Forex In Practice Lecture & Ch 19 & 20 (Final Modified Fall 2007

Economic Theories about How Exchange Rates are Determined: Summary ,[object Object],[object Object],[object Object],[object Object],[object Object]

Economic Theories about How Exchange Rates are Determined: Summary ,[object Object],[object Object]

Foreign Exchange Issues: International Trade and FDI Selected topics in lecture and selected topics from Chapter 10 (pages 357-361) Foreign Exchange Chapter 19 (pages 650-660) Accounting Chapter 20 (pages 681-682) International Financial Management

Forex Issues: International Trade & Foreign Direct Investment ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

CSU EBAY ,[object Object],[object Object],[object Object],[object Object],EXAMPLE: FORWARD EXCHANGE NOW 30 DAYS Your bid of US $10,000 for one of the two Maseratis for sale was accepted by CSUEBAY. You can take delivery now or in thirty days. You check both Spot and the Forward exchange rates to decide when you want to take delivery. What will you do ?

Selected Issues in Foreign Exchange and International Trade ,[object Object],[object Object],[object Object],[object Object]

Forex and Export Pricing ,[object Object],[object Object],[object Object],[object Object],? Or

Impacts of Forex on International Trade ,[object Object],[object Object],[object Object]

Export Management & Price Strategies in relation to Foreign Exchange ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Extracted and restated from: Chapter 71 Levy, Frerichs, and Gordon, eds. Marketing Manager’s Handbook, Dartnell Corporation, Chicago, IL. Fig 2.

M2 CALLS IN: PASS THROUGH OR NO PASS? ,[object Object]

Pricing Issues in International Trade: Exchange Rate Pass-Through ,[object Object],[object Object],[object Object]

Pricing Issues in International Trade: Exchange Rate Pass-Through ,[object Object],[object Object]

Other Factors impacting Pricing and Pass-Through Decisions ,[object Object],[object Object],[object Object],[object Object]

Pricing Issues in International Trade: Exchange Rate Pass-Through ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Pricing Issues in International Trade: Exchange Rate Pass-Through ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Pricing Issues in International Trade: Exchange Rate Pass-Through ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Example of Pricing decision due to foreign exchange rate PASS-THROUGH WITH A REDUCTION IN PRICE

Examples of Pass-Through Levels ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],c. 1988 Source: Exchange Rates and Pass-Through

To Pass-Through or Not Pass-Through—that is the question ,[object Object],[object Object],[object Object]

Other Impacts of Forex fluctuation ,[object Object],Fluctuations in Forex can impact markets/consumers in other ways.

Foreign Exchange Issues in Foreign Direct Investment ,[object Object],[object Object],[object Object],[object Object],[object Object]

Issues in Foreign Direct Investment: Types of Foreign Exchange Risk (Chapter 10) ,[object Object],[object Object],[object Object],[object Object],[object Object]

Transaction Exposure ,[object Object],[object Object],[object Object],[object Object]

Translation Exposure ,[object Object],[object Object]

Translation Exposure ,[object Object],[object Object],[object Object]

Translation Exposure ,[object Object],[object Object],[object Object],[object Object],[object Object]

Currency Translation ,[object Object],[object Object],[object Object],[object Object]

Current U.S. Practice ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Current U.S. Practice SOURCE: Eitman, David K., Stonehill, Arthur L., Moffet, Michael H. MULTINATIONAL BUSINESS FINANCE. Addison Westley: New York, 2001. p.92

Reducing Transaction & Translation Exposure ,[object Object],[object Object],[object Object],[object Object]

Example: Lead & Lag ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Reducing Economic Exposure ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Reducing Economic Exposure ,[object Object],[object Object],[object Object],[object Object]

FOREX & FDI: Transfer Pricing ,[object Object],[object Object],[object Object]

FOREX & FDI :Transfer Pricing ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

FOREX & FDI :Transfer Pricing ,[object Object],[object Object],[object Object],[object Object],[object Object]

FOREX & FDI: Budget and Control Systems ,[object Object],[object Object],[object Object],[object Object]

General Guidelines for Policies to Manage Forex Exposure ,[object Object],[object Object],[object Object],[object Object],[object Object]

General Guidelines for Policies to Manage Forex Exposure ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Forex In Practice Lecture & Ch 19 & 20 (Final Modified Fall 2007

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Forex In Practice Lecture & Ch 19 & 20 (Final Modified Fall 2007