Read case 1 and case 2 below about fixing price scheme. Analyze the differences between two cases. • CASE 1: Unilever and Procter & Gamble fined £280m for price fixing CASE 2: The Debate Over Canada Bread's $50 Million Price Fixing Fine

Read case 1 and case 2 below about fixing price scheme. Analyze the differences between two cases. • CASE 1: Unilever and Procter & Gamble fined £280m for price fixing CASE 2: The Debate Over Canada Bread's $50 Million Price Fixing Fine

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter11: Managing Transaction Exposure

Section: Chapter Questions

Problem 22QA

See similar textbooks

Similar questions

A specific model of computer servers are being sold by Company A for $26,900 each, offering trade discounts of 8% and 5% and by Company B for $35,800 each, offering trade discount rates of 13% and 3%. a. Which company offers the servers for a cheaper price? A B b. What further trade discount rate must the company with the higher price provide to match the lower price? 0.00 %
(d) Your firm, a Singapore company, imports electronic products from America. Your firm has purchased USD 1 million worth of products and is to pay in one month's time. The current spot rate is SGD1.40/USD. (i) (ii) (iii) Will your company be concerned about an appreciation or depreciation in the USD? Explain your answer. Your firm is considering purchasing an option to hedge the risk of the USD movements against the SGD. Should your firm purchase a USD call or put option? Justify your answer. The option your firm purchased has a strike price of SGD1.41/USD. Given that the spot rate in one month's time is SGD1.42/USD, should your firm exercise the option? Explain your reason(s).
F4. Sonic Corporation imports materials from a Nigerian supplier. Assume that it is 2020 and Sonic Corporation is worried that the Nigerian supplier may enter into a long-term contract with Chinese customer to sell all of their output to the Chinese customers, hence cutting off Sonic Corporation's supply. In the event of such a contract with the Chinese customers, Sonic Corporation will face much higher costs for its raw materials causing its operating profits to decline substantially and its marginal tax rate to fall from its current level of 25% down to 10%. An insurance firm has agreed to write a trade insurance policy that will pay Sonic Corporation $3,700,000 in the event of the Nigerian supply of materials being cut off. The chance of the Nigerian supply being cut off is estimated to be 30%, with a beta of -1.50. The risk-free rate of interest is 3% and the return on the market is estimated to be 10%. What is Sonic's NPV for purchasing this policy? (Hint: you need to determine…
A. What is the amount of the provision that should be provided for by the company in accordance with IAS 37 based on the scenarios below? i. Somerset Deliveries Plc is an outsourcing company that does deliveries for Several other companies. The company is being sued by a customer for $ 500 000 for breach of contract over a cancelled order. The company has obtained legal opinion that there was a 20% chance that the company will lose the case. Accordingly, the company has made a provision of $100 000 ($500 000 ×20%) in respect of the claim. The unrecoverable legal costs of defending the action are estimated at $50 000.These costs have not been provided for as the case will not go to court until the following year.…
Q3. Cold Storage Malaysia Sdn Bhd needs to pay AUD 575,000 in 2 months time for the purchase of fresh fruits and vegetables from an Australian supplier. Knowing that it is exposed to fluctuations in AUDIMYR exchange rate, Cold Storage is considering the following alternatives: Alternative 1: Do nothing, i.e. to wait until the AUD is due to be paid in 2 months' time and to buy the amount required at whatever spot rate at that time. Alternative 2: Hedge by entering into an FX forward contract. i. Explain what Cold Storage need to do if Alternative 1 were selected. ii. Again if Altermative 1 were to be used, calculate the amount in MYR that Cold Storage would pay in| 2 months from now under the different AUD/MYR exchange rate scenarios at maturity by filling up the blank spaces in the following Table 1. Also compute potential gain or loss to Cold Storage in MÝR in each scenario. Table 1 Amount To Be If Spot Rate Gain / (Loss) Allocated at Maturity is... MYR per AUD in MYR 3.1000 0.0085…
P9
Suppose IBM receives quotes of USD 0.008170-7 for the Japanese Yen ( JPY). What is the JPY value to IBM of buying USD 5 million? Question 3 Answer a. JPY611,995, 104.04 b. JPY611,471, 199.71 c. There is not enough information in this question d More than one of these options e. JPY611,733, 151.85
17. Jollibee has just ended the calendar year making a sale in the amount of P200,000 of merchandise purchased during the year at a total cost of P150,500. Although the firm paid in full for the merchandise during the year, it has yet to collect at year end from the customer. One possible problem this firm may face isA. low profitability.B. insolvency.C. inability to receive credit.D. high leverage.
1. Your company has a customer who is shutting down a production line, and it is your responsibility to dispose of the extrusion machine. The company could keep it in inventory for a possible future product and estimates that the reservation value is $100,000. Your dealings on the secondhand market lead you to believe that if you commit to a price of $200,000, there is a 0.5 chance you will be able to sell the machine. If you commit to a price of $300,000, there is a 0.2 chance you will be able to sell the machine. If you commit to a price of $400,000, there is a 0.15 chance you will be able to sell the machine. These probabilities are summarized in the following table. For each posted price, enter the expected value of attempting to sell the machine at that price. (Hint: Be sure to take into account the value of the machine to your company in the event that you are not be able to sell the machine.) Posted Price Probability of Sale Expected Value ($) ($) $400,000 0.15 $300,000 0.2…
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Required information [The following information applies to the questions displayed below.] Hult Games buys electronic components for manufacturing from two suppliers, Milan Components and Dundee Parts. If the components are delivered late, the shipment to the customer is delayed. Delayed shipments lead to contractual penalties that call for Hult to reimburse a portion of the purchase price to the customer. During the past quarter, the purchasing and delivery data for the two suppliers showed the following. Dundee 48,000 28 40 10% Total purchases (cartons) Average purchase price (per carton) Number of deliveries Percentage of late deliveries Milan Dundee Milan 112,000 $ 26.00 60 25% Effective Cost Per Carton $ Total 160,000 $ 26.60 100 The Accounting Department recorded $492,000 as the cost of late deliveries to customers. 19% Required: Assume that the average quality, measured by the percentage of late deliveries, and prices from the two companies will continue as in the past. What is…
5 Your company has a customer who is shutting down a production line, and it is your responsibility to dispose of the extrusion machine. The company could keep it In Inventory for a possible future product and estimates that the reservation value is $150,000. Your dealings on the secondhand market lead you to believe that if you commit to a price of $200,000, there is a 0.5 chance you will be able to sell the machine. If you commit to a price of $250,000, there is a 0.3 chance you will be able to sell the machine. If you commit to a price of $300,000, there is a 0.1 chance you will be able to sell the machine. These probabilities are summarized in the following table. For each posted price, enter the expected value of attempting to sell the machine at that price. (Hint: Be sure to take into account the value of the machine to your company in the event that you are not be able to sell the machine.) Posted Price Expected Value ($) Probability of Sale ($) $300,000 0.1 $ $250,000 0.3 $…