Research method Assignment Example | Topics and Well Written Essays - 2500 words

Research method - Assignment Example The bank presents different offers to Super Cars; the option to receive payment after three months of entering the deal, or receiving the payment after one year. By unleashing these contrasting offers, the bank wants to also shield itself from the effects of uncertainties in the international market, thereby offering Super Cars minimum cushioning from the same. The Super Cars’ resolve to opt for the three-month payment duration presents better value for the firm, and subsequently affirms greater exposure to risk for HSBC. Finally, HSBC evaluates two options with the foreign currency it acquires: to either convert the currency to dollars immediately or after one year. This is done through examining strategies to mitigate effects of currency value fluctuations that the bank could use. The USA Super Cars sells luxury sports cars to buyers in different destinations around the world. Over the next one year, the firm will be expected to supply the UK, Japanese, Canadian, South African and the local US markets with sports cars. In order to determine the expected prices of the products at the time they will be shipped to requested destinations (the cars will be required exactly one year from now), the firm has taken forecasted estimates of the dollar’s exchange rates against the foreign currencies in the target markets. This way, it is possible to fairly estimate the amount of revenue expected from the sales, considering both the lower and upper bounds for the same. This report examines the value of the offer presented by HSBC to USA Super Cars, its ability to cushion the latter from expected risks and the ability to generate a profit for HSBC. Note: In these calculations, the totals are subsequently divided by n = 27 (the number of cars that have been ordered by the domestic and foreign buyers) in order to work with the formula for z-scores. = (81,481.48 – 113,011.1) / 16,491.40 = -1.912, equivalent to the