Your firm's inter-affiliate cash receipts and disbursements matrix is shown here ($000): \[\begin{array} { | l | c | c | c | c | c | } \hline & { \text { Disbursements } } \\ \hline \text { Receipts } & \text { U.S. } & \text { Canana } & \text { Cermany } & \text { U.K } & \text { Tatal Receipts } \\ \hline \text { U.S. } & & 10 & 15 & 15 & 40 \\ \hline \text { Caruada } & 10 & & 10 & 10 & 30 \\ \hline \text { Germaryy } & 5 & 5 & & 5 & 15 \\ \hline \text { U.K. } & 20 & 20 & 20 & & 60 \\ \hline \text { Total Disburemerts } & 35 & 35 & 45 & 30 & \\ \hline \end{array}\] Find the net cash flow in (out of)the Canadian affiliate.

A) $5,000 in B) $5,000 out C) $30,000 in D) $30,000 out A) $5,000 in B) $5,000 out C) $30,000 in D) $30,000 out

Your firm's inter-affiliate cash receipts and disbursements matrix is shown here ($000): \[\begin{array} { | l | c | c | c | c | c | } \hline & { \text { Disbursements } } \\ \hline \text { Receipts } & \text { U.S. } & \text { Canana } & \text { Cermany } & \text { U.K } & \text { Tatal Receipts } \\ \hline \text { U.S. } & & 30 & 35 & 60 & 125 \\ \hline \text { Caruada } & 20 & & 10 & 40 & 70 \\ \hline \text { Germaryy } & 10 & 25 & & 30 & 65 \\ \hline \text { U.K. } & 40 & 30 & 20 & & 90 \\ \hline \text { Total Disburemerts } & 70 & 85 & 65 & 130 & \\ \hline \end{array}\] Find the net cash flow in (out of)the U.K.affiliate.

A) $55,000 in B) $15,000 out C) $0 in or out D) $40,000 out A) $55,000 in B) $15,000 out C) $0 in or out D) $40,000 out

ABC Trading Company of Singapore purchases spices in bulk from around the world,packages them into consumer size quantities and sells them through sales affiliates in Hong Kong and the Unites States.For a recent month,the following payments matrix of inter-affiliate cash flows,stated in Singapore dollars,was forecasted. \[\begin{array} { | l | c | c | c | } \hline{ \text { ABC Trading Company Puyments Matrix (S\$000) } } \\ \hline &{ \text { Disbursements by: } } \\ \hline & \text { Sinqupore } & \text { Hang Kong } & \text { U.S. } \\ \hline \text { Receipts by: } & & & \\ \hline \text { Bingapore } & & 80 & 110 \\ \hline \text { Hong Kong } & 16 & & 44 \\ \hline \text { U.S. } & 22 & 50 & \\ \hline \end{array}\] Calculate,in Singapore dollars,the amount that the inter-affiliate foreign exchange transaction will be reduced by with multilateral netting.

A) S$152,000 B) S$170,000 C) S$322,000 D) S$405,000 A) S$152,000 B) S$170,000 C) S$322,000 D) S$405,000

Your firm's inter-affiliate cash receipts and disbursements matrix is shown here ($000): \[\begin{array} { | l | c | c | c | c | c | } \hline &{ \text { Disbursements } } \\ \hline \text { Receipts } & \text { U.S. } & \text { Canana } & \text { Cermany } & \text { U.K } & \text { Tatal Receipts } \\ \hline \text { U.S. } & & 30 & 35 & 60 & 125 \\ \hline \text { Caruada } & 20 & & 10 & 40 & 70 \\ \hline \text { Germaryy } & 10 & 25 & & 30 & 65 \\ \hline \text { U.K. } & 40 & 30 & 20 & & 90 \\ \hline \text { Total Disburemerts } & 70 & 85 & 65 & 130 & \\ \hline \end{array}\] Find the net cash flow in (out of)the Canadian affiliate.

A) $55,000 in B) $15,000 out C) $0 in or out D) $40,000 out A) $55,000 in B) $15,000 out C) $0 in or out D) $40,000 out

Exam 19: Multinational Cash Management

A firm keeps a precautionary cash balance to cover unexpected transactions during the budget period.The size of this balance depends on how safe the firm desires to be in its ability to meet unexpected transactions.

Free

(Multiple Choice)

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Question 1

Correct Answer:

Verified

D

The lower the transfer price

Free

(Multiple Choice)

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Question 2

Correct Answer:

Verified

B

On blocked funds strategy is

Free

(Multiple Choice)

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Question 3

Correct Answer:

Verified

D

Consider a U.S.MNC with three subsidiaries and the following foreign exchange transactions shown at left.Use bilateral netting to reduce the number of foreign exchange transactions by half.

(Multiple Choice)

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Question 4

One benefit of a centralized cash depository is

(Multiple Choice)

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Question 5

Your firm's inter-affiliate cash receipts and disbursements matrix is shown here ($000): Disbursements Receipts U.S. Canana Cermany U.K Tatal Receipts U.S. 10 15 15 40 Caruada 10 10 10 30 Germaryy 5 5 5 15 U.K. 20 20 20 60 Total Disburemerts 35 35 45 30 Find the net cash flow in (out of)the Canadian affiliate.

(Multiple Choice)

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Question 6

The U.S.IRS allows transfer prices to be set using the resale price method

(Multiple Choice)

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Question 7

Your firm's inter-affiliate cash receipts and disbursements matrix is shown here ($000): Disbursements Receipts U.S. Canana Cermany U.K Tatal Receipts U.S. 30 35 60 125 Caruada 20 10 40 70 Germaryy 10 25 30 65 U.K. 40 30 20 90 Total Disburemerts 70 85 65 130 Find the net cash flow in (out of)the U.K.affiliate.

(Multiple Choice)

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Question 8

Some countries allow inter-affiliate transactions to be settled only on a gross basis.That is,

(Multiple Choice)

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Question 9

With a centralized cash depository

(Multiple Choice)

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Question 10

Find the net exposure of the British subsidiary of the U.S.MNC with the following intra affiliate transactions shown.

(Multiple Choice)

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Question 11

ABC Trading Company of Singapore purchases spices in bulk from around the world,packages them into consumer size quantities and sells them through sales affiliates in Hong Kong and the Unites States.For a recent month,the following payments matrix of inter-affiliate cash flows,stated in Singapore dollars,was forecasted. ABC Trading Company Puyments Matrix (S \0 00) Disbursements by: Sinqupore Hang Kong U.S. Receipts by: Bingapore 80 110 Hong Kong 16 44 U.S. 22 50 Calculate,in Singapore dollars,the amount that the inter-affiliate foreign exchange transaction will be reduced by with multilateral netting.

(Multiple Choice)

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Question 12

Reasons for a country to impose exchange restrictions on its own currency,limiting conversion to other currencies include

(Multiple Choice)

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Question 13

Precautionary cash balances

(Multiple Choice)

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Question 14

Why can blocked funds be detrimental to all concerned?

(Multiple Choice)

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Question 15

Not all countries allow MNCs the freedom to net payments,

(Multiple Choice)

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Question 16

Your firm's inter-affiliate cash receipts and disbursements matrix is shown here ($000): Disbursements Receipts U.S. Canana Cermany U.K Tatal Receipts U.S. 30 35 60 125 Caruada 20 10 40 70 Germaryy 10 25 30 65 U.K. 40 30 20 90 Total Disburemerts 70 85 65 130 Find the net cash flow in (out of)the Canadian affiliate.

(Multiple Choice)

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(78)

Question 17

Affiliate X sells 10,000 units to Affiliate Y per year.The marginal tax rates for X and Y,respectively,are 20 percent and 30 percent.The transfer price per unit is currently set at $1,000,but it can go as high as $1,250. Calculate the increase in annual after-tax profits if the higher transfer price of $1,250 per unit is used.

(Multiple Choice)

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Question 18

The formula for the standard deviation of cash held by the centralized depository for N affiliates is $\sqrt { ( \text { Std. Dev. Affiliate } 1 ) ^ { 2 } + ( \text { Std. Dev. Affiliate } 2 ) ^ { 2 } + \cdots + ( \text { Std. Dev. Affiliate } N ) ^ { 2 } + }$

(Multiple Choice)

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Question 19

Find the net exposure of the U.S.MNC with the following intra-affiliate transactions shown.

(Multiple Choice)

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Question 20

A firm keeps a precautionary cash balance to cover unexpected transactions during the budget period.The size of this balance depends on how safe the firm desires to be in its ability to meet unexpected transactions.

The lower the transfer price

On blocked funds strategy is

Consider a U.S.MNC with three subsidiaries and the following foreign exchange transactions shown at left.Use bilateral netting to reduce the number of foreign exchange transactions by half.

One benefit of a centralized cash depository is

The U.S.IRS allows transfer prices to be set using the resale price method

Some countries allow inter-affiliate transactions to be settled only on a gross basis.That is,

With a centralized cash depository

Find the net exposure of the British subsidiary of the U.S.MNC with the following intra affiliate transactions shown.

Reasons for a country to impose exchange restrictions on its own currency,limiting conversion to other currencies include

Precautionary cash balances

Why can blocked funds be detrimental to all concerned?

Not all countries allow MNCs the freedom to net payments,

The formula for the standard deviation of cash held by the centralized depository for N affiliates is $\sqrt { ( \text { Std. Dev. Affiliate } 1 ) ^ { 2 } + ( \text { Std. Dev. Affiliate } 2 ) ^ { 2 } + \cdots + ( \text { Std. Dev. Affiliate } N ) ^ { 2 } + }$

Find the net exposure of the U.S.MNC with the following intra-affiliate transactions shown.

International Monetary System

Globalization and the Multinational Firm

Balance of Payments

Corporate Governance Around the World

The Market for Foreign Exchange

International Parity Relationships and Forecasting Foreign Exchange Rates

Futures and Options on Foreign Exchange

Management of Transaction Exposure

Management of Economic Exposure

Management of Translation Exposure

International Banking and Money Market

International Bond Market

International Equity Markets

Interest Rate and Currency Swaps

International Portfolio Investment

Foreign Direct Investment and Cross-Border Acquisitions

International Capital Structure and the Cost of Capital

International Capital Budgeting

International Trade Finance

International Tax Environment and Transfer Pricing

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