...PIXONIX INC. - Currency Exposure Answers Question #1 The company Pixonix Inc is based in Canada and its revenues are based in Canadian Dollars, however Pixonix dealt with US firms, so a majority of Pixonix's expenses were paid in US Dollars. Of key interest is the annual payment of US$7.5million at the end of January each year as well as the payments made at the end of June each year (which required the CAD to be converted to USD). Recently the Canadian Dollar has been appreciating and positively affecting Pixonix's profitability, however since some of the cash flows needed to be converted to USD Pixonix is exposed to currency exchange risk. Cain's dilemma is to choose between either to purchase a forward contract and lock the cost of the January US$7million. or to purchase call options for the USD for $7.5million, and which course of action will provide the highest benefit and lowest risk possible under different exchange rates. Should the CAD depreciate with respect to the USD Pixonix costs would be higher. Question #2 Various Hedging Options: a) Purchase a forward contract Cain can eliminate exchange rate risk by engaging in a forward contract by locking in the exchange rate for the CAD/USD. To benefit when purchasing a forward contract to sell CAD for USD, the CAD should have depreciated at the time of the payment relative to today. To benefit when purchasing a forward contract to buy USD for CAD, the USD should have appreciated at the time of the payment...
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...advantageous which actually has unlimited capabilities; in seeking a certain information, for recreation, for entertainment purposes and many other uses. But despite those infinite uses of computers, some say that computers cause detrimental effects to those who are exposed to its radiation. Radiation, in Physics, it is defined as the process of transmitting energy through space. There are two types of radiation exposure—82% is from natural resources such as cosmic and solar rays and 18% of the exposure is from man-made radiation. Radiation injures the body by destroying cells and parts of cells. It hinders cells from dividing which gives rise to cells which does not have the ability to reproduce. The reason why the researchers have chosen this topic is to stress out the hazardous effects of computer radiation.Long-term exposure to radiation increases the risk of all forms of cancer, tumors, blood disorders, miscarriage, headaches, insomnia, anxiety, aging of the skin, skin burn, etc. Radiation exposure over time can cause skin burn, dry wrinkled skin and photo aging. This skin damage is identical to sun damage and causes the same health problems. Many electronic products that we use on a daily basis expose us to harmful radiation. A television, microwave oven, cellular phone and computer are examples of products that emit radiation. To preserve your health use electronic products carefully, in ways that shield...
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...Using the control wheel Using the In-Camera Guide In-Camera Guide Shooting Tip Back to top Copyright 2012 Sony Corporation Cyber-shot User Guide undefined Search Search Print Top page > Shooting Before Use Shooting Viewing Using MENU items (Shooting) Using MENU items (Viewing) Changing settings Viewing images on a TV Using with your computer Shooting Shooting still images Shooting still images Zoom (Still images) Shooting movies Shooting movies Zoom (Movies) Shooting still images while recording a movie (Dual Rec) Setting REC mode Printing Troubleshooting Precautions/About this camera Contents list List of mode dial functions Intelligent Auto Superior Auto Program Auto Aperture Priority Shutter Priority Manual Exposure Memory recall Movie Sweep Shooting Scene Selection Functions not available in some REC modes...
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...help create but I had grown enough to understand the significance of the experience I gained. I had been exposed to exclusive training with the company and had acquired the necessary skills to help me handle difficult tasks. I was always available when my manager required my contribution; I knew he would miss that. However, I was more concerned about my experience and exposure in other fields, as well as what I had to do to achieve my life goals. Position 2: You are right, I am wrong Leaving my previous employer who trained me to be a top notch administrative professional was obviously painful. According to him, if I only took some more time, he would have promoted me to a managerial position in the company. He was willing to expose me to higher responsibilities that would prepare me to handle extremely difficult situations that managers experience in their duties. However, I no longer had the desire to be someone’s secretary. Position 3: both right, both wrong My employer was correct when he claimed that he was concerned of me and would ensure that I am well versed with experience and exposure in my field of work. He was also right to say that he had trained me on the basics of my career and he was ready to expose me to more knowledge in the field....
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...Cortina dʼAmpezzo Venice Portofino Cinque Terre Two photographers, Italy and the D80 Photographers from different fields share their impressions after shooting with the D80 on a trip to Italy. About shooting in Italy - H (Hien): Iʼ ve long dreamed of shooting in Venice. As a photojournalist, I always strive to convey the moment just as I see it with my own eyes. This demands a great amount of footwork to get acquainted with the location, and the time to establish a rapport with the locals. Shooting early in the morning with the D80 left an immediate impression on me. There was limited light, and that was comprised of a mixture of natural and artificial light. A film camera in such a situation requires complicated use of filters, whereas the D80 was able to achieve accurate white balance and metering under mixed light sources and produce beautiful results. Y (Yves): I believe shooting in the cafe allowed m e t o c l e a r l y ex p r e s s m y f e e l i n g s a b o u t the location. I am always exploring how best to express myself based on the inspiration I draw from the actual scene. And for me, the light is the inspiration. I like to control the light in each shot, which of course includes capturing the mood of the natural light, while at times also taking advantage of reflected light or using flashes. The D80 produced images just as I envisioned them, performing perfectly throughout the trip. Images from the D80 are of the highest quality, and I can edit them freely after...
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...Loder, Carey Ann Maines, Charles Schweizer ISBN-13: 978-1-58428-258-7 Library of Congress Control Number: 2008942244 Printed in Korea. 10 9 8 7 6 5 4 3 2 1 No part of this publication may be reproduced, stored, or transmitted in any form or by any means, electronic, mechanical, photocopied, recorded or otherwise, without prior written consent from the publisher. Notice of Disclaimer: The information contained in this book is based on the author’s experience and opinions. The author and publisher will not be held liable for the use or misuse of the information in this book. Table of Contents FOREWORD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 by David A. Williams INTRODUCTION Why Manual Exposure Mode? . . . . . . . . . . . . . . . .15 Exposure Metering Techniques . . . . . . . . . . . . . . .17 Metering Methods . . . . . . . . . . . . . . . . . . . . . .17 Metering Objectives . . . . . . . . . . . . . . . . . . . . .18 Using a Hand-Held Incident Light Meter . . . . .18 Using and Interpreting the Camera’s Built-In Meter . . . . . . . . . . . . . . . . . . . . . . .18 Using the Histogram to Determine...
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...Measuring/Managing Translation and Transaction Exposure Chapter 10 Lecture Notes Measuring Translation and Transaction Exposure PART I. ALTERNATIVE MEASURES OF FOREIGN EXCHANGE EXPOSURE: Accounting and Economic Risk I. ALTERNATIVE MEASURES A. TYPES 1. Accounting Exposure: arises when reporting and consolidating financial statements require conversion from subsidiary to parent currency. 2. Economic Exposure: arises because exchange rate changes alter the value of future revenues and costs. Accounting Exposure B. Accounting Exposure = Transaction risk + Translation risk [pic] ALTERNATIVE MEASURES OF FOREIGN EXCHANGE EXPOSURE C. Economic Exposure = Transaction Exposure +Operating Exposure Operating Exposure arises because exchange rate changes alter the value of future revenues and costs. PART II. ALTERNATIVE CURRENCY TRANSLATION METHODS (ACCY) I. FOUR METHODS OF TRANSLATION A. Current/Noncurrent Method 1. Current accounts use current exchange rate for conversion. 2. Income statement accounts use average exchange rate for the period. B. Monetary/Nonmonetary Method 1. Monetary accounts use current rate 2. Pertains to - Cash - Accounts receivable - Accounts payable - Long term debt 3. Nonmonetary accounts - Use historical rates - Pertains to: Inventory, Fixed assets, Long term investments 4. Income statement accounts - Use average...
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... using the Euro as a functional currency. Contents Contents 2 1. EXECUTIVE SUMMARY 3 2. INTRODUCTION 3 2.1. HISTORY OF INSOMNIA PLC 3 2.2. SCOPE OF BUSINESS 3 2.3. CURRENT EXPOSURES 4 2.3.1. TRANSACTION EXPOSURE 4 2.3.2. ECONOMIC EXPOSURE 4 2.3.3. TRANSLATION EXPOSURE 4 2.4. HEDGING 5 3. EFFECTS OF UK JOINING EMU ON INSOMNIA PLC 5 3.1. COST SAVINGS ON CROSS-BORDER TRANSACTIONS 5 3.2. STABILITY OF PRICES 6 3.3. PRICE TRANSPARENCY 6 3.4. OTHER EFFECTS 6 4. USING EURO AS A FUNCTIONAL CURRENCY OF INSOMNIA PLC 7 5. CONCLUSION 8 6. BIBLIOGRAPHY 9 1. EXECUTIVE SUMMARY It has been found that UK joining EMU as well as accepting the Euro as a functional currency will bring more benefits to Insomnia plc than staying outside of the Economic and Monetary Union or continuing using Pound Sterling as a functional currency. Both of the choices will decrease the currency exchange rate fluctuation risk which was found to be the most significant to the company. Analysis were based mainly on academic articles, European Central Bank (ECB) publishing’s, and International Accounting Standards (IASs). 2. INTRODUCTION “The Economic and Monetary Union is an agreement between participating European nations to share a single currency, the Euro and a single economic policy with set conditions of fiscal responsibility. There are currently 27 member-states...
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...QBE Financial Risk Management Report Date: 18/04/2012 Team of Financial Risk Management Content Executive summary 2 Company background 2 Global Financial Crisis influence 2 Risk Exposures 3 Foreign Exchange Exposure 4 Transaction Exposures 4 Translation Exposures: 5 Interest Risk Exposure 5 Borrowing exposure 5 Investment exposure 6 Gross Profit exposure 6 Recommendations for Two Risk Exposures 6 Foreign exchange risk 7 Interest rate risk 7 Appendices 8 Reference list 11 Executive summary Company background Global Financial Crisis influence The impact from the global financial crisis(GFC) on us is complex. Compared to our competitors, the situation showed that little was the overall operation of our company negatively affected. It was both the positive and negative effects of GFC that contribute to this. From the downside, we do experienced significant loss in several areas. Our share price has going down from $22.4 to $16 per share during the financial year 2008-2009. Our equity decreased 28.5% on its value, and apparently, stroked the worst record in years. In addition to the impaired equity value, GFC also challenged us with a lower investment yield, a decreased risk margin, as well as increasing claims of large individual risk. First, due to the fall in equity market, lower interest rates and the loss on our property (account 29.5% of our portfolio), we keep a low yield from our investment. Only 2...
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...believe that the heart of the brand comes from its performance in manufacturing and engineering. Porsche is therefore, by far the most exposed company among other European-based auto manufactures to changes in exchange rates. While the other manufacturers increase their amount of natural hedging by conducting more manufacturing in their countries of large sales Porsche increase their put option hedging. According to their 2006 model year they are going to fully hedged all their sales. This is done even though Porsche has the largest US exposure among the manufactures. Their hedging strategy has been criticized for being more lucky than thoughtful. Porsche also differ with their extreme anti-debt attitude. Porsche have a strong competitive position and another aspect that is very specific for Porsche’s products is the exchange rate pass-through. They pass through the changes of exchange rate upon the final consumer. Chapter 9 Operating Exposure ( End-of-Chapter Questions 1....
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...Transaction, Operating, & Accounting (Translation) Exposures Foreign Exchange Exposure – measures the potential for a firm’s profitability, net cash flow, and market value to alter because of a change in exchange rates. Q: What are the three main foreign exchange exposures? A: 1) Transaction Exposure 2) Operating Exposure 3) Accounting Exposure Transaction Exposure – measures changes in the value of outstanding financial obligations incurred prior to a change in exchange rates. Operating Exposure (Economic Exposure, Competitive Exposure, Strategic Exposure) – measures a change in the present value of a firm resulting from any change in future expected operating cash flows caused by unexpected changes in exchange rates. Accounting Exposure (Translation Exposure) – measures accounting-derived changes in owner’s equity as a result of translating foreign currency financial statements into a single reporting currency. Exhibit 8.1 [pic] Note: In the fourth quarter of 2001 Amazon.com reported a net income of $5 million, due in part to a one-time foreign currency gain of $16 million. Hedging – To take a position that will rise (or fall) in value to offset a change in value of an existing position. |Benefits of Hedging |Costs of Hedging | |Improved the planning capability of the firm. |Risk-averse strategy that benefits management...
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...FOREIGN CURRENCY RISK EVALUATION ACC401 With Firm XYZ’s proposed expansion into three new foreign markets there will be several problems that arise. A risk assessment will need to be completed and presented to the board. The following is a risk assessment, with relevant subsequent mitigation measures in the area of foreign currency. Types of Risk There are primarily three types of risk that the firm XYZ faces with the expansion abroad. These are the accounting exposure, transaction exposure and the operating exposure. Accounting exposure, is defined as the exposure that a company faces due to the reduction of its value; as a result of foreign exchange differences between the currency used in the main branch and the currency used in the other country (Gertler, Kiyotaki and Queralto, 2012). Accounting exposure is also referenced as translation exposure. The item most affected by this risk is the balance sheet. This is because the balance sheet is the statement which shows the net worth of a company. Transaction exposure is the risk that a company involved in international trade might incur. Upon entering into an agreement, a company may have to pay higher costs to meet those financial obligations as a result of changes in the foreign exchange. Unlike economic exposure, transaction exposure is well-defined and short-term. Transaction exposure is simply the amount of foreign currency that is receivable or payable. Operating exposure is the risk that a firm with a foreign...
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...Executive Summary: Jaguar PLC, 1984 This case explores the operating exposure of Jaguar PLC in 1984, just as the government is about to relinquish control and take the company public via an IPO. The primary concern of the CFO is that Jaguar sells over 50% of its cars in the US, while its production costs and factories are U.K.-based. This currency mismatch creates operating exposure for the firm that needs to be hedged. While the current trend in the USD has been higher, the markets are expecting a pullback in the currency. With labor accounting for a significant portion of the cost base for luxury car industry, it is unlikely that the expense will decline in the near future. Again this creates a potential liability in the matching pf the cash inflows and outflows. Given Jaguar's primary competitors have operating expenses in DEM, the CFO should also be concerned with the competitive advantages that are associated with favorable exchanges rate when compared to the competition. Thus, there also exists the issue of the GBP/DEM exchange rate. The overarching themes and underlying issues that must be addressed in order to address Jaguar's currency exposure are: •Valuation of the risks associated with firms with multiple currency exposure •Risks associated with revenue streams and expenses in different currencies •Valuation and assessment of highly competitive niche luxury car markets •Supply chain effectiveness and labor trends in the automotive industry •Strategic positioning...
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...Europe in 1963. A hypermarket is a mega-store, similar to that of a Wal-Mart. They started in small French towns, but by 1969 expanded to Belgium. In 1975, they opened their first store outside of the European continent, they had expanded to South America’s largest country, Brazil. Carrefour’s strategy until 1998 was to grow organically. But since 1998, its growth has been fueled by acquisitions of other retailers. Carrefour’s Financing Policy Analysis The risk that a business' operations or an investment's value will be affected by changes in exchange rates. Carrefour is exposed to exchange rate risk because of foreign-currency exposure from imported goods. This risk was being hedged through forward contracts. The €13.5 billion of debt on the Carrefour books is 97% hedged in Euro currency. Carrefour has a large exposure risk to the Euro because of their hedging policy. Questions from the Book 1. What is going on at carrefour? • Carrefour is expanding through acquisitions o This will require taking on debt • Current capital structure o Long-term debt ▪ 97% of foreign exchange rate risk hedged in Euros 2 . why does the eurobond market exist? (or, is plentiful debt capital not available domestically?) • Why does this market exist o Market was fueled by growth of multi-national firms o Able to reach global pool of investors • Debt is available domestically ...
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...business overseas. * Economic Exposure: When changes occur in rates, operating costs will make a product uncompetitive in the global market. Profits will be diminished. There is very little that a company can do about economic risk. * Translation Exposure: Currency exchange rates will reduce a company’s earnings and it will weaken the balance sheet. It can be argued that currency fluctuations have no significant impact on real assets. * Currency Exposure: this is caused by a negative move in a currency between the time when a contract is agreed and the time it is completed. ("Exchange rate risk," ) If the exchange rate of EUR/USD was 1.2868 in 30 days, what would be the impact on the company’s Profit and Loss at the time of the receipt of payment from the European customer? What would be the Economic exposure for the company? What would be the Translation Exposure if any? Include calculations. The company is still making over the original $100,000.00 but the accounts receivable will need to be adjusted from the $138,680.00 to the current $128,680.00. Calculating the company’s receivables on a monthly basis will be a common event. This is done by taking the current exchange rate for the EUR/USD which is 1.2868 and multiplying that by the $100,000.00. This is an example of economic exposure due to the fact that 30 days ago the amount was $138,680.00 and now it is $128,680.00 this is a difference of $10,000.00. This is not a translation exposure; the company is not losing...
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