Outline the pros and cons of each of the following exchange rate forecasting techniques:
technical, fundamental, market-based, and mixed. Which technique would you use if you were
hired by an MNC to forecast exchange rates? Explain the reasons why you wou
Complete Questions 1, 3, 4 & 6 Pages 195-197. Submit your homework as an attachment to Drop
Fixed exchange rate system: exchange rates are either held constant or allowed to fluctuate
only within very narrow boundaries.
3. Explain corporate motives for forecasting exchange rates. What are some limitations of using
a fundamental technique to forecast exchange rates?
Hedging decision: MNCs constantly face the decision of whether to hedge future payables a
1. As a manager how will you balance the need for establishing control in your organization with
encouraging and allowing intelligent failures?
I would use two different methods and combine them. The first being concertive
control because it allows people
2. a. With other things being equal, a high home inflation rate would affect the home countrys current
account by decreasing the current account. Per the book Consumers and corporations in that country
will most likely purchase more goods overseas (due to
U.S.-based MNCs typically invest in foreign securities. Explain how low and high U.S. interest
rates influence these corporations decisions to invest abroad. Support your statements by
explaining the causes and effects.
Low and High investment rates influ