Comparison of Techniques for Hedging Receivables. Assume that Carbondale Co. expects to receive S$500,000 in one year.  The existing spot rate of the Singapore dollar is $.60.  The one?year forward rate of the Singapore dollar is $.62.  Carbondale created a probability distribution for the future spot rate in one year as follows: Future Spot Rate Probability                                $.58                                                         20%                                  .63                                                         50                                  .67                                                         30            Assume that one?year put options on Singapore dollars are available, with an exercise price of $.63 and a premium of $.04 per unit. One?year call options on Singapore dollars are available with an exercise price of $.60 and a premium of $.03 per unit.  Assume the following money market rates: U.S. Singapore                  Deposit rate                         7%                         4%                  Borrowing rate                    8                           5            Given this information, determine whether a forward hedge, money market hedge, or a currency options hedge would be most appropriate.  Then compare the most appropriate hedge to an unhedged strategy, and decide whether Carbondale should hedge its receivables position.      ANSWER: Forward hedge Money market hedge  Option hedge Possible Spot Rate Option Premium per Unit Exercise Yes or No? Amount Received per Unit (also accounting for premium) Total Amount Received for S$500,000 Probability Unhedged Strategy Possible Spot Rate Total Amount Received for S$500,000 Probability Assume that Baton Rouge, Inc. expects to need S$1 million in one year.  Using any relevant information in part (a) of this question, determine whether a forward hedge, a money market hedge, or a currency options hedge would be most appropriate.  Then, compare the most appropriate hedge to an unhedged strategy, and decide whether Baton Rouge should hedge its payables position.      ANSWER: Forward hedge Money market hedge Option hedge Amount Paid                Total      Option                                                       per Unit                 Amount      Possible       Premium      Exercise           (including                Paid for                Spot Rate per Unit Option? the premium) S$1,000,000 Probability Unhedged Strategy            Possible                                                 Total Spot Rate                                       Amount Paid                   Probability

Assignment: Client Presentation on Globalization: Part 1You are an economic consultant for XYZ Corporation who reports to the VP of Finance, Maria Horowitz. You learned that multiple departments of your company are collaborating to create a presentation for a prospective client that explains how XYZ Corporation can help them improve their business. Maria has been asked to present on several financial aspects of an organization. She asks you to develop the sections of the presentation for two topics: government intervention and globalization. The potential client, named Fourevr Enterprises, has stated they have a lack of understanding about governmental intervention and their business is projected to grow at a rate that has them concerned about factors such as externalities and market power. Additionally, Fourevr Enterprises has cited that they mostly operate domestically, both in terms of production and selling, because they are unfamiliar with and apprehensive to engage in globalization efforts.For this Assignment, identify a product or service offered by Fourevr Enterprises and the industry that defines it. Select one that is or potentially can be involved in international trade and globalization. Some suggestions are:Automobile or parts manufacturingPharmaceutical research and development (R&D) and manufacturingFinancial IndustriesSoftware developmentEntertainment/video gamesOil and gas exploration and productionSmall businesses involved in importing and/or exporting consumer productsMaria has developed an outline of questions she would like to have addressed for the presentation and has placed them in the presentation template. She has tasked you with addressing the questions and filling out the presentation template.In addition to responding to the prompts, you should include a cover slide, an Introduction to Fourevr Enterprises, and a References slide that includes all sources cited. Each content slide should also include detailed speaker’s notes that would be used to make the presentation to the leaders of Fourevr Enterprises. Use the presentation template provided to address the prompts. To prepare for this Assignment:Review this week’s Learning Resources; you may also want to review the characteristics of market structure from Week 4 to support your selection of a particular industry for Fourevr Enterprises.Refer to the Academic Writing Expectations for 1000-Level Courses as you compose your Assignment.BY DAY 7Submit the first part of your presentation, which involves a discussion of government regulations and policies associated with “market failure.” Be sure to include the following:Provide a brief introduction to Fourevr Enterprises, including type of business and industry and what types of products or services the company offers. (1 slide)Define market failure and identify at least two of the most common forms of market failure. Select examples consistent with Fourevr’s operations (e.g., pollution controls for an oil and gas company, labeling requirements for a pharmaceutical company, intellectual property protection for an entertainment company, provision of public services such as police or fire protection, or publicly funded training programs to help train skilled manufacturing workers). (1–2 slides)For each market failure identified, use graphs and economic models to explain the following (2–3 slides for each market failure):The reason for the market failureThe possible or potential effects of the failure on Fourevr’s operations (whether positive or negative)The role of government regulations/policy to correct each failure, and what effects those regulations might have on the company’s costs, revenues, and profits