Multinational Business Finance - Math Problem Example

The paper "Multinational Business Finance" is a good example of a business math problem. The long term capital is 1,000 million local currencies and the capital received through A shares is 100 million local currency. This amounts to 10 percent of the total long term capital the company received. The capital received from common stock A is one-tenth of the total capital.

2. the total capital is 1000 million local currency. The voting rights of A-shares are 10 times more than the B shares. The voting rights of A-shares is 1x10 = 10 million votes.

The total voting rights of B shares is 1x1 = 1 million votes.

The total votes are 11 million. Out of these total shares, 10 million votes are from A-shares. The proportion is 10= .909. Out of every 10 votes, 9 votes are from A-shares.

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• The shares that have more voting rights will have less right to receive cash when the company is bankrupt. When the situation is not like that and if the company is issuing dividends from the returns, the share of dividends depends on the voting rights of the types of shares. As the voting rights of A-shares are 10 times more than the voting rights of B and the number of shares of common, the total dividend can be divided into 11 parts and 10 parts go to the A shares as a dividend. This means if 11million local currency is issued as a dividend, the 10 million can be given to A shares and 1 million to B shares.

• • 3. Under the gold standard, the price of an ounce of gold in U.S. dollars was $20.67, while the price of that same ounce in British pounds was 4.2474. What would the exchange rate between the dollar and the pound be if the U.S. dollar price had been $38.00

Under the Gold standard, any two currencies’ values can be compared depending on the currency offered for an ounce of gold. If 2 units of one currency and 3 units of another currency were able to buy an ounce of gold, the 2 units of the first currency will be equal to 3 units of the second currency. In the above case, the $20.67 = 4.2474 pounds. This decides the exchange rate as 1 dollar = 0.205 GBP. If one ounce of gold costs about $38.00 the exchange rate will be 1 dollar = 0.405 GBP.

• Before World War I, $20.67 was needed to buy one ounce of gold. If, at the same time one ounce of gold could be purchased in France for FF310.00, what was the exchange rate between France francs and U.S. dollars

Price of one ounce of gold in dollars = $20.67

Price of one ounce of gold in francs of France = 310.00.