b) Analysts at Delfonica Capital have taken the view that due to ZPZ-Bank's loan book being o Eastern European lending it is highly probable the bank will have to set aside capital onperforming loans. As a result, they believe the stock price of ZPZ-Bank will fall in value dvised the fund to invest £10,000. Consider two investment alternatives: i) Borrow 1818 ZPZ-Bank shares (£10,000/5.5=1818.2). Sell these shares at £5.50 each.

b) Analysts at Delfonica Capital have taken the view that due to ZPZ-Bank's loan book being o Eastern European lending it is highly probable the bank will have to set aside capital onperforming loans. As a result, they believe the stock price of ZPZ-Bank will fall in value dvised the fund to invest £10,000. Consider two investment alternatives: i) Borrow 1818 ZPZ-Bank shares (£10,000/5.5=1818.2). Sell these shares at £5.50 each.

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter5: Currency Derivatives

Section: Chapter Questions

Problem 4SBD

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