Suppose that you are the Chief Financial Officer of a corporation based in Germany (EUR is thehome currency), having operations globally in all the continents.In the performance of your estimations and calculations you have to analyze the exposures in theforeign currencies. In the appendix there is a table with downloaded information from theEuropean Central Bank (ECB)’s website, the exchange rates of each day of September 2020.Required:i. Present that information in a table for 5 currencies (freely decide whichcurrencies).ii. Discuss the fluctuations and how the exchange rates have changed from the firstto the last day of the period under investigation.iii. Discuss how the following activities of your company are expected to beinfluenced by the expected EUR appreciation for the last quarter of 2020.Explain your answers.i. Domestic sales;ii. Foreign sales denominated in domestic currency;iii. Foreign sales denominated in foreign currency;iv. Importing goods for domestic sales denominated in domestic currency;v. Importing goods for domestic sales denominated in foreign currency;vi. Importing production materials / input denominated in domestic currency;vii. Importing production materials / input denominated in foreign currency;viii. Dividends received from foreign direct investment and portfolio investmentabroad;ix. Interest received from portfolio investment abroad;x. Interest payments on bonds, loans and other funds denominatedin foreign currency. Appendix: ECB's website the exchange rates of each day of September 2020.DateGBP30-09-20 0.9129-09-20 0.9128-09-20 0.9125-09-20 0.9124-09-20 0.9123-09-20 0.9222-09-20 0.9221-09-20 0.9218-09-20 0.9117-09-20 0.9216-09-20 0.9115-09-20 0.9214-09-20 0.9211-09-20 0.9210-09-20 0.9209-09-20 0.9108-09-20 0.9007-09-20 0.9004-09-20 0.8903-09-20 0.8902-09-20 0.8901-09-20 0.8936.78HUF PLN RON ISK365.53 4.55 4.87 162.20365.70 4.54 4.87 162.00364.12 4.55 4.87 162.40363.16 4.56 4.88 161.80364.45 4.53 4.88 161.80365.01 4.50 4.87 161.40362.05 4.49 4.86 162.00363.08 4.48 4.86 161.60RUB AUD BRL NZD PHP SGD THB91.78 1.64 6.63 1.78 56.77 1.60 37.0892.16 1.64 6.60 1.77 56.70 1.60 36.9991.82 1.65 6.46 1.78 56.61 1.60 36.9790.41 1.65 6.46 1.78 56.43 1.6089.87 1.65 6.49 1.78 56.55 1.6089.79 1.64 6.45 1.78 56.78 1.6089.15 1.63 6.37 1.76 56.90 1.6089.98 1.62 6.43 1.76 57.14 1.601.7557.311.75 57.1736.8219.8736.8419.9636.8419.5836.8219.7436.89 19.15360.78 4.46 4.86 160.80 89.14 1.62 6.22361.16 4.46 4.86 162.201.611.6088.611.6236.8019.276.216.22 1.76 57.40358.54 4.454.86 160.601.61 36.9119.371.62 37.0819.5737.1719.7937.1419.85357.68 4.45 4.86 160.60357.65 4.45 4.86 160.00357.13 4.45 4.86 161.80357.85 4.45357.70 4.451.6237.0519.864.86 163.704.86 165.804.86 165.301.77 57.28 1.6136.9319.7088.80 1.6289.10 1.62 6.23 1.77 57.5189.591.63 6.31 1.77 57.59 1.6288.73 1.62 6.26 1.77 57.55 1.6288.89 1.63 6.29 1.77 57.5989.36 1.63 6.2890.02 1.63 6.3489.82 1.62 6.2788.97 1.63 6.2888.98 1.62 6.34 1.76 57.39 1.6188.07 1.62 6.42 1.75 57.67 1.624.84 164.50 88.15 1.62 6.51 1.77 58.171.77 57.331.61 37.0820.00361.37 4.45359.92 4.454.86 164.901.76 57.551.62 37.0919.771.76 57.53 1.6237.1719.6337.1419.81359.60 4.45 4.85 164.70358.05 4.43 4.85 164.50358.77 4.42 4.84 164.5037.1019.92354.02 4.391.63 37.2519.95ANZAR19.7119.8719.8919.90

The term sales in accounting refers to a company's income derived from the selling of items or…

Suppose that you are the Chief Financial Officer of a corporation based in Germany (EUR is the home currency), having operations globally in all the continents. In the performance of your estimations and calculations you have to analyze the exposures in the foreign currencies. In the appendix there is a table with downloaded information from the European Central Bank (ECB)’s website, the exchange rates of each day of September 2020. Required: i. Present that information in a table for 5 currencies (freely decide which currencies). ii. Discuss the fluctuations and how the exchange rates have changed from the first to the last day of the period under investigation. iii. Discuss how the following activities of your company are expected to be influenced by the expected EUR appreciation for the last quarter of 2020. Explain your answers. i. Domestic sales; ii. Foreign sales denominated in domestic currency; iii. Foreign sales denominated in foreign currency; iv. Importing goods for domestic sales denominated in domestic currency; v. Importing goods for domestic sales denominated in foreign currency; vi. Importing production materials / input denominated in domestic currency; vii. Importing production materials / input denominated in foreign currency; viii. Dividends received from foreign direct investment and portfolio investment abroad; ix. Interest received from portfolio investment abroad; x. Interest payments on bonds, loans and other funds denominated in foreign currency.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Question

Suppose that you are the Chief Financial Officer of a corporation based in Germany (EUR is the
home currency), having operations globally in all the continents.

In the performance of your estimations and calculations you have to analyze the exposures in the
foreign currencies. In the appendix there is a table with downloaded information from the
European Central Bank (ECB)’s website, the exchange rates of each day of September 2020.

Required:
i. Present that information in a table for 5 currencies (freely decide which
currencies).
ii. Discuss the fluctuations and how the exchange rates have changed from the first
to the last day of the period under investigation.
iii. Discuss how the following activities of your company are expected to be
influenced by the expected EUR appreciation for the last quarter of 2020.

Explain your answers.
i. Domestic sales;
ii. Foreign sales denominated in domestic currency;
iii. Foreign sales denominated in foreign currency;
iv. Importing goods for domestic sales denominated in domestic currency;
v. Importing goods for domestic sales denominated in foreign currency;
vi. Importing production materials / input denominated in domestic currency;
vii. Importing production materials / input denominated in foreign currency;
viii. Dividends received from foreign direct investment and portfolio investment
abroad;
ix. Interest received from portfolio investment abroad;
x. Interest payments on bonds, loans and other funds denominated
in foreign currency.

Appendix: ECB's website the exchange rates of each day of September 2020.
Date
GBP
30-09-20 0.91
29-09-20 0.91
28-09-20 0.91
25-09-20 0.91
24-09-20 0.91
23-09-20 0.92
22-09-20 0.92
21-09-20 0.92
18-09-20 0.91
17-09-20 0.92
16-09-20 0.91
15-09-20 0.92
14-09-20 0.92
11-09-20 0.92
10-09-20 0.92
09-09-20 0.91
08-09-20 0.90
07-09-20 0.90
04-09-20 0.89
03-09-20 0.89
02-09-20 0.89
01-09-20 0.89
36.78
HUF PLN RON ISK
365.53 4.55 4.87 162.20
365.70 4.54 4.87 162.00
364.12 4.55 4.87 162.40
363.16 4.56 4.88 161.80
364.45 4.53 4.88 161.80
365.01 4.50 4.87 161.40
362.05 4.49 4.86 162.00
363.08 4.48 4.86 161.60
RUB AUD BRL NZD PHP SGD THB
91.78 1.64 6.63 1.78 56.77 1.60 37.08
92.16 1.64 6.60 1.77 56.70 1.60 36.99
91.82 1.65 6.46 1.78 56.61 1.60 36.97
90.41 1.65 6.46 1.78 56.43 1.60
89.87 1.65 6.49 1.78 56.55 1.60
89.79 1.64 6.45 1.78 56.78 1.60
89.15 1.63 6.37 1.76 56.90 1.60
89.98 1.62 6.43 1.76 57.14 1.60
1.75
57.31
1.75 57.17
36.82
19.87
36.84
19.96
36.84
19.58
36.82
19.74
36.89 19.15
360.78 4.46 4.86 160.80 89.14 1.62 6.22
361.16 4.46 4.86 162.20
1.61
1.60
88.61
1.62
36.80
19.27
6.21
6.22 1.76 57.40
358.54 4.45
4.86 160.60
1.61 36.91
19.37
1.62 37.08
19.57
37.17
19.79
37.14
19.85
357.68 4.45 4.86 160.60
357.65 4.45 4.86 160.00
357.13 4.45 4.86 161.80
357.85 4.45
357.70 4.45
1.62
37.05
19.86
4.86 163.70
4.86 165.80
4.86 165.30
1.77 57.28 1.61
36.93
19.70
88.80 1.62
89.10 1.62 6.23 1.77 57.51
89.59
1.63 6.31 1.77 57.59 1.62
88.73 1.62 6.26 1.77 57.55 1.62
88.89 1.63 6.29 1.77 57.59
89.36 1.63 6.28
90.02 1.63 6.34
89.82 1.62 6.27
88.97 1.63 6.28
88.98 1.62 6.34 1.76 57.39 1.61
88.07 1.62 6.42 1.75 57.67 1.62
4.84 164.50 88.15 1.62 6.51 1.77 58.17
1.77 57.33
1.61 37.08
20.00
361.37 4.45
359.92 4.45
4.86 164.90
1.76 57.55
1.62 37.09
19.77
1.76 57.53 1.62
37.17
19.63
37.14
19.81
359.60 4.45 4.85 164.70
358.05 4.43 4.85 164.50
358.77 4.42 4.84 164.50
37.10
19.92
354.02 4.39
1.63 37.25
19.95
AN
ZAR
19.71
19.87
19.89
19.90

Expert Solution

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here