Suppose PepsiCo Hedges a ¥1 Billion Dividend It Expects to Receive

question 3

Multiple Choice

Suppose PepsiCo hedges a ¥1 billion dividend it expects to receive from its Japanese subsidiary in 90 days with a forward contract.The current spot rate is ¥150/$1 and the 90-day forward rate is ¥149/$1.If the spot rate in 90 days is ¥154/$,how much has this forward market hedge cost PepsiCo?

• A)$173,160
• B)$44,743
• C)Pepsi gains $173,160 from the forward contract
• D)Pepsi gains $217,903 from the forward contract

Grasp the concept of risk tolerance and asset distribution based on age.

Describe the levels of investment and examples for each level.

Analyze how asset allocation can minimize losses in investments.

Identify sources of investment information for evaluating potential investments.

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Definitions:

Net Operating Income

Profit generated from a company's core business operations, excluding deductions of interest and taxes.

Flexible Budget

A flexible budget adjusts based on changes in the volume of activity, allowing for a more accurate comparison of actual to budgeted performance.

Tenant-Days

The total number of days rented across all properties within a specified timeframe, used for calculating occupancy rates and revenue in the hospitality or rental sector.

Administrative Expenses

Costs related to the general operation of a business that are not directly tied to the production of goods or services, such as office supplies, salaries of administrative staff, and utilities.