Assuming that the inter-affiliate cash flows are uncorrelated with one another,calculate the minimum cash balance to have if the firm follows a conservative policy of having three standard deviations of cash for precautionary purposes. \[\begin{array} { l c c } & \text { Expected } & \text { Stardard } \\ \text { Affiliate } & \text { Trarnactions } & \text { Deviation } \\ \text { U.S. }& \$ 100,000& \$ 40,000 \\ \text { Carada } & \$ 150,000& \$ 60,000 \\ \text { Mexico } & \$ 175,000 & \$ 30,000 \\ \text { Chile }& \$ 200,000 & \$ 70,000 \end{array}\]

A) $34,960.33 B) $314,642.65 C) $104,880.88 D) none of the options A) $34,960.33 B) $314,642.65 C) $104,880.88 D) none of the options

For a recent month,the following payments matrix of inter-affiliate cash flows was forecasted: \[\begin{array} { l c c c c } &&{ \text { Disbursernent From: } } \\ \text { Receipts by: } & \text { France } & \text { Britain } & \text { U.S. } \\ \text { France } && € 500 & € 800 \\ \text { Britain } & £ 300 & & £ 400 \\ \text { U.S. }& \$ 1,000 & \$ 500 & \end{array}\] Use multilateral netting to find the net payment from the British affiliate to the U.S.affiliate. The spot exchange rates are $1.20 = €1.00 and $1.80 = £1.00; affiliates get paid in home currency.

A) $60 B) $20 C) $0 D) none of the options A) $60 B) $20 C) $0 D) none of the options

For a recent month,the following payments matrix of inter-affiliate cash flows was forecasted: \[\begin{array} { l l c c c } & & { \text { Disbursernent From: } } \\ \text { Receipts by: } & \text { France } & \text { Britain } & \text { U.S. } \\ \text { France } & & € 500& € 800 \\ \text { Britain } & £ 480 & & £ 300 & \\ \text { USS } & \$ 600 & \$ 960 & \end{array}\] The spot exchange rates are $1.20 = €1.00 and $2.00 = £1.00; affiliates get paid in home currency.Use multilateral netting to find the net payments to and from all parties. Which of the following is an accurate chart of their current situation?

A) B) C) D) none of the options A) B) C) D) none of the options

Your firm's inter-affiliate cash receipts and disbursements matrix is shown here ($000): \[\begin{array} { | l | c | c | c | c | } \hline & { \text { Disbursements } } \\ \hline \text { Receipts } & \text { U.S. } & \text { Canida } & \text { Cermany } & \text { U.K } \\ \hline \text { U.S. } & & 10 & 5 & 15 \\ \hline \text { Carada } & 10 & & 5 & 20 \\ \hline \text { Germarty } & 5 & 5 & & 5\\ \hline \text { U.K. } & 15 & 20 & 5 & \\ \hline \end{array}\] Find the net cash flow in (out of)the German affiliate.

A) $0 in or out B) $5,000 out C) $30,000 in D) $30,000 out A) $0 in or out 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): \[\begin{array} { | l | c | c | c | c | } \hline & { \text { Disbursements } } \\ \hline \text { Receipts } & \text { U.S. } & \text { Canida } & \text { Cermany } & \text { U.K } \\ \hline \text { U.S. } & & 10 & 5 & 15 \\ \hline \text { Carada } & 10 & & 5 & 20 \\ \hline \text { Germarty } & 5 & 5 & &5 \\ \hline \text { U.K. } & 15 & 20 & 5 & \\ \hline \end{array}\] Find the net cash flow in (out of)the U.K.affiliate.

A) $0 in or out B) $5,000 out C) $30,000 in D) $30,000 out A) $0 in or out 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): \[\begin{array} { | l | c | c | c | c | c | } \hline & { \text { Disbursements } } \\ \hline \text { Receipts } & \text { U.S. } & \text { Canana } & \text { Cermany } & \text { U.K } & \text { Tatal Receipts } \\ \hline \text { U.S. } & & 10 & 15 & 15 & 40 \\ \hline \text { Caruada } & 10 & & 10 & 10 & 30 \\ \hline \text { Germaryy } & 5 & 5 & & 5 & 15 \\ \hline \text { U.K. } & 20 & 20 & 20 & & 60 \\ \hline \text { Total Disburemerts } & 35 & 35 & 45 & 30 & \\ \hline \end{array}\] Find the net cash flow in (out of)the German affiliate.

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

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. \[\begin{array} { | l | c | c | c | } \hline { \text { ABC Trading Company Puyments Matrix (S\$000) } } \\ \hline & { \text { Disbursements by: } } \\ \hline & \text { Sinqupore } & \text { Hang Kong } & \text { U.S. } \\ \hline \text { Receipts by: } & & & \\ \hline \text { Bingapore } & & 80 & 110 \\ \hline \text { Hong Kong } & 16 & & 44 \\ \hline \text { U.S. } & 22 & 50 & \\ \hline \end{array}\] If foreign exchange transactions cost ABC 0.45 percent,what savings results from netting?

A) S$684 B) S$765 C) S$1,449 D) S$1,823 A) S$684 B) S$765 C) S$1,449 D) S$1,823

Exam 19: Multinational Cash Management

Assuming that the inter-affiliate cash flows are uncorrelated with one another,calculate the minimum cash balance to have if the firm follows a conservative policy of having three standard deviations of cash for precautionary purposes. Expected Stardard Affiliate Trarnactions Deviation U.S. \ 100,000 \ 40,000 Carada \ 150,000 \ 60,000 Mexico \ 175,000 \ 30,000 Chile \ 200,000 \ 70,000

(Multiple Choice)

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Question 21

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. Assume that Y pays a tax deductible tariff of 7 percent on imported merchandise.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 22

Which one of the following is a false statement when engaged in bilateral netting?

(Multiple Choice)

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Question 23

For a recent month,the following payments matrix of inter-affiliate cash flows was forecasted: Disbursernent From: Receipts by: France Britain U.S. France 500 800 Britain £300 £400 U.S. \ 1,000 \ 500 Use multilateral netting to find the net payment from the British affiliate to the U.S.affiliate. The spot exchange rates are $1.20 = €1.00 and $1.80 = £1.00; affiliates get paid in home currency.

(Multiple Choice)

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Question 24

A centralized cash pool assists in reducing the problem of mislocated funds and in funds mobilization.

(True/False)

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Question 25

For a recent month,the following payments matrix of inter-affiliate cash flows was forecasted: Disbursernent From: Receipts by: France Britain U.S. France 500 800 Britain £480 £300 USS \ 600 \ 960 The spot exchange rates are $1.20 = €1.00 and $2.00 = £1.00; affiliates get paid in home currency.Use multilateral netting to find the net payments to and from all parties. Which of the following is an accurate chart of their current situation?

(Multiple Choice)

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Question 26

Which one of the following is a false statement when engaged in bilateral netting?

(Multiple Choice)

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Question 27

If French-based Affiliate A owes U.S.-based affiliate B $1,000 and Affiliate B owes Affiliate A €2,000 when the exchange rate is $1.50 = €1.00.The net payment between A and B should be closest to

(Multiple Choice)

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Question 28

Your firm's inter-affiliate cash receipts and disbursements matrix is shown here ($000): Disbursements Receipts U.S. Canida Cermany U.K U.S. 10 5 15 Carada 10 5 20 Germarty 5 5 5 U.K. 15 20 5 Find the net cash flow in (out of)the German affiliate.

(Multiple Choice)

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Question 29

Your firm's inter-affiliate cash receipts and disbursements matrix is shown here ($000): Disbursements Receipts U.S. Canida Cermany U.K U.S. 10 5 15 Carada 10 5 20 Germarty 5 5 5 U.K. 15 20 5 Find the net cash flow in (out of)the U.K.affiliate.

(Multiple Choice)

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Question 30

Cash management refers to

(Multiple Choice)

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Question 31

Several international banks offer multilateral netting software packages.These packages

(Multiple Choice)

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Question 32

"Unbundling fund transfers" from an MNC and to its affiliates refers to the following activity:

(Multiple Choice)

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Question 33

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 German affiliate.

(Multiple Choice)

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Question 34

Mislocated funds are defined as

(Multiple Choice)

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Question 35

Many of the skills necessary for effective cash management are the same regardless of whether the firm has only domestic operations or if it operates internationally.

(True/False)

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Question 36

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 If foreign exchange transactions cost ABC 0.45 percent,what savings results from netting?

(Multiple Choice)

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Question 37

Efficient cash management techniques can

(Multiple Choice)

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Question 38

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 Which of the following is an accurate chart of their current situation?

(Multiple Choice)

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Question 39

In reference to establishing "transfer prices" between the affiliates of an MNC,which of the following relates to the "resale" price approach?

(Multiple Choice)

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Question 40

Which one of the following is a false statement when engaged in bilateral netting?

A centralized cash pool assists in reducing the problem of mislocated funds and in funds mobilization.

Which one of the following is a false statement when engaged in bilateral netting?

If French-based Affiliate A owes U.S.-based affiliate B $1,000 and Affiliate B owes Affiliate A €2,000 when the exchange rate is $1.50 = €1.00.The net payment between A and B should be closest to

Your firm's inter-affiliate cash receipts and disbursements matrix is shown here ($000): Disbursements Receipts U.S. Canida Cermany U.K U.S. 10 5 15 Carada 10 5 20 Germarty 5 5 5 U.K. 15 20 5 Find the net cash flow in (out of)the German affiliate.

Your firm's inter-affiliate cash receipts and disbursements matrix is shown here ($000): Disbursements Receipts U.S. Canida Cermany U.K U.S. 10 5 15 Carada 10 5 20 Germarty 5 5 5 U.K. 15 20 5 Find the net cash flow in (out of)the U.K.affiliate.

Cash management refers to

Several international banks offer multilateral netting software packages.These packages

"Unbundling fund transfers" from an MNC and to its affiliates refers to the following activity:

Mislocated funds are defined as

Many of the skills necessary for effective cash management are the same regardless of whether the firm has only domestic operations or if it operates internationally.

Efficient cash management techniques can

In reference to establishing "transfer prices" between the affiliates of an MNC,which of the following relates to the "resale" price approach?

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