INB 205 CheckPoint Ch 20 Questions
This pack of INB 205 CheckPoint Ch 20 Questions shows the solutions to the following problems:
1. Why is an exporter that is to be paid in six months in a foreign currency worried about fluctuating foreign exchange rates?
2. Are there ways in which this exporter can protect itself? If so, what are they?
3. How does the credit or money market hedge work?
4. Why is acceleration or delay of payments more useful to an IC than to smaller, separate companies?
5. How would you accomplish exposure netting with currencies to two countries that tend to go up and down together in value?
6. Why is the price adjustment device more useful to an IC than to smaller, separate companies?
7. Some argue that translation gains or losses are not important so long as they have not been realized and are only accounting entries. What is the other side of that argument?
8. Is the parallel loan a sort of swap? How does it work?
9. How and why would a seller make a sale to a buyer that has no money the seller can use?
10. Developed country partners in countertrade contracts have had problems with quality and timely delivery of goods from the developing country partners. How are they trying to deal with those problems?