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Essay Section Group I – Complete all essays ( 10 points each) 1. Describe the t

Essay Section
Group I – Complete all essays ( 10 points each)
1. Describe the two methods for the translation of foreign subsidiary financial statements into the parent company’s consolidated statements. Identify when each technique should be used and the major advantage(s) of each.
2. There are as many different approaches to foreign exchange transaction exposure management as there are firms and no real consensus exists regarding the best approach. List and discuss three different exposures you can hedge and three different types of hedges.
3. Diversification is possibly the best technique for reducing the problems associated with international transactions. Provide one example of each of international financial diversification and international operational diversification and explain how the action reduces risk.
Group 2 – Choose any three of the following 3 – ( 10 points each)
1. What are blocked funds? List and explain two of the three methods the authors list in this chapter for dealing with blocked funds.
2. Explain what a letter of credit (L/C) is, who the principal parties are, what the principle advantage is, and how the L/C facilitates international trade.
3. What is a transfer price, and can a government regulate it? What difficulties and motives does a parent multinational firm face in setting transfer prices?
4. How would the value of the price elasticity of demand for a product/service affect the profitability of an investment

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