Implication of exchange rate, business and finance homework help

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orggl123

Business Finance

Description

Apa format

Proper Citations in paper

Proper References – 3 or more

Length:  2 pages must have proper headings

Assignment below:

You are asked to help put together a training program describing the effects of exchange rates to training participants at Axetem. Your training material is to address the following:

Explain the Fisher effect and its mechanics by walking the trainees through a step-by-step explanation in the following hypothetical situation:

  • If the real interest rate is 5%, the U.S. inflation rate is at 3%, and the inflation rate of the euro area (the countries that use the euro) is at 4%, what are the nominal interest rates for both the United States and the euro area? Interpret the calculation for your trainees.
  • What are at least 3 implications of exchange rate fluctuations for Axetem as they relate to marketing and production decisions?

Rubric:

Scenario

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Axetem International, Inc. is a successful, Washington-based, public company and a manufacturer of various high-quality running and cross-training athletic shoes. 

In addition to its national wholesale operation, Axetem, Inc. also maintains several satellite wholesale branch offices outside of the United States. These include office locations in Canada, France, the United Kingdom, and a currently nonoperational office in the Middle East.

Assume that you are a foreign business operations analyst for Axetem, Inc. Your job responsibilities include not only various business analyses but also the task of cross-training various employees in matters relating to Axetem’s foreign operations.


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Explanation & Answer

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Running Head: IMPLICATIONS OF EXCHANGE RATE FLUCTUATIONS

IMPLICATIONS OF EXCHANGE RATE FLUCTUATIONS
Student’s Name
Professor’s Name
Course Title
Date

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IMPLICATIONS OF EXCHANGE RATE FLUCTUATIONS

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Introduction
Nominal interest rate is the interest rate before inflation is taken into account. It is quoted
on loan and deposit agreements. Remarkably, nominal interest rates are higher than the real
interest rates when the inflation values are positive. However, during deflation periods, the real
interest rates exceed the nominal interest rates. Research shows that the rates of inflation moves
in tandem with the nominal interest rates as time goes. This implies that the real interest rates
have stabilized over time. Therefore, investors are in a position to accurately make ...


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