With such a deficit, the US won’t be able to sustain a strong USD. We are going to develop 2 scenarios. The first one will describe a situation where the USD depreciates against the JPY, after the BoJ increased its interest rates. The second one will describe a situation where the USD will appreciate against the JPY thanks to low interest rates in Japan. Scenario 1: BoJ interest rate grows up to 4.25% In this scenario, we assume the dollar is going to depreciate against the yen.
WEEK 6 2014-02-20: Foreign exchange: competitive exposure Case summary: The GM treasure is concerned about the strength of Japanese Yen regard US dollar, because that would affect what Japanese Auto makers do in the U.S. a declining yen reduces the Japanese manufacturers’ $ cost, enabling them to pass on some of the benefit to US customers and thus taking some of GM’s market share. This will impact GM’s top and bottom line. 2.What competitive exposure affect? Competitive exposure is important for companies doing business internationally. Competitive exposure affect the company the ability to compete internationally.
The wealth that the Citic Pacific shareholders lost would be the declined stock price multiplied by total number of shares, that is HK$8 X 2,194,148,000 = HK$17,553,184,000 (US$2,250,408,205). It is around HK$17.5 billion (US$2.2 billion). 3. My Feeling Towards the Change in Stock Price I am not surprised by the market reaction as measured by the stock price change because the misguided bet of Citic Pacific caused a big blow to China’s brokerage firms and swayed investors’ confidence.
spending in the economy does not increase), we have some dangerous ramifications. Assuming that negative interest rates is a way of “unlocking” money supply, then the shift from AD to AD’ is clear (up, but not to the right). As such, the ECB runs the risk that its monetary policy no longer being effective, effectively replicating Japan’s “lost decade”. Recommendation The Author believes that negative real interest rates in
2. Question : (TCO 6) In the 1980s, Caterpillar was negatively affected by a strong dollar and lost significant market share to Japanese competitor Komatsu. The situation prompted Caterpillar to revise its global strategy and by the 2000s, the company was in a much better position to deal with volatile currency values. More recently, a strong dollar has actually helped boost Caterpillar’s bottom line. In the 1980s, a stronger dollar hurt Caterpillar’s competitive position, but in 2008 a stronger dollar did not seem to have the same effect.
The expansion to Japan result in major losses. Merrill Lynch re-entered the private client services market in Japan in 1998 when Japanese government allowed investment of stocks and financial instruments by its citizens. Merrill Lynch experienced market defeat, re-entry success, and instabilities after re-entry, it saw the potentials of exposing Japanese consumers with services that is in its infancy for development, therefore, challenges abound during start up periods in lieu for potential windfall of gaining majority foothold of the private client services market by introducing U.S. born stocks, mutual funds, and other products to Japan. According to Merrill Lynch’s President of Japan, Jiro Seguchi, Merrill Lynch alone with Bank of America is poised for connecting its Japanese customers to the world with enhance outreached in the world financial market and liquidity to fund (Merrill Lynch, 2013). Merrill Lynch also developed over 60
On the other side, the United States government was complained by its domestic industry companies during its recession period since Japanese products was very competitive. The United States also wanted to change the situation of its self and broke the imbalance in the trading and also to recover its own economy. United States claimed that Japan should appreciate yen to change the imbalance and unstable currency status. After the Plaza Accord was signed, an extraordinary asset price boom happened with huge painful impact bust. Japan used to be one of the fastest-growing economies during 1960’s to 1980’s.
The fed has to set a lower reserve requirement, which allows banks to loan out more money, which generates more interest, which could lead to periods of inflation and could have worse consequences if the government does not react quickly enough. Inflation would decrease the purchasing power of an individual's money, which would lead to more saving and less spending. (Fried) Less spending would mean less money being injected into the circular flow of our economy and would lead to economic crisis. However, many critics also use this to determine how national debt does not have a huge impact on the economy. A huge national debt has no effect on the money market.
Though another way of looking at it is that Apple is only waiting for the really good investments, and that opportunity offset the lost revenue of hoarding cash at a low interest rate. Stockpiling cash increases grumbles from stakeholders for dividend or share buy backs. Apple’s war chest has grown faster than even the loftiest projections, and for Apple’s CEO Tim Cock more money brings more problems. Approximately 64% of Apple’s cash is overseas, which induce the issue of hefty tax to bring in into the United States . An Apple share of stock is merely a claim on a portion of their future cash flow.
After the takeover, traders believed that the share prices of VW would not hold their current levels and would eventually drop, so they started short selling the stock hoping that they will make profit when prices go down at the time when they buy the shares back at the lower price. Porsche, on the other hand, Porsche bought cash settled options representing 31.5% of the shares outstanding in addition to its 42.6% stake in the company shares (up from 35.14% in September 2008) contributing to the stability of the share price. 2. What did Porsche gain from it? Porsche made a huge financial profit from the increase in the stock price when short sellers had to buy back shares to cover their position.