Your Firm Has Just Tendered for a Contract in Japan

question 118

Essay

Your firm has just tendered for a contract in Japan.You won't know for 3 months whether you get the contract but if you do, you will receive a payment of 10 million yen a year from now on.You are worried that if the yen declines in value, the dollar value of this payment will be less than you expect and the project could even show a loss.Discuss the possible ways that you could protect the firm against a decline in the value of the yen.Illustrate the possible outcomes if you do get the contract and if you don't.

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Definitions:

Advantages and Disadvantages

This term refers to the positive and negative aspects of a specific situation, decision, or strategy.

Legal Myth

A belief about the law or legal system that is not true or is based on incorrect assumptions.

Separate Existence

The legal principle that a corporation exists independently from its shareholders, affording protection to shareholders' personal assets.

Corporation

A legal entity that is separate and distinct from its owners, capable of owning property, entering into contracts, and being sued.