Consider two Thai firms listed on the Bangkok stock exchange:
$\bullet$Thai A is a mining company that exports a large part of its minerals production. Much larger competitors can be found in Latin and North America. The market price of its production is largely determined in dollars on the world market.
$\bullet$ Thai B imports various engine parts from Europe and the United States. The demand for its product is highly price elastic. A significant rise in baht prices lowers the demand.
a. What will happen to the earnings and stock prices of the two companies if there is a sudden and large devaluation of the Thai baht against major currencies?
b. What can you say about the currency exposures of the two companies ($\gamma$'s)

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The Answer of Consider two Thai firms listed on the Bangkok stock exchange:
$\bullet$Thai A is a mining company that exports a large part of its minerals production. Much larger competitors can be found in Latin and North America. The market price of its production is largely determined in dollars on the world market.
$\bullet$ Thai B imports various engine parts from Europe and the United States. The demand for its product is highly price elastic. A significant rise in baht prices lowers the demand.
a. What will happen to the earnings and stock prices of the two companies if there is a sudden and large devaluation of the Thai baht against major currencies?
b. What can you say about the currency exposures of the two companies ($\gamma$'s)

Consider Two Thai Firms Listed on the Bangkok Stock Exchange ∙\bullet∙

Consider Two Thai Firms Listed on the Bangkok Stock Exchange $\bullet$