EECS 3101 Lecture Notes - Lecture 2: Financial Analyst, Swim Briefs
28 Jun 2018
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EECS 3101 Lecture 2 Notes
Introduction
Decisions to Use International Financial Markets
Commercial banks serve as financial intermediaries in this market.
They stand ready to exchange currencies for immediate delivery in the spot market.
In addition, they are also willing to negotiate forward contracts with MNCs that wish to
buy and/or sell currencies in the future.
The international money markets are composed of several large banks that accept
deposits and provide short-term loans in various currencies.
This market is used primarily by governments and large corporations.
The international credit markets are composed of the same commercial banks that
serve the international money market.
These banks convert Exhibit 3.7
Some of the deposits received into loans (for medium-term periods) to governments
and large corporations.
The international bond markets facilitate international transfers of long-term credit
Thereby enabling governments and large corporations to borrow funds from various
countries
The international bond market transactions are facilitated by multinational syndicates of
investment banks that help to place the bonds.
International stock markets enable firms to obtain equity financing in foreign countries.
Thus, these markets help MNCs finance their international expansion.
As a financial analyst for Blades, Inc., you are reasonably satisfied with Blades’ current
setup of exporting Speedos (roller blades) to Thailand.
Due to the unique arrangement with Blades’ primary customer in Thailand, forecasting
the revenue to be generated there is a relatively easy task.
Document Summary
Commercial banks serve as financial intermediaries in this market. They stand ready to exchange currencies for immediate delivery in the spot market. In addition, they are also willing to negotiate forward contracts with mncs that wish to buy and/or sell currencies in the future. Due to the unique arrangement with blades" primary customer in thailand, forecasting the revenue to be generated there is a relatively easy task. Specifically, your customer has agreed to purchase 180,000 pairs of speedos annually, for a period of 3 years, at a price of thb4, 594 (thb thai baht) per pair. The current direct quotation of the dollar-baht exchange rates is sh. 024. They are also willing to negotiate forward contracts with mncs that wish to buy and/or sell currencies in the future. The international money markets are composed of several large banks that accept deposits and provide short-term loans in various currencies. This market is used primarily by governments and large corporations.
