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nalin
1 month ago
4

In early 2016, the same Germany machinery company has interest from four prospective clients from emerging markets: Indonesia, B

razil, Russia, and South Africa. They all want to buy ten machines, but the factory can only produce ten in time. Therefore, the company has to choose only one client. Given the volatility of the domestic currencies of the four prospective clients, the CFO would like to choose the client which is least likely to cancel the order due to currency volatility. The invoice comes due on June 30, 2016. According to volatility alone, which prospective client would be most likely to cancel the order?

Business
1 answer:
harina [3.8K]1 month ago
4 0

Answer:

Brazil

Explanation:

The following image shows that the Brazilian real has the least currency volatility, with a spot value of 4.0685 and a forward rate of 4.1820. These figures significantly lower than those of the other three currencies make the Brazilian client the most favorable choice for the CFO.

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