IBUS Test 1

Let's suppose you (USA dealer) imported one Earth Equipment machine from German dealer on March 1, 2017 at € 300,000 each, payable in 30 days. The exchange rate on March 1, 2017 was 1.16 US$/€. Then you sold the machine in the US market at US$350,000 in cash on March 29, 2017. On April 1, 2017, you paid to Italian car dealer at the exchange rate of 1.19 US$/€. What was profit or loss from this business in terms of US$? (Please assume all costs are included in price.)

-7000

What is the summation of 1 to 1000? (1 + 2 + 3 +....+ 1000)

1001 x 500

This question DOES NOT require you to complete I/S, B/S, or C/F. You are US company. You sold products on Dec 1, 2014 to an UK company at 100,000 Euro. That is, you would receive Euro, not US$. Your fiscal year ends on Dec 31. You received money from the UK customer on Feb 1, 2015. Below, see the exchange rates for different dates: Dec 1, 2014: $1.07/Euro Dec 31, 2014: $1.09/Euro Feb 1, 2015: $1.06/Euro What would be your journal entry for Dec 31, 2014? (Year-End Exchange Rate Adjustment) *All figures in [ ] are positive.

AR [$2000] / Currency Exchange Gain [$2000]

Let's assume GDPs for US and China at the beginning of 2016 are US$ 18 trillion and US$ 11.4 trillion. If the GDP growth rates for US and China are 2% and 9% for years to come, from the beginning of 2016, how many more years would it take for China to catch up with the US' GDP? (rounding at 10000th, e.g. .43568 -> .4357; .02634 -> .0263)

About 6.88 more years

This question DOES NOT require you to complete I/S, B/S, or C/F. You are US company. You sold products on Dec 1, 2014 to an UK company at 100,000 Euro. That is, you would receive Euro, not US$. Your fiscal year ends on Dec 31. You received money from the UK customer on Feb 1, 2015. Below, see the exchange rates for different dates: Dec 1, 2014: $1.07/Euro Dec 31, 2014: $1.09/Euro Feb 1, 2015: $1.06/Euro What would be your journal entry for Feb 1, 2015? (Assume Year-End Exchange Rate Adjustment was completed on Dec 31, 2014.) *All figures in [ ] are positive.

Cash [$106000] / AR [$109000] Currency Exchange Loss [$3000] /

Current exchange rate (Feb 15, 2018) is 1.22 $/Euro. You speculate the exchange rate will be 1.13 $/Euro on Mar 15, 2018. You plan to make money in the currency exchange market through the 'Short-selling' method. In this case, the first step is you borrow ________.

Euro

According to 'Procter & Gamble' story, extensive duplication of manufacturing, marketing, and administrative facilities in different national markets was to respond to high tariff duties set forth by other countries, such as Germany.True or False?

False

In general US export has been bigger than US import since 1970s. True or False?

False

Let's compare the first year performance of Obama (i.e. 2009) and Trump (2017) with regard to the reduction of the US trade deficit. According to our class discussion, we have to conclude that Trump is the winner because the US' trade deficit was declined in 2017 compared to that in 2016 under the Trump's policy. True or False, based on my lecture?

False

RE: Apple's Earnings Hit by Strong Dollar When Apple reported its fourth quarter earnings in January 2016 (i.e. financial figures between Sep - Dec of 2015), they contained a surprise. The strong US dollar had brought Apple nearly $5 billion extra revenue. True or False?

False

RE: Jollibee story Jollibee entered the Middle East in 1987, mainly because taste and preference in people in Middle East are similar to Filipino, according to their market research. True or False?

False

RE: Regional Trade Deals and The Mexican Auto Industry Everyone in the US is happy with growth of auto industry in Mexico because Mexico is a member of NAFTA. True or False?

False

RE: Subaru While Japanese Yen sharply appreciated against US$, Subaru established significant manufacturing facilities in the North american market. True or False?

False

RE: Tomato Wars In 2013, the US Commerce Department announced a preliminary decision to scrap the 1996 minimum agreement between US and Mexico. True or False?

False

The economic development boards of Singapore and Malaysia and China and many of these countries are visiting regularly the executives of US companies so that US companies would invest in their (Singapore, Malaysia, China and so forth) countries. Yet, US companies make investment decision based on free trade, the 'invisible hands' concept. True or False?

False

The firm does not need to consider how its global rivals will respond to changes in its pricing strategy. True or False?

False

According to the NUMMI story, which statement is true? Correct!

In the early 1980s, Toyota wanted to start producing cars in the US. Toyota chose the GM plant known for Sex, drugs, and alcohol for the joint venture project.

Let's suppose you have $1 million to invest. You are considering to invest in UK first, then convert the British Pound back to US$ in the future. You know following information: Annual Interest rate on investment in US: 2% Annual Interest rate on investment in UK: 4% Investment period: 1 year Current exchange rate: 1.48 $/BP Forward exchange rate which you can apply when converting BP to US$: 1.47 $/BP What would be profit if you apply the covered-interest arbitrage?

None of the above

RE: Planned Obsolescence, Perceived Obsolescence "The consumer feels a need to purchase new products and services when their products are still usable or fixable." This is most related to:

Perceived Obsolescence

Jetta production cost in 2002 and 2003 was 12,000 Euro per Jetta. Jettas were sold in US at $13,000 in 2002 and 2003. Forward hedge exchange rate was 1 $/Euro in 2003. The market exchange rate was 1.15 $/Euro (i.e. rate without hedge) in 2003. If 8,000 Jetta were sold in US, in 2003, by 60% forward hedge and 40% not hedged. What would be profits or loss from sales of 8,000 Jetta in US?

Profit of 2.57 million Euro

According to 'The Greek Sovereign Debt Crisis,' if a country's 10-year bonds reached high number, such as 34%, it usually indicates that many investors expect the country to default on its sovereign debt. True or False?

True

According to our textbook, when a negative country of origin effect exists, an international business may have to work hard to counteract this effect by using promotional messages that stress the positive performance attributes of its product. True or False?

True

RE: Amazon - A Leader in Global Supply Chain Management Often, Amazon customers expect that Amazon will deliver whatever we buy in the shortest cycle time possible. True or False?

True

RE: Apple: The Best Supply Chains in the World? One of the factors that make Apple's global supply chains as a leader of supply chains is managing its suppliers and all other providers within the chains. True or False?

True

RE: The Story of Bottled Water Advertisement of 'Nesle' once said: "Bottled water is the most environmentally responsible consumer product in the world." True or False?

True

RE: The U.S. Dollar, Oil Prices, and Recycling Petrodollars Depreciation of US$ means substantial decrease in the dollar holdings of oil producers, such as Saudi Arabia. Correct!

True

Assume the BigMac is sold at US$ 3 in US and 4 Euro in Germany. Let's assume the current spot exchange rate is 1.21 US$/Euro. If we believe in th PPP theory, US$ should _____ against Euro.

appreciate

Assume the US government security with 1 year maturity (nominal interest rate) is 2% and Japanese government security with 1 year maturity is 4%. Regardless of the current exchange rate (US$ as a base), if you apply the International Fisher Effect to predict the exchange rate, US$ will _____ against Japanese Yen.

appreciate

See information below. From 2011 to 2012, the British Pound has _____ against Vietnamese Dong (VD). Year British Pound (BP) / Mexican Peso (Peso) Vietnamese Dong (VD) / British Pound (BP) 2011 0.040 BP/Peso 34,143 VD/BP 2012 0.047 BP/Peso 34,150 VD/BP 2013 0.042 BP/Peso 34,100 VD/BP

appreciated

Read the following sentence: "The U.S. economy is strong enough to warrant further interest rate increases by the Federal Reserve. In a speech on the U.S. economy, FED argued that the Fed's benchmark interest rate was below normal levels, a suggestion that Fed policy was still stimulating economic growth." (Sep 24, 2018) In the class, raising benchmark interest rate or rumor of raising interest by FED (in the US) has contributed _______ of foreign currencies (such as Argentine, Turkey, India, Indonesia) against US$.

depreciation

RE: The Story of Electronics "instead of company making facility safe, workers sacrifice their health" "instead of paying to redesign products so that they would be less toxic, villagers pay by loosing clean water" These are examples of:

externalizing costs

Consider the bond (newly issued, issued on Nov 2013) for a country A: Face value $10 million Coupon rate 4.3% If this bond is purchased (in April 2014) at $9.02 million, instead of $10 million, the yield would be:

greater than 4.3%

RE: Airbus and the Euro Airbus (French company) prices planes in dollars. In this case, depreciation of the dollar translates smaller revenue for Airbus. And more than half of Airbus' costs are in Euros. At least that was the case in 2003. Here is the question. Under the condition described above, depreciation of the dollar ________ Airbus' costs in proportion to its revenue.

increase

RE: Quantitative Easing, Inflation, and the Value of the US Dollar While the FED pursued Quantitative Easing in 2011 through to 2013, US export ______. Correct!

increased

Video: China Changing Supply Chain: In order to achieve the economy not influenced significantly by export, Xi Jinping (President, the political leader in China) _______________ during the 2012 - 2017 period.

increased minimum wage by 13.5% every year

My name is Maurice. I have $50,000 in FXCM (Foreign Exchange Market). I am considering converting dollar to Euro now. The rate I apply now (first exchange rate conversion) is 0.95 Euro/$. In the evening, I bet the rate will be 0.92 Euro/$. Let's assume there are no service fees about this process. If I strongly believe in my speculation (i.e. my speculation that the exchange rate in the evening would be 0.92 Euro/$), what would be your advice to me?

risk is urs

We discussed about the formula: Profit/Loss = (p - vc)*Segment size*%*# - TFC where p: price per customer; vc:variable cost per customer; %: percentage of the segment that use/buy your service/product; #: frequency; TFC: Total fixed costs. According to the lecture on Enterprise valuation, "Enter new market" is directly related to:

segment size