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value added during the period (019% from underweighting France and 011% from overweighting Japan) to the asset allocation decision But how do we interpret the 0254% currency effect One way to interpret the currency effect is similar to that of the allocation effect, where we credit the manager with a gain due to allocating assets to markets that outperformed during the period One problem with this interpretation, however, is that currency returns actually have two components: an expected return given the difference in interest rates at the beginning of the period, as well as an unexpected return In this section we discuss a method to isolate the expected from the unexpected return in order to credit the manager only with the return that could not have been anticipated at the beginning of the period.



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Listing 28-2 is an example of a servlet that monitors a local configuration file for logging settings.

Figure 17.9 Product of the range of an energetic electron in a solid material with the density as a function of the incident kinetic energy is shown. (From Knoll, 2000.)





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Procter & Gamble (P&G) and Wal-Mart Wal-Mart provides P&G access to sales information on every item Wal-Mart buys from P&G The information is collected by P&G on a daily basis from every Wal-Mart store, and P&G uses the information to manage the inventory replenishment for Wal-Mart By monitoring the inventory level of each P&G item in every Wal-Mart store, P&G knows when the inventories fall below the threshold that triggers a shipment All this is done electronically; the bene t for P&G is that they can sell to a good customer, and the bene t to Wal-Mart is adequate inventory on its shelves P&G has similar agreements with other major retailers Retailer Supplier Collaboration: Target Corporation Target Corporation (targetcorpcom) is a large retail conglomerate (owner of Target Stores, Marshall Field, Mervyn s, and Targetdirectcom) It needs to conduct EC activities with about 20,000 suppliers.

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The reason for a component of currency return that can be anticipated at the beginning of the period is that currency returns are in uenced by the difference between interest rates in the two markets on either side of the exchange rate The difference in interest rates prevailing within two countries is called the interest rate differential For example, if interest rates in Japan were higher than interest rates in the United States at the beginning of the period, we would expect that the Japanese yen would depreciate versus the dollar during the period Over time we expect high interest rate currencies to depreciate relative to low interest rate currencies.

In 1998, then operating under the name Dayton-Hudson Corporation, the company established an extranet-based system for those suppliers that were not connected to its VAN-based EDI The extranet enabled the company not only to reach many more partners, but also to use many applications not available on the traditional EDI The system enabled the company to streamline its communications and collaboration with suppliers It also allowed the company s business customers to create personalized Web pages that were accessible via either the Internet or GE s private VAN Reduction of Product Development Time: Caterpillar, Inc Caterpillar, Inc (caterpillarcom) is a multinational heavy-machinery manufacturer In the traditional mode of operation, cycle time along the supply chain was long because the process involved paper-document transfers among managers, salespeople, and technical staff.

To solve the problem, Caterpillar connected its engineering and manufacturing divisions with its active suppliers, distributors, overseas factories, and customers through an extranet-based global collaboration system By means of the collaboration system, a request for a customized tractor component, for example, can be transmitted from a customer to a Caterpillar dealer and on to designers and suppliers, all in a very short time Customers also can use the extranet to retrieve and modify detailed order information while the.

This must be so in order to eliminate an arbitrage opportunity whereby, for example, investors could earn a risk-free return by borrowing at the risk-free rate in the United States during the period, exchange dollars for yen, and then invest in Japanese risk-free investments during the period To eliminate the arbitrage opportunity, holding all other in uences on exchange rates constant, the value of the yen will fall during the period, as measured in US dollars, in an amount required to offset the interest rate differential Because of the relationship between interest rate differentials and expected currency returns, a portion of the currency effect might have been expected at the beginning of the period, given the funds over- or underweight in a particular currency relative to the benchmark.

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