You have just been appointed treasurer of a medium-sized Slovenian instrument-making company. Its manufacturing facilities are in Slovenia (which is part of the Eurozone) and all its raw materials and parts come from within the Eurozone. Exports to countries outside the Eurozone account for 60 percent of the company’s sales, and most of its export sales are to the US. As the market for the company’s products is international, it faces the same competitors in each market. Its major competitor is a US company, and another substantial competitor is based in Japan. What are the channels through which the company’s foreign exchange exposure arises? Explain.
You have just been appointed treasurer of a medium-sized Slovenian instrument-making company. Its manufacturing facilities are in Slovenia (which is part of the Eurozone) and all its raw materials and parts come from within the Eurozone. Exports to countries outside the Eurozone account for 60 percent of the company’s sales, and most of its export sales are to the US. As the market for the company’s products is international, it faces the same competitors in each market. Its major competitor is a US company, and another substantial competitor is based in Japan. What are the channels through which the company’s foreign exchange exposure arises? Explain.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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You have just been appointed treasurer of a medium-sized Slovenian instrument-making company. Its manufacturing facilities are in Slovenia (which is part of the Eurozone) and all its raw materials and parts come from within the Eurozone. Exports to countries outside the Eurozone account for 60 percent of the company’s sales, and most of its export sales are to the US. As the market for the company’s products is international, it faces the same competitors in each market. Its major competitor is a US company, and another substantial competitor is based in Japan.
What are the channels through which the company’s foreign exchange exposure arises? Explain.
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