International Business 6800:305
t 4(25 points)
Due in Brightspace March 7 11:59 PM
Please remember to check the Writing Guidelines and citation information. Use reputable sources (for example, but not limited to, The Wall Street Journal).
We will once again combine a text question with current events.This time, the question comes from Chapter 10.
At the end of Chapter 10, refer once again to the questions under “Research Task.” The first question asks about Japanese yen. One of your company’s essential suppliers is located in Japan. Your company needs to make a 1 million Japanese yen payment in six months. Considering that your company primarily operates in U.S. dollars, you are assigned the task of deciding on a strategy to minimize your transaction exposure. Identify the spotand forward exchange rates between the two currencies.
What factors influence your decision to use each rate?
Which one would you choose?
How many dollars must you sped to acquire the amount of yen required?
That’s all well and good and a pretty standard question. The information needed (plus a little algebra and business sense) is available readily on globalEDGE. Ah, but life is trickier in 2021. Your Japanese counterpart has been studying cryptocurrency markets and has suggested that the companies should make the transaction in Bitcoin instead. Uh oh, there is precious little information on globalEDGE about Bitcoin. Your decision is needed by the end of the week. What to do?
Required: In a memorandum to the CFO of the company you are to explain the alternatives. On the one hand, answer the text questions about making the transaction in Japanese yen. You will also have to explain some of the pros and cons of a transaction in Bitcoin. If you do agree to price the exchange in Bitcoin should your company buy “now” or “six months from now” or something in between? Make a specific recommendation. Use current sources to support your recommendation.
Criteria: Recommendation regarding a transaction in yen 10
Recommendation regarding a transaction in Bitcoin 10
Writing style and sources 5
25