“Exchange rates are the amount of one country’s currency needed to purchase one unit of another currency (Brealey 1999, p. 625)”. People wanting to exchange some money for their vacation trip will not be too much bothered with shifts if the exchange rates. However, for multinational companies, dealing with very large amounts of money in their transactions, the rise or fall of a currency can mean getting a surplus or a deficit on their balance sheets. What types of exchange rate risks do multinational companies face? One type of exchange risk faced by multinational companies is transaction risk. If a company sells products to an overseas customer it might be subject to transaction risk. If a UK company is expecting a payment from a US customer in June and the invoice was made in January, the exchange rate is bound to have changed during the period. If the deal was worth £1,000,000 and the american dollar compared to pound sterling weakened from US$1.40 in January to US$1.50 in June, the UK company would loose £47,619 (Appendix A). Economic risk is another type of exchange risks companies have to consider when dealing globally. Changes in exchange rates are bound to affect the relative prices on imports and exports, and that will again affect the competitiveness of a company. An UK exporter dealing with companies in the US would not want the US$ to depreciate, because it would make the exports more expensive for the US market, thus the company will loose business. Other types of exchange rate risks are translation risk and so-called hidden risk. The translation risk relates to cases where large multinational companies have subsidiaries in other countries. On the financial statement of the whole group, the company may have to translate the assets and liabilities from foreign accounts into the group statement. The translation will involve foreign exchange exposure. The term hidden risk evolves around the fact that all companies are subject to exchange rate risks, even if they don’t do business with companies using other currencies. A company that is buying supplies from a local manufacturer might be affected of fluctuating foreign exchange rates if the local manufacturer is doing business with overseas companies. If a manufacturer goes out of business, or experience heavy losses, it will affect all the companies it does business with. The co... ... middle of paper ... ...he curve. Appendix A. Transaction Risk: A UK exporter invoicing US$1,000,000 in January for payment in June. Spot rates: January: US$1.40 £714,286 February: US$1.50 £666,667 Loss on transaction: £47,619 (£714,286 - £666,667) Appendix B. Interest Rates: i. A company borrows £100,000 from a bank at 8% interest rate. £100,000 X 1.08 = £108,000 ii. A company borrows £2,000,000 in 1998, with a fixed interest rate of 8%, payable annually for a 5 year period. Fixed annual interest, 8%: £2,000,000 X 0.08 = £160,000 New annual interest, 6%: £2,000,000 X 0.06 = £120,000 Annual loss, 6% vs. 8%: £160,000 - £120,000 = £40,000 References: http://www.expedia.com, 22/11/2000, http://www.expedia.com/pub/Agent.dll Brealey, Richard A., Marcus, Alan J., Myers, Stewart C. 1999, Fundamentals of Corporate Finance, 2nd edn, Craig S. Beytien, USA. Howells, Peter., Bain, Keith 2000, Financial Markets and Institutions, 3rd edn, Henry King Ltd., Great Britain. Ritter, Lawrence R., Silber, William L., Udell, Gregory F. 2000, Money, banking, and Financial Markets, 10th edn, USA.
Saputo’s business is constantly affected by changes in the exchange rate as the majority of its business takes place outside of Canada. Due to the fact products and cash flows travel internationally, the company is exposed to economic exposures. Exchange exposure affects Saputo in many ways such as the cost of production and demand for their products. Transaction exposure affects Saputo when cash flows from foreign operations into Canada. Saputo is affected by translation exposure when foreign revenue is converted into Canadian dollars for its financial statements.
Giving good reason for what legalizing marijuana can do for the United States and how we can gain a lot from legalizing marijuana, but she is able to pull back her reader on why you should not be tamped by what good marijuana can do. The author of the article view that the negative effects of marijuana are a huge deal, since marijuana tempers with the human brain and that even though it has its pros, the cons win since it’s more harmful if not use properly or the drug is used to much or use often. As well that we still don’t know that much about marijuana and that there should be more studies on marijuana, since we can still learn more about
There has always been controversy about marijuana and the affects it has on health and the issue of legalization. Some people believe it is very destructive to one’s health, and yet others feel the complete opposite about it. Is Marijuana truly harmful to one’s health? “Marijuana, the Deceptive Drug”, written by George Bierson, was published in the Massachusetts News. In this article, Bierson determines that marijuana is harmful in many ways. He seems to think that it damages the brain, the reproductive system, and also contributes to the halt of production in the immune system. Bierson also tries to persuade the reader that marijuana is a “gateway drug” that leads to larger drugs in the future. However, by conducting research of my own, I have come to the conclusion that Bierson’s article simply lacks truth.
Today the society is looking for ways to ease life and to find solutions for problems which oppress our lives and make it hard to live through. Because of many reasons, the traditional burials in this century are becoming a problem. (Prothero,2001). The fact that they cover a lot of land to build cemeteries and other things that are attached to these traditional burials is enough for us to search for a practical solution. About a century ago the term "cremation" was unknown to many people. It is believed that it began to be practiced during the early Stone Age and still exists today. Since that time cremations have been made all over the world, but they have never been so popular as they are now in this century. First and the most important to us all are the costs which are much less expensive for cremations than for funerals . Second, cremation does not contaminate the earth and cause a foul odor in the ground. Third, a lot of land is saved which means that it has an environmental impact.
Modern Day Olympics are a huge tradition that sweeps the screens of televisions across the world. Competitors take the arena with uniforms that dawn their countries colors and designs that are meant to resemble their designated flag. For months the news is centered around the games; the preparation, the athletes, and of course the competition. Countries aren 't obsessed, they are inspired and full of pride seeing athletes from their country compete and show their incredible skill. This tradition dates back to ancient Greece where the games began. Tony Perrottet writes about the traditions of the ancient game in his book The Naked Olympics.
Evins states her opinion on the idea of marijuana becoming legal. In her report, she tells readers marijuana should not become legalized for many reasons where she uses various scientific studies to back up her opinion. Dr. Evins goes into great deal about several harmful side effects that come with smoking marijuana mainly focusing on the unhealthy effects on the brain. Further, she elaborates on the addictiveness of marijuana and the repercussions of long-term use, often comparing nicotine and marijuana. Deeper into Evins’ analysis she tells reader should marijuana become legalized mental disabilities will become more prevalent because in certain individuals the use of marijuana can trigger mental disorders. Dr. Evins then concludes her essay by re-elaborating her main points on the harmful side effects of using marijuana. Dr. Evins closes her essay telling readers, “As a society, we are going in the wrong direction on
The ancient Greek Olympic Games are said to be on par with the modern day Olympic Games, despite the cultural intentions they may have. They are basically the same at the core of their institutions. Despite the realized traits of these games, they have been able to create a unifying atmosphere, indirectly causing a pseudo-period of peace for all as the ancient Greeks and the modern world have come together to watch whenever these games appear
Did you know that there is a such thing as burying without embalming? This is referred to as natural or green burial. Green Burial is typically done in the UK. When green burial is done, the body is put directly in a body bag and buried, without using any chemicals. This is done so that the body can recycle naturally. Green Burial should not be allowed because it causes foul odors, has the potential of spreading diseases, and can attract animals to the body due to the smells. While people may have religious or personal reasons for advocating burying without embalming, the health and sanitary risks are too great to ignore.
William Sharpe, Gordon J. Alexander, Jeffrey W Bailey. Investments. Prentice Hall; 6 edition, October 20, 1998
These occur if the currency in the home market strengthens in comparison with the currencies in the target markets, which reduces the value of earnings from foreign business. For example, an export manager of one of the companies surveyed said, “We pay the salaries of our staff in Swiss francs. The customers pay in Euros. Because of the current strength of the Swiss franc, we take a big margin loss”. In addition, Inflation in foreign markets can have a similar effect if it leads to devaluation of the currencies concerned. Recessions in foreign markets and an increase in state indebtedness can cause demand for the company’s products to
The stability of currency values plays a significant role for economic and financial stability. It is not difficult to see the exchange rate fluctuations are widely regarded as damaging. As the movements of the exchange rate have significant and large effects on the trade balance, resource allocation, domestic prices, interest rate, national income and other key economic variables. Then can exchange rate movements be predicted by these fundamental economic variables?
The summer Olympic games isone of the most prestigious events in world history. Olympic games started in Athens in 776B.C.E, mostly to praise all the gods but also to show political peace throughout Greece. Olympic games gave people chance to show off there skills and also to become well known to become known as a legend. These games really brought the community together it created and maintained a common bond. Only the best of the best athletes came and competed in the events. These games affected the political status so the created a The "Olympic Truce” which was established in ancient Greece in the 9th century BC between three kings. During the Truce period, athletes, artists and their families could travel in total safety to participate in or attend the Olympic games and return afterwards to their respective countries. (" Olympic Movement Promotes Peace Worldwide. ) There were four crucial parts in the history of the Olympic games starting with the start in 776B.C.E, then 1896, 1970/1980s, and lastly modern day Olympic games. This work is an evolutionary piece denoting change and continuities over time in the Olympic games.
Block, S. B., & Hirt, G. A. (2005). Foundations of financial management. (11th ed.). New York: McGraw-Hill.
The Olympic Games are a spectacle that all enjoy all over the world. The Olympic Games are a series of sporting events that are played by people all over the world. These athletes come from all corners of the globe to one place that changes every two years to partake in an epic event. Billions of people sit at home to watch the glory that is the Olympic Games, and some are even lucky enough to go to see the games in person. It seems that the Games always had this majestic feeling dating back to some of the very first Olympic Games, which can be traced to as early as 776 B.C. The Historic Olympic Games took place every four years in Olympia. These Games, however, have some other major differences to the Games of today. Firstly,
The Olympic Games were a vital part of Greek culture which was heavily influenced by athletics. Today, the Olympic Games are the world's largest presentation of athletic skill and competitive spirit. Thousands of athletes and spectators participate in this universal event. Revived in 1896, the Olympic Games had their beginnings in ancient Greece, and since then the event is very much comparable to modern Olympic events.