Log in
Finance
2
answers
0
watching
172
views
24 Feb 2019

What country(ies) do you think is(are) presently attractive for U.S. corporations seeking foreign direct investment opportunities? Take into account any geopolitical/economic/currency risks you are aware of.

Watch
2
answers
0
watching
172
views

For unlimited access to Homework Help, a Homework+ subscription is required.

Unlock all answers

Get 1 free homework help answer.
Already have an account? Log in
Share
Jarrod Robel
Jarrod RobelLv2
26 Feb 2019
Already have an account? Log in
Share

Related questions

Choose a country (not the United States or Canada) that has not already been chosen by another learner and post your country choice in the discussion area. Then, analyze some of the political and currency risks of that country and discuss why a U.S. company would invest (for example, build a factory) in that country. If you were in a decision-making position, what are the three for four specific factors that you would take into consideration?

Business

Do some research on the currency and banking situation in CHINA .

We normally think of currency and banking risks as being something confined to third-world or developing countries. But events in the past few years such as the Euro crisis or the financial crisis in the United States have shown that not even the wealthy, developed countries are without risks on the financial side. So it is important for any company doing business in your country to carefully consider the risks that they face.

After you

Mexico tends to have much higher inflation than the United States, as well as much higher interest rates. Inflation and interest rates are much more volatile in Mexico than in industrialized countries. The value of the Mexican peso is typically more volatile than the currencies of industrialized countries from a U.S. perspective; it has typically depreciated from one year to the next, but the degree of depreciation has varied substantially. The bid/ask spread tends to be wider for the peso than for currencies of industrialized countries.

a. Identify the most obvious economic reason for the persistent depreciation of the peso.

b. High interest rates are commonly expected to strengthen a country’s currency because they can encourage foreign investment in securities in that country, which results in the exchange of other currencies for that currency. Yet the peso’s value has declined against the dollar over most years, even though Mexican interest rates are typically much higher than U.S. interest rates. Thus it appears that the high Mexican interest rates do not attract substantial U.S. investment in Mexico’s securities. Why do you think U.S. investors do not try to capitalize on the high interest rates in Mexico? c. Why do you think the bid/ask spread is higher for pesos than it is for currencies of industrialized countries? How does this affect a U.S. firm that does substantial business in Mexico?

Related Documents

FIN 621 Lecture Notes - Lecture 8: Purch Group, Canala, Random Walk
harlequinsnail861
FIN 521 Chapter Notes - Chapter 3: High-Yield Debt, Call Option, Commercial Paper
jademallard37
FIN 300 Lecture Notes - Lecture 2: Malaysian Ringgit, Cbre Group, Klang Valley
ceruleanserval340

Weekly leaderboard

Home
Homework Help 3,900,000
Finance 370,000
Start filling in the gaps now
Log in