Analysing a Multinational Corporation
QUESTIONS
1.What stock markets are the MNC listed on? Give the stock price at the MNC’s year end and explain any fluctuations in price over the past year. Does it appear that the MNC issues stock in foreign countries? 5 marks
2.What are the main currencies that the MNC uses to conduct its international business? Prepare a chart or table showing the direct and indirect quotation of each foreign currency in relation to the home currency of the MNC at the last year-end and the previous one. Also prepare a cross-exchange rate chart for these currencies for the same dates. 8 marks
3.Illustrate, using diagrams or tables and calculations, how the values of these currencies have changed (appreciated or depreciated) over the past year relative to the MNC’s home currency, and comment on the main reasons for these changes.To answer this question, review a foreign exchange table provided online for the company’s year-end and another table containing quotations from the previous year-end date. The answers to this question will be used in later sections to determine how the firm was affected by changes in the values of these currencies. 10 marks
4. For each of the main foreign currencies used by the MNC, describe the level of volatility of the currency and the level of government intervention, if any. How have these factors influenced the MNC’s business, especially over the past financial year? 6 marks
5. Using actual rates for the main currencies where the MNC conducts international business illustrate and determine if any type of arbitrage is possible (locational, triangular and covered interest). 9 marks
