Questions from Financial Management

Q: Explain the benefits of netting. How can a centralized cash management

Explain the benefits of netting. How can a centralized cash management system be beneficial to the MNC?

Q: How can an MNC implement leading and lagging techniques to help subsidiaries

How can an MNC implement leading and lagging techniques to help subsidiaries in need of funds?

Q: If a U.S. firm believes that the international Fisher

If a U.S. firm believes that the international Fisher effect holds, what are the implications regarding a strategy of continually attempting to generate high returns from investing in currencies with...

Q: Walmart has established two retail outlets in the city of Shanzen,

Walmart has established two retail outlets in the city of Shanzen, China, which has a population of 3.7 million. These massive outlets sell imported goods in addition to products produced locally. As...

Q: Tallahassee Co. has $2 million in excess cash that it

Tallahassee Co. has $2 million in excess cash that it has invested in Mexico at an annual interest rate of 60 percent. The U.S. interest rate is 9 percent. By how much would the Mexican peso have to d...

Q: Why would a U.S. firm consider investing its short

Why would a U.S. firm consider investing its short-term funds in euros even when it does not have any future cash outflows in euros?

Q: Evansville, Inc., has $2 million in cash available for

Evansville, Inc., has $2 million in cash available for 90 days. It is considering the use of covered interest arbitrage because the euro’s 90-day interest rate is higher than the U.S. interest rate. W...

Q: Fort Collins, Inc., has $1 million in cash available

Fort Collins, Inc., has $1 million in cash available for 30 days. It can earn 1 percent on a 30-day investment in the United States. Alternatively, if it converts the dollars to Mexican pesos, it can...

Q: Rollins, Inc., has $3 million in cash available for

Rollins, Inc., has $3 million in cash available for 1 year. It can earn 3 percent on aU.S. Treasury bill or 5 percent on a British Treasury security. The British investment requires conversion of the...

Q: Plak Co. of Chicago has several European subsidiaries that remit earnings

Plak Co. of Chicago has several European subsidiaries that remit earnings to it each year. Explain how appreciation of the euro (the currency used in many European countries) would affect Plak’s valua...