Homework Question

Part 1:
Can a foreign acquisition target be assessed like any other asset? Provide your argument as to why or why not.

Part 2:
Define the concept of real options. Describe an instance in your professional life (current employer or past employer) where a real option could have been useful.

Part 3:
There is some debate on whether Multinational Corporations (MNC’s) increase risk when borrowing foreign currencies. Those in favor of borrowing state that lower costs of financing can be achieved, and it improves their ability to compete. Those against state that when an MNC borrows a foreign currency, they are essentially speculating on future exchange rate movements. Choose a side and defend your argument.

Part 4:
You are a cash manager of a MNC based in the United States. One of your responsibilities is to gain the highest yield for your treasury cash. Go to Bloomberg (https://www.bloomberg.com/markets/rates-bonds/government-bonds/us) and click on a country to review its interest rates. Select a country to invest in for one year. Describe why you chose that country and your expected yield for the next year.