Answered: make a guess on the exchange rate of…

make a guess on the exchange rate of Eur/Usd from November 23 30. And tell me what are the reasons and evidences based on practices

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter27: Multinational Financial Management

Section: Chapter Questions

Problem 6P

See similar textbooks

Related questions

Q: The Airbus A380 is the largest civilian aircraft ever built. It can carry 555 passengers on two…

A: The net present value (NPV) capital budgeting approach is used to determine the current value of…

Q: What is the project's NPV? Round to nearest whole dollar value.

A: Net present value is determined by deducting the initial investment from the current value of cash…

Q: Operating leverage Tucker Co. reports the following data: Sales Variable costs Contribution margin…

A: Contribution Margin = cm = $141,100Operating Income = oi = $48,700

Q: Nogueiras Corp's budgeted monthly sales are $6,000, and they are constant from month to month. 25%…

Q: Ezzell Corporation issued perpetual preferred stock with a 11% annual dividend. The stock currently…

A: Stock Value:The stock value, also known as the stock price or share price, represents the current…

Q: You have following information about a company: Book value of equity per share = $40 ROE = 20%…

A: The intrinsic value of a company'scommon stock using the single-stage residual income model can be…

Q: You want to purchase a new motorcycle that costs $27,400. The most you can pay each month is $635…

A: Compound = Monthly = 12Present Value = pv = $27,400Monthly Payment = p = $635Time = t = 48 Months

Q: a. Paradise Retailers, Inc. (PRI) determined that $1,500,000 is needed for cash transactions made…

A: Total cash needed (T) = $1,500,000Fixed charges (F) = $12.95Interest rate (I) = 4.5%

Q: 103 103 Close Strike Price Expiration Volume Last Volume Last Hendreeks 103 103 100 100 Maximum gain…

A: Put option contracts - Put option refers to that option that gives the holders the right but not…

Q: Torch Industries can issue perpetual preferred stock at a price of $58.00 a share. The stock would…

A: Price of Preferred Stock = p = $58Dividend = d = $6

Q: Given the information below for Seger Corporation, compute the expected share price at the end of…

A: The prices of the shares can be computed using various methods such as the P/E ratio, price to cash…

Q: A global equity manager is assigned to select stocks from a universe of large stocks throughout the…

A: The objective of the question is to calculate the total value added by the manager's decisions, the…

Q: you invest $1,100,000 in equity into a property and the broker tells you that the property would…

A: Net operating income is the earnings derived from a property after subtracting all costs associated…

Q: You own 1,000 shares of stock in Avondale Corp. You will receive a $.80 per share dividend in one…

A: Stock price under dividend discount model will be the present value of all dividends and present…

Q: State of Economy Bust Boom Probability of State of Economy .20 .80 State of Probability of State of…

A: The expected return of a portfolio as a whole is determined or calculated with the help of the…

Q: An investor purchases a zero coupon bond with 13 years to maturity at a price of $536.47. The bond…

A: Compound = Semiannually = 2Time to Maturity = t = 13 * 2 = 26Current Price of Bond = pv =…

Q: Sunrise, Incorporated, is trying to determine its cost of debt. The firm has a debt issue…

A: > Give data:> Face value = 100> No of payments per year = 2> No of years = 26>…

Q: Consider the following information: Probability of State of Economy State of Economy Boom Good Poor…

A: The expected return of a portfolio refers to the weighted return of the constituent stocks which is…

Q: 1. Calculate the Beta and Expected Return of the portfolio. 2. If the real risk-free rate is 2.10%,…

A: Portfolio Beta = (Weight of Asset A Beta of Asset A) + (Weight of Asset B Beta of Asset B) +…

Q: You have been given the following return information for a mutual fund, the market index, and the…

A: YearReturn on fundReturn on marketRisk-free…

Q: Spherical Manufacturing recently spent $15 million to purchase some equipment used in the…

A: Net present value is one of the best methods of evaluating the project wherein the project is…

Q: You have been asked by the president of your company to evaluate the proposed acquisition of a new…

A: Under MACRS depreciation method,Depreciation = Cost of the asset x depreciation rateCost of the…

Q: A company can borrow $780000 for 5 years by issuing bonds, on which interest is paid monthly at = 8%…

A: The periodic cost can be found by using the PMT function where monthly rates, the number of months,…

Q: 1. 1- Calculate the beta adjusted by the degree of freedom for stock X relative to the equity market…

A: Here, YearXMarket1-772-1115321204151758106977-2-1

Q: What is the present value of $3,000 paid at the end of each of the next 70 years if the interest…

A: Here:Payment value (p) = $3000Time (t) = 70 yearsInterest rate (r) = 6%= 6/100= 0.06

Q: The Wildcat Oil Company is trying to decide whether to lease or buy a new computer- assisted…

A: > A lease payment is a payment made under the terms of a written lease agreement between the…

Q: Brewster Company manufactures elderberry wine. Last year, Brewster earned operating income of…

A: Calculation of EVA is as follows:Workings:Calculations:

Q: the next yeat the common stick of Gold corp will pay a dividend of $6.17 per share if the cimpany is…

A: In this question, we are required to determine the worth of the stock. In other words, we are…

Q: Mansi Inc. is considering a project that has the following cash flow data. What is the project's…

A: Payback period (PBP) refers to the period or duration within which the company is able to recover…

Q: Mesa Media is evaluating a project to help increase sales. The project costs $650,000 and has an IRR…

A: In this case, the IRR is given 10% which means the project's WACC should be less than the given IRR…

Q: Empire Electric Company (EEC) uses only debt and common equity. It can borrow unlimited amounts at…

A: Cost of equity, r = D0 x (1 + g) / P + gWhere,P = Stock valueD0 = Current dividendg = growth rate in…

Q: You are a consultant to a firm evaluating an expansion of its current business. The cash-flow…

A: IRR is also known as Internal rate of Return. It is a capital budgeting technique which helps in…

Q: If life insurance is pledged as collateral for a loan, how much can be borrowed? face value of the…

A: The correct answer is b) Cash surrender value of the policy.When life insurance is pledged as…

Q: In a recent 5-year period, mutual fund manager Diana Sauros produced the following percentage rates…

A: The average return is the return expected to earn on a portfolio whereas the standard deviation…

Q: In order to accurately assess the capital structure of a firm, it is necessary to convert its…

A: A bond is a kind of debt security issued by the government and private companies to the public for…

Q: Find the new balance, assuming that the bank charges 2-% per month on the unpaid balance. 2 Previous…

A: Variables in the question:Previous balance=$592.88Payment=$81.26New purchases=$50.00Bank charges per…

Q: You borrow B20,000 for a term of 20 years to be repaid by level annual instalments. The rate of…

A: The regular fixed periodic payments made are considered annuity payments. The current worth of all…

Q: b. Evaluate the sensitivity of your base-case NPV to changes in fixed costs. (A) negative answer…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: Why is the cost of financing a project with retained earnings lessthan the cost of financing it with…

A: The objective of the question is to understand why the cost of financing a project with retained…

Q: Which of the following is a possible investment strategy for an investor who wishes to hold a…

A: Standard deviation is the measure of risk and volatility of the stock and measures how much is the…

Q: A loan is being repaid with payments of $1,500 at the end of each quarter. If the loan will be…

A: Payment Amount (PMT) = $1500Loan duration (Number of years) = 5 yearsNumber of compounding period…

Q: Capital Structure Analysis Pettit Printing Company (PPC) has a total market value of $100 million,…

A: The weighted average cost of capital (WACC) is the average after-tax cost of capital from all…

Q: Hawaiian Macadamia Nuts currently has no debt. They are considering changing to a capital structure…

A: New Cost of equity= Ko + (Ko - Kd)*(D/E)*(1-t)Ko = Old Cost of equityKd = Cost of debtD/E = Debt /…

Q: Assume a 20-year, 8%, monthly amortizing, $4,000,000 mortgage on a residential property that was…

A: The amortization refers to the equal and regular repayment of the mortgage amount over the period of…

Q: Suppose you held a diversified portfolio consisting of a $7,500 investment in each of 20 different…

A: Given data:> Exsting beta = 0.65> selling stock beta = 1> purchasing stock beta = 1.60

Q: Consider the following scenario analysis: Scenario Recession Normal economy Boom Probability 0.20…

A: Standard deviation is helpful in measuring the scatteredness of the data from its mean value, low…

Q: Suppose that you borrow $125,000 using a 15-year loan with an annual interest rate of 4% with…

A: Present value of annuity is computed as follows:-PV=A*wherePV= present value of annuityA= periodic…

Q: How much would you be willing to pay for a $1,000 par value, 10-year bond with a 12.00% coupon…

A: Compound = Semiannually = 2Face Value = fv = $1000Time = t = 10 * 2 = 20Coupon Rate = c = 12 / 2 =…

Q: Suppose the rate of return on a 10-year T-bond is 5.30%, the expected average rate of inflation over…

A: The Expected average percentage increase in the overall level of prices for goods and services,…

Q: The Bouchard Company's EPS was $5.40 in 2021, up from $3.26 in 2016. The company pays out 40% of its…

A: Retained earnings refers to the part of earnings for shareholders that is retained or kept aside by…

Concept explainers

Exchange Rate Risk

It is the possibility that the value of a currency will fluctuate in the future. In the wake of globalization, business establishments have increasingly ventured into international markets. The volume of international trade has prospered excellently in the near past and is expected to be more affluent in the future. The use of exchange-traded derivative financial instruments has been multi-folded to provide for the requirements of various MNCs and offshore potential investors. Most banks and financial institutions have helped integrate the global economies. Our Government has introduced some bold and extreme measures to fulfil the purpose behind the fiscal, industrial, and monetary policies. The enactment of GST is a huge step towards streamlining the taxation system of the country. Owing to Covid-19, this aspect of corporate risk management has become critical.

Question

make a guess on the exchange rate of Eur/Usd from November 23 30. And tell me what are the reasons and evidences based on practices..

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: estimation of eur/usd

VIEW

Step 2: some important points

VIEW

Solution

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Match each term in Column A with its related definition in Column B. Column A 1. ____________ Spot rate 2. ____________ Currency appreciation 3. ____________ Translation risk 4. ____________ Transaction risk 5. ____________ Exchange rate Column B a. The rate at which one currency can be traded for another currency. b. The possibility that future cash transactions will be affected by changing exchange rates. c. A month ago, 1 U.S. was worth 8.5 Mexican pesos. Today, 1 is worth 9.0 Mexican pesos. The U.S. dollar has undergone what? d. The degree to which a firms financial statements are exposed to exchange rate fluctuation. e. The exchange rate of one currency for another for immediate delivery (today).
Suppose the exchange rate between U.S. dollars and British Pounds is $1.00 = 1.70 Pounds and the exchange rate between the U.S. dollar and the Euro is $1.00 = 1.24 Euros. What is the direct quote cross rate of one Pound to the euro? (How many Euros will one Pound purchase?) Instruction: Type your answer in euros, and round to two decimal places.
Compare graphically the exchange rates between the two currencies between the period mid 2007 – mid 2009, and between the period mid 2019 – current. Briefly explain.
When translating Acceletron’s fi nancial statements into US dollars, Redline is least likelyto use an exchange rate of USD per SGD:A . 0.671.B . 0.588.C . 0.654.
Consider the following table, which reports the spot exchange rate between the dollar and the pound, as well as the interest rates in the UK and the US (standard notation applies): 5 S/£ exchange rate r UK (%)r US (%) spot S1.1122/£1 1 month 2.1 2.1 3 month 2.5 2.9 6 month 2.9 4 1 year 4.1 4.5 Showing all your calculations, evaluate the 1 - month, 1-year, 3- month, and 6-month forward exchange rate between the pound and the dollar.
Suppose quotes for the dollar–euro exchange rate E$/€ are as follows: in New York $1.05 per euro, and in Tokyo $1.15 per euro. Describe how investors use arbitrage to take advantage of the difference in exchange rates. Explain how this process will affect the dollar price of the euro in New York and Tokyo.
Today is 1 July and the spot exchange rate for AUD 1.00 = EUR 0.7000. You have purchased equipment from a European supplier and the invoice amount is EUR 10,000. a) If you paid the invoice today, what is the AUD cost of the purchase?
The following are the prices in the foreign exchange market between the U.S. dollar and another local currency (LC). Spot $0.03112/LC 3-month forward $0.03117/LC 6-month forward $0.03118/LC What was the approximate discount or premium on a three-month forward for LC? A. 0.643% premium B. 0.013% premium C. 0.013% discount D. 0.643% discount
In April 2018, the exchange rate between the U.S. Dollar and the euro is 1 euro = $ 1.21. If in the following months, inflation in the euro zone is lower than the inflation in the U.S., then (other things equal) a possible exchange rate would be: 1 euro = $1 1 euro = $1.6 1 euro = $0.94
From the following data provided, ascertain what would be the exchange rates that the Bank would quote for an FDI transaction amounting to USD 2 Mn for value cash basis, assuming a margin of 3 paise where., Spot USD/INR = 75.0900/75.1000 ., Cash/Spot : 4/5 paise. Arrive at the exchange rate up to 4 decimal places. Adhere to the steps involved in calculation.
A newspaper provides spot exchange rate of $1 = £.7555 and 1-year forward rate of $1=£.7755. You’ll also need to use the additional information provided in the problems. Jay has Euro 1,000 wishes to trade out of euro and into Pound. The USD-Euro exchange rate is quoted as $1.30 = Euro1.00. How much Pound will the customer get, 2 decimal places?
Which one of the following best describes an agreement you make today to exchange U.S. dollars for British pounds three months from now? Multiple Choice Forward trade Spot trade Arbitrage transaction Cross-rate exchange Eurocurrency transaction