Suppose your company imports computer motherboards from Singapore. The exchange rate is $1.4651 per Singapore dollar. You have just placed an order for 44,910 motherboards at a cost to you of S155 Singapore dollars each. You will pay for the shipment when it arrives in 90 days. You can sell the motherboards for $111 each. Calculate your profit if the exchange rates goes up by 8.72% over the next 90 days.

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A:

Q: Suppose that a firm is considering opening a plant on the moon, and the current exchange rate is…

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Q: rate that would make your firm indifferent between the two alternatives. -0%

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Exchange Rate Risk

It is the possibility that the value of a currency will fluctuate in the future. In the wake of globalization, business establishments have increasingly ventured into international markets. The volume of international trade has prospered excellently in the near past and is expected to be more affluent in the future. The use of exchange-traded derivative financial instruments has been multi-folded to provide for the requirements of various MNCs and offshore potential investors. Most banks and financial institutions have helped integrate the global economies. Our Government has introduced some bold and extreme measures to fulfil the purpose behind the fiscal, industrial, and monetary policies. The enactment of GST is a huge step towards streamlining the taxation system of the country. Owing to Covid-19, this aspect of corporate risk management has become critical.