The Spot Rate for U

question 34

Multiple Choice

The spot rate for U.S.dollars and Euros is $1.232/€.The 90 day forward rate for the two currencies is $1.254/€.The U.S.dollar

• A) trades at a 1.79% 90 day forward premium.
• B) trades at a 7.14% annual forward premium.
• C) trades at a 1.79% 90 day forward discount.
• D) trades at a 7.14% annual forward discount.

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Definitions:

Geocentric Staffing Model

The geocentric staffing model puts parent-country, host-country, and third-country nationals all in the same category, with the firm attempting to always hire the best person available for a position.

International Corporation

A corporation that operates in multiple countries, managing production or delivering services across national borders.

Agency Problems

Issues that arise in a corporation due to conflicts of interest between those who manage the company (agents) and those who own it (principals).

Transnational Strategy

A multinational corporation's approach to global competition that involves seeking efficiency, flexibility, and learning on a global basis.