Treasury and Advanced Risk Management Techniques

AFM – May 2017 – L3 – Q5b – Treasury and Advanced Risk Management Techniques

Explanation of internal and external factors influencing transfer pricing decisions for multinational companies like Kofas Ltd.

Question

One of the key considerations for multinational companies is to decide on the price at which goods and services are transferred from one member of a group to another.

Kofas Ltd has been operating in four countries: Ghana, Nigeria, UK, and USA. The parent company and the subsidiaries have decided to use a transfer pricing policy.

Required:
You have been approached as a consultant to advise on the internal and external factors that will facilitate the transfer of goods and services from one member of the group to another. (10 marks)

Answer

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Tags: External factors, Internal Factors, multinational companies, Profit Maximization, Transfer Pricing
Level: Level 3

Topic: Treasury and Advanced Risk Management Techniques
Series: MAY 2017

AFM – Nov 2017 – L3 – Q5a – Treasury and Advanced Risk Management Techniques

Calculate the impact of undertaking multilateral netting for Paakro Ltd and its subsidiaries using expected exchange rates.

Question

Paakro Limited, based in Ghana, is the parent company of a group that contains three subsidiaries: Mangoase Limited based in Munich, Germany; Asaman Limited based in Atlanta, USA; and Nsawam Limited based in Tokyo, Japan. The following cash flows are due in three months’ time between Paakro Limited and its subsidiaries:

Owed by	Owed to	Amount
Paakro Ltd	Nsawam Ltd	¥3 million
Paakro Ltd	Asaman Ltd	$5 million
Mangoase Ltd	Asaman Ltd	$4 million
Mangoase Ltd	Nsawam Ltd	¥7 million
Asaman Ltd	Nsawam Ltd	¥2 million
Asaman Ltd	Paakro Ltd	$6 million
Nsawam Ltd	Mangoase Ltd	€12 million
Nsawam Ltd	Paakro Ltd	¥5 million

The mid-rate exchange rates in three months’ time are expected to be:

GH¢4.0 = $1
GH¢3.0 = €1
GH¢3.5 = ¥1

Required:
Calculate, using a tabular format (transaction matrix), the impact of undertaking multilateral netting by Paakro Limited and its three subsidiary companies for the cash flows due in three months. (8 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cash Flow, Exchange Rates, Foreign Exchange, Multilateral netting, Netting table
Level: Level 3

Topic: Treasury and Advanced Risk Management Techniques
Series: NOV 2017

AFM – Nov 2017 – L3 – Q1c – Treasury and Advanced Risk Management Techniques

Calculating the portfolio risk (beta coefficient) for a combined investment in government securities and the stock market.

Question

Your Uncle has won lotteries and has decided to invest the funds in various securities. His financial advisor advised him to invest 40% of the proceeds into Government Securities (Treasury Bills) and the balance invested in the Stock Market, with funds spread equally among the securities listed on the market.

Required: Advise your Uncle’s Portfolio risk (beta coefficient).

Answer

Find Related Questions by Tags, levels, etc.

Tags: Beta coefficient, Portfolio risk, Stock market investment, Treasury bills
Level: Level 3

Topic: Treasury and Advanced Risk Management Techniques
Series: NOV 2017

AFM – May 2017 – L3 – Q5b – Treasury and Advanced Risk Management Techniques

Explanation of internal and external factors influencing transfer pricing decisions for multinational companies like Kofas Ltd.

Question

One of the key considerations for multinational companies is to decide on the price at which goods and services are transferred from one member of a group to another.

Kofas Ltd has been operating in four countries: Ghana, Nigeria, UK, and USA. The parent company and the subsidiaries have decided to use a transfer pricing policy.

Answer

Find Related Questions by Tags, levels, etc.

Tags: External factors, Internal Factors, multinational companies, Profit Maximization, Transfer Pricing
Level: Level 3

Topic: Treasury and Advanced Risk Management Techniques
Series: MAY 2017

AFM – Nov 2017 – L3 – Q5a – Treasury and Advanced Risk Management Techniques

Calculate the impact of undertaking multilateral netting for Paakro Ltd and its subsidiaries using expected exchange rates.

Question

Owed by	Owed to	Amount
Paakro Ltd	Nsawam Ltd	¥3 million
Paakro Ltd	Asaman Ltd	$5 million
Mangoase Ltd	Asaman Ltd	$4 million
Mangoase Ltd	Nsawam Ltd	¥7 million
Asaman Ltd	Nsawam Ltd	¥2 million
Asaman Ltd	Paakro Ltd	$6 million
Nsawam Ltd	Mangoase Ltd	€12 million
Nsawam Ltd	Paakro Ltd	¥5 million

The mid-rate exchange rates in three months’ time are expected to be:

GH¢4.0 = $1
GH¢3.0 = €1
GH¢3.5 = ¥1

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cash Flow, Exchange Rates, Foreign Exchange, Multilateral netting, Netting table
Level: Level 3

Topic: Treasury and Advanced Risk Management Techniques
Series: NOV 2017

AFM – Nov 2017 – L3 – Q1c – Treasury and Advanced Risk Management Techniques

Calculating the portfolio risk (beta coefficient) for a combined investment in government securities and the stock market.

Question

Required: Advise your Uncle’s Portfolio risk (beta coefficient).

Answer

Find Related Questions by Tags, levels, etc.

Tags: Beta coefficient, Portfolio risk, Stock market investment, Treasury bills
Level: Level 3

Topic: Treasury and Advanced Risk Management Techniques
Series: NOV 2017

Topic: Treasury and Advanced Risk Management Techniques

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AFM – May 2017 – L3 – Q5b – Treasury and Advanced Risk Management Techniques

Explanation of internal and external factors influencing transfer pricing decisions for multinational companies like Kofas Ltd.

AFM – Nov 2017 – L3 – Q5a – Treasury and Advanced Risk Management Techniques

Calculate the impact of undertaking multilateral netting for Paakro Ltd and its subsidiaries using expected exchange rates.

AFM – Nov 2017 – L3 – Q1c – Treasury and Advanced Risk Management Techniques

Calculating the portfolio risk (beta coefficient) for a combined investment in government securities and the stock market.

AFM – May 2017 – L3 – Q5b – Treasury and Advanced Risk Management Techniques

Explanation of internal and external factors influencing transfer pricing decisions for multinational companies like Kofas Ltd.

AFM – Nov 2017 – L3 – Q5a – Treasury and Advanced Risk Management Techniques

Calculate the impact of undertaking multilateral netting for Paakro Ltd and its subsidiaries using expected exchange rates.

AFM – Nov 2017 – L3 – Q1c – Treasury and Advanced Risk Management Techniques

Calculating the portfolio risk (beta coefficient) for a combined investment in government securities and the stock market.

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AFM – May 2017 – L3 – Q5b – Treasury and Advanced Risk Management Techniques

Explanation of internal and external factors influencing transfer pricing decisions for multinational companies like Kofas Ltd.

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AFM – Nov 2017 – L3 – Q5a – Treasury and Advanced Risk Management Techniques

Calculate the impact of undertaking multilateral netting for Paakro Ltd and its subsidiaries using expected exchange rates.

You're reporting an error for "AFM – Nov 2017 – L3 – Q5a – Treasury and Advanced Risk Management Techniques"

AFM – Nov 2017 – L3 – Q1c – Treasury and Advanced Risk Management Techniques

Calculating the portfolio risk (beta coefficient) for a combined investment in government securities and the stock market.

You're reporting an error for "AFM – Nov 2017 – L3 – Q1c – Treasury and Advanced Risk Management Techniques"

AFM – May 2017 – L3 – Q5b – Treasury and Advanced Risk Management Techniques

Explanation of internal and external factors influencing transfer pricing decisions for multinational companies like Kofas Ltd.

You're reporting an error for "AFM – May 2017 – L3 – Q5b – Treasury and Advanced Risk Management Techniques"

AFM – Nov 2017 – L3 – Q5a – Treasury and Advanced Risk Management Techniques

Calculate the impact of undertaking multilateral netting for Paakro Ltd and its subsidiaries using expected exchange rates.

You're reporting an error for "AFM – Nov 2017 – L3 – Q5a – Treasury and Advanced Risk Management Techniques"

AFM – Nov 2017 – L3 – Q1c – Treasury and Advanced Risk Management Techniques

Calculating the portfolio risk (beta coefficient) for a combined investment in government securities and the stock market.

You're reporting an error for "AFM – Nov 2017 – L3 – Q1c – Treasury and Advanced Risk Management Techniques"

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