatriate your profit. You will need to look into the country in which the subsidiary is located and determine if it has any restrictions on blocked funds. If so, you must incorporate the findings into your final decision. Explain if you will repatriate your profit back annually on all, or only partially, and why.
Requirements of Submission: Written components of projects must follow these formatting guidelines when applicable: double spacing, 12-point Times New Roman font, one-inch margins, and discipline-appropriate citations. Eight to twelve pages are required, not including the cover page and resources.
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Writedemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.