(公司理财)英文版罗斯公司理财习题答案C

CHAPTER20 INTERNATIONALCORPORATEFINANCEAnswerstoConceptsReviewandCriticalThinkingQuestionsa.Thedollarissellingatapremiumbecauseitismoreexpensiveintheforwardmarketthaninthespotmarket(SFr1.53versusSFr1.50).Thefrancisexpectedtodepreciaterelativetothedollarbecauseitwilltakemorefrancstobuyonedollarinthefuturethanitdoestoday.InflationinSwitzerlandishigherthanintheUnitedStates,asarenominalinterestrates.Theexchangeratewillincrease,asitwilltakeprogressivelymorepesostopurchaseadollar.ThisistherelativePPPrelationship.a.TheAustraliandollarisexpectedtoweakenrelativetothedollar,becauseitwilltakemoreA$inthefuturetobuyonedollarthanitdoestoday.TheinflationrateinAustraliaishigher.NominalinterestratesinAustraliaarehigher;relativerealratesinthetwocountriesarethesame.AYankeebondismostaccuratelydescribedbyd.No.Forexample,ifacountry’scurrencystrengthens,importsbecomecheaper(good),butitsexportsbecomemoreexpensiveforotherstobuy(bad).Thereverseistrueforcurrencydepreciation.Additionaladvantagesincludebeingclosertothefinalconsumerand,thereby,savingontransportation,significantlylowerwages,andlessexposuretoexchangeraterisk.Disadvantagesincludepoliticalriskandcostsofsupervisingdistantoperations.Onekeythingtorememberisthatdividendpaymentsaremadeinthehomecurrency.Moregenerally,itmaybethattheownersofthemultinationalareprimarilydomesticandareultimatelyconcernedabouttheirwealthdenominatedintheirhomecurrencybecause,unlikeamultinational,theyarenotinternationallydiversified.a.False.IfpricesarerisingfasterinGreatBritain,itwilltakemorepoundstobuythesameamountofgoodsthatonedollarcanbuy;thepoundwilldepreciaterelativetothedollar.False.Theforwardmarketwouldalreadyreflecttheprojecteddeteriorationoftheeurorelativetothedollar.Onlyifyoufeelthattheremightbeadditional,unanticipatedweakeningoftheeurothatisn’treflectedinforwardratestoday,willtheforwardhedgeprotectyouagainstadditionaldeclines.True.Themarketwouldonlybecorrectonaverage,whileyouwouldbecorrectallthetime.a.Americanexporters:theirsituationingeneralimprovesbecauseasaleoftheexportedgoodsforafixednumberofeuroswillbeworthmoredollars.Americanimporters:theirsituationingeneralworsensbecausethepurchaseoftheimportedgoodsforafixednumberofeuroswillcostmoreindollars.Americanexporters:theywouldgenerallybebetteroffiftheBritishgovernment’sintentionsresultinastrengthenedpound.Americanimporters:theywouldgenerallybeworseoffifthepoundstrengthens.Americanexporters:theywouldgenerallybemuchworseoff,becauseanextremecaseoffiscalexpansionlikethisonewillmakeAmericangoodsprohibitivelyexpensivetobuy,orelseBraziliansales,iffixedincruzeiros,wouldbecomeworthanunacceptablylownumberofdollars.Americanimporters:theywouldgenerallybemuchbetteroff,becauseBraziliangoodswillbecomemuchcheapertopurchaseindollars.IRPisthemostlikelytoholdbecauseitpresentstheeasiestandleastcostlymeanstoexploitanyarbitrageopportunities.RelativePPPisleastlikelytoholdsinceitdependsontheabsenceofmarketimperfectionsandfrictionsinordertoholdstrictly.Italldependsonwhethertheforwardmarketexpectsthesameappreciationovertheperiodandwhethertheexpectationisaccurate.Assumingthattheexpectationiscorrectandthatothertradersdonothavethesameinformation,therewillbevaluetohedgingthecurrencyexposure.Onepossiblereasoninvestmentintheforeignsubsidiarymightbepreferredisifthisinvestmentprovidesdirectdiversificationthatshareholderscouldnotattainbyinvestingontheirown.Anotherreasoncouldbeifthepoliticalclimateintheforeigncountrywasmorestablethaninthehomecountry.Increasedpoliticalriskcanalsobeareasonyoumightpreferthehomesubsidiaryinvestment.Indonesiacanserveasagreatexampleofpoliticalrisk.Ifitcannotbediversifiedaway,investinginthistypeofforeigncountrywillincreasethesystematicrisk.Asaresult,itwillraisethecostofthecapital,andcouldactuallydecreasetheNPVoftheinvestment.Yes,thefirmshouldundertaketheforeigninvestment.If,aftertakingintoconsiderationallrisks,aprojectinaforeigncountryhasapositiveNPV,thefirmshouldundertakeit.Notethatinpractice,thestatedassumption(thattheadjustmenttothediscountratehastakenintoconsiderationallpoliticalanddiversificationissues)isahugetask.Butoncethathasbeenaddressed,thenetpresentvalueprincipleholdsforforeignoperations,justasfordomestic.Iftheforeigncurrencydepreciates,theU.S.parentwillexperienceanexchangeratelosswhentheforeigncashflowisremittedtotheU.S.Thisproblemcouldbeovercomebysellingforwardcontracts.Anotherwayofovercomingthisproblemwouldbetoborrowinthecountrywheretheprojectislocated.False.Ifthefinancialmarketsareperfectlycompetitive,thedifferencebetweentheEurodollarrateandtheU.S.ratewillbeduetodifferencesinriskandgovernmentregulation.Therefore,speculatinginthosemarketswillnotbebeneficial.ThedifferencebetweenaEurobondandaforeignbondisthattheforeignbondisdenominatedinthecurrencyofthecountryoforiginoftheissuingcompany.Eurobondsaremorepopularthanforeignbondsbecauseofregistrationdifferences.Eurobondsareunregisteredsecurities.SolutionstoQuestionsandProblemsNOTE:Allend-of-chapterproblemsweresolvedusingaspreadsheet.Manyproblemsrequiremultiplesteps.Duetospaceandreadabilityconstraints,whentheseintermediatestepsareincludedinthissolutionsmanual,roundingmayappeartohaveoccurred.However,thefinalanswerforeachproblemisfoundwithoutroundingduringanystepintheproblem.BasicUsingthequotesfromthetable,weget:$50(0.€7870/$1)39.=35€$1.2706€5M1(.27$06/€)6,=353$,240NewZealanddollarMexicanpeso(P11.0023/$1)($1.2186/€1P)13.=9801/€Thisisacrossrate.ThemostvaluableistheKuwaitdinar.TheleastvaluableistheIndonesianrupiah.a. Youwouldprefer£100,since:(£100)($.5359/£1)=$53.59Youwouldstillprefer£100.Usingthe$/£exchangerateandtheSF/£exchangeratetofindtheamountofSwissfrancs£100willbuy,weget:(£100)($1.8660/£1)(SF.8233)=SF226.6489UsingthequotesinthebooktofindtheSF/£crossrate,wefind:(SF1.2146/$1)($0.5359/£1)=SF2.2665/£1The£/SFexchangerateistheinverseoftheSF/£exchangerate,so:£1/SF.4412=£0.4412/SF1,pssnie[[opjsd89go•（）$stjtjojJ耳!qieno入89Go・【$=（【B0Z/【$）9【C9.（U:sq[rmireo[0卬彘doiojjsoo叫£，ireo[。卬X^dsjpiresie[[op平*qXnqojspunod0卬ssn9【79.0守=（£8【加【»£【【去:noX9at§[rmipiqM4gjm-ssojo0卬ysspunod0smpind01g[[去o卬ssn£[[去Xnqpire[$jojueo[ejno。枣工,punod0卬oj0AHe即mo[oojpsjonbstusX叫工，q【BGS6【夫=（【B0Z/【$）（【$/G【【a：STSUU9J的大UT9JBJSSOJOoq]'VSut9jbX。卬ire卬 Xjq^qojdsjbswisp9ipn0卬utso冲jssjsjui '3,彘poissop其ire卬0mlnj0卬mie[[opsnouoXnqojsn[[opireipeue。jsmsjsow1!osneooqre[[op0卬oj0AHe即snpAm ojpsjosdxsstie[[opireipeue。叫工'p■（93'I$TO3snsj9A 宾斗leuijodsoqjutire卬1。斗leuipj^Mjoj0卬ut9Aisu9dx9sso[st其osneooq^unoosxpeys丽[辟stie[[opsfl叫工，J,ssjsbjjusjsjjTppire'soxej'sisoosuoRoesire耳匕pe耳o]sisiJJBqnqjopuesjjub^sibp[oqj,us00Pjjj01rl[osqe此卬suoseoi0卬Suouiy17//【$二（【$/9C【$ueD）/（6【N$ueD）:stsj^nopsnu!isoooq]q乙£6Z/0$=（【$/9乙【$ueD）/（【$ue°）：Xnq[RMJ2[[0pTOTpBTOQ9UO99UTS'n[[0pSR9^1'曾,p,彘poissop其ire卬0mlnj0卬mpunodsuoXnqojsie[[opjsmsj0邪1[rm其osneooq'punod0卬oj0AHe即ssuhtmie[[op0卬josnpA叫工乐poissop具ire卬0mlnj0卬utusXouoXnqojsn[[opsjouiso邪1具souts'uoX0卬oj0AHe即jpj设丛叫[Op0卬josnpA叫工p•（6££泉。$snsj9A08£^10$）1。五Jemjodsoqimireqi真用euipj^MJojoqiut9Aisu9dx9sso[st具ssnBOsqjunoosTp12ysSunpsstpunodoq]?/乙8€81$=06J'q,（0£^600'0$snsjsA6G9£600Q$）真用euijods。卬mire卬真用euipjbmjoj0卬ut9Aisu9dx99jouist其ssnBOsquinTuisjdeys§u![[0SstusXoq1•（$jgd）£6卞0[大=08TJ•曾•£Wecanrearrangetheinterestrateparityconditiontoanswerthisquestion.Theequationwewilluseis:RFC=(FTS0)/S0+RUSUsingthisrelationship,wefind:GreatBritain: RFC= (£0.5394£0.5359)/£0.5359+.038= 4.45%Japan: RFC= (¥104.93¥106.77)/¥106.77+.038= 2.08%Switzerland: RFC= (SFr1.1980SFr1.2146)/SFr1.2146 +.038=2.43%IfweinvestintheU.S.forthenextthreemonths,wewillhave:$30M(1.0045)3=$30,406,825.23IfweinvestinGreatBritain,wemustexchangethedollarstodayforpounds,andexchangethepoundsfordollarsinthreemonths.Aftermakingthesetransactions,thedollaramountwewouldhaveinthreemonthswouldbe:($30M)(£0.56/$1)(1.0060)3/(£0.59/$1)=$28,990,200.05WeshouldinvestinU.S.Usingtherelativepurchasingpowerparityequation:Ft=S0义[1+(hFChus)]tWefind:Z3.92=Z3.84[1+(hFChUS)]3hFChUS=(Z3.92/Z3.84)1/31hFChUs=-0069InflationinPolandisexpectedtoexceedthatintheU.S.by0.69%overthisperiod.Theprofitwillbethequantitysold,timesthesalespriceminusthecostofproduction.Theproductioncostisinsingaporedollars,sowemustconvertthistoU.s.dollars.Doingso,wefindthatiftheexchangeratesstaythesame,theprofitwillbe:Profit=30,000[$145{(S$168.50)/(S$1.6548/$1)}]Profit=$1,295,250.18Iftheexchangeraterises,wemustadjustthecostbytheincreasedexchangerate,so:Profit=30,000[$145{(S$168.50)/1.1(S$1.6548/$1)}]Profit=$1,572,954.71Iftheexchangeratefalls,wemustadjustthecostbythedecreasedexchangerate,so:Profit=30,000[$145-{(S$168.50)/0.9(S$1.6548/$1)}]Profit=$955,833.53Tocalculatethebreakevenchangeintheexchangerate,weneedtofindtheexchangeratethatmakethecostinSingaporedollarsequaltothesellingpriceinU.S.dollars,so:$145=S$168.50/STST=S$1.1621/$1ST=-.2978or-29.78%declinea.IfIRPholds,then:F180=(Kr6.43)[1+(.08-.05)]1/2F180=Kr6.5257SincegivenF180isKr6.56,anarbitrageopportunityexists;theforwardpremiumistoohigh.BorrowKr1todayat8%interest.Agreetoa180-dayforwardcontractatKr6.56.Converttheloanproceedsintodollars:Kr1($1/Kr6.43)=$0.15552Investthesedollarsat5%,endingupwith$0.15931.Convertthedollarsbackintokroneas$0.15931(Kr6.56/$1)=Kr1.04506RepaytheKr1loan,endingwithaprofitof:Kr1.04506-Kr1.03868=Kr0.00638b.Tofindtheforwardratethateliminatesarbitrage,weusetheinterestrateparitycondition,so:F180=(Kr6.43)[1+(.08-.05)]1/2F180=Kr6.5257TheinternationalFishereffectstatesthattherealinterestrateacrosscountriesisequal.WecanrearrangetheinternationalFishereffectasfollowstoanswerthisquestion:RUS-hUS=RFC-hFChFC=RFC+hUS-RUShAUS=.05+.035-.039hAUS=.046or4.6%hCAN=.07+.035-.039hCAN=.066or6.6%hTAI=.10+.035-.039hTAI=.096or9.6%a.Theyenisexpectedtogetstronger,sinceitwilltakefeweryentobuyonedollarinthefuturethanitdoestoday.b. hUS-hJAPx(¥129.76-¥131.30)/¥131.30hus-hjAP=—.0117or-1」7%(1-.0117)4-1=-.0461or-4.61%TheapproximateinflationdifferentialbetweentheU.S.andJapanis-4.61%annually.Weneedtofindthechangeintheexchangerateovertime,soweneedtousetherelativepurchasingpowerparityrelationship:Ft=S0义[1+%—Usingthisrelationship,wefindtheexchangerateinoneyearshouldbe:F1=215[1+(.086-.035)]1F1=HUF225.97Theexchangerateintwoyearsshouldbe:F2=215[1+(.086-.035)]2F2=HUF237.49Andtheexchangerateinfiveyearsshouldbe:F5=215[1+(.086-.035)]5F5=HUF275.71Usingtheinterest-rateparitytheorem:(1+RUS)/(1+RFC)=F(0,1)/S0Wecanfindtheforwardrateas:F(0,1)=[(1+RUS)/(1+RFC)]S0F(0,1)=(1.13/1.08)$1.50/£F(0,1)=$1.57/£IntermediateFirst,weneedtoforecastthefuturespotrateforeachofthenextthreeyears.Frominterestrateandpurchasingpowerparity,theexpectedexchangerateis:E(ST)=[(1+RUS)/(1+RFC)]TS0So:E(S1)=(1.0480/1.0410)1$1.22/€=$1.2282/€E(S2)=(1.0480/1.0410)2$1.22/€=$1.2365/€E(S3)=(1.0480/1.0410)3$1.22/€=$1.2448/€Nowwecanusethesefuturespotratestofindthedollarcashflows.Thedollarcashfloweachyearwillbe:Year0 cashflow= —€$12,000,000($1.22/€) =—$14,640,000.00Year1 cashflow= €$2,700,000($1.2282/€) =$3,316,149.86Year2 cashflow= €$3,500,000($1.2365/€) =$4,327,618.63Year3 cashflow= (€3,300,000+7,400,000)($1.2448/€) = $13,319,111.90AndtheNPVoftheprojectwillbe:NPV=—$14,640,000+$3,316,149.86/1.13+$4,4327,618.63/1.132+$13,319,111.90/1.133NPV=$914,618.73a.Implicitlyi,tisassumedthatinterestrateswon’cthangeoverthelifeoftheproject,buttheexchangerateisprojectedtodeclinebecausetheEuroswissrateislowerthantheEurodollarrate.Wecanuserelativepurchasingpowerparitytocalculatethedollarcashflowsateachtime.Theequationis:E[ST]=(SFr1.72)[1+(.07-.08)]tE[ST]=1.72(.99)tthecashflowseachyearinU.S.dollartermswillbe:tSFrE[ST]US$0-27.0M1.7200-$15,697,674.421+7.5M1.7028$4,404,510.222+7.5M1.6858$4,449,000.223+7.5M1.6689$4,493,939.624+7.5M1.6522$4,539,332.955+7.5M1.6357$4,585,184.79AndtheNPVis:NPV=-$15,697,674.42+$4,404,510.22/1.13+$4,449,000.22/1.132+$4,493,939.62/1.133+$4,539,332.95/1.134+$4,585,184.79/1.135NPV=$71,580.10Rearrangingtherelativepurchasingpowerparityequat