On the Milan bourse, Fiat Chrysler stock recently traded at €13.82 per share. Fiat Chrysler also trades as an ADR on the NYSE. One underlying Fiat Chrysler share equals one ADR. If the $/€ spot exchange rate was $1.12/EUR1.00, what is the no-arbitrage U.S. dollar price of one ADR?
Q: Under the National Flood Insurance Program (NFIP), flood insurance is Only available through…
A: Flood insurance is a sort of property insurance that protects a home from the financial consequences…
Q: Quantitative Problem: Bellinger Industries is considering two projects for inclusion in its capital…
A: IRR is the Internal rate of return. It is that rate at which the NPV of a project is zero ie: the…
Q: You have received $200,000 from the PowerBall Lottery and want to have half that amount available…
A: Total lottary amount = $200,000 Amount required at retirement (FV) = $200,000/2 = $100,000 Interest…
Q: The real risk-free rate of interest is 3 percent. Inflation is expected to be 4 percent this coming…
A: An expectation theory is defined as the theory, which used to attempt for predicting what the rate…
Q: Stock W has the following returns for various states of the economy: State of the Economy…
A: State of the Economy Probability Stock W's Return Recession 0.15 -10% Below Average 0.2 5%…
Q: A gold-mining firm is concerned about short-term volatility in its revenues. Gold currently sells…
A: Data given: Current selling price of Gold per ounce= $2100 Company will bring 1400 ounces of Gold to…
Q: Compute the payback period for an investment with the following net cash flows. (Round your answer…
A: Last year in which cumulative net cash flow is negative (Y) = 4th year Minimum cash inflow required…
Q: 5.940%
A: WACC= Cost of equity (ke) * weight of equity + Cost of debt(kd) * weight of debt.
Q: a. The value of CoolTech's entire company is S. (Round to the nearest dollar.) The value per share…
A: Growth rate = 5% Weighted average cost of capital = 11% Market value of debt = $2,950,000 Market…
Q: k W has the following returns for various states of the economy: State of the Economy Probability…
A: The mean return is expected probabilistic return considering the different state of economy and…
Q: Calculate the mean (that is, calculate the arithmetic mean) of the following set of values. Round to…
A: Answer - Formula of Arithmetic Mean - AM = Sum of Observation ÷ Total numbers of Observations A…
Q: [The following information applies to the questions displayed below.] Following is information on an…
A: Net Present Value: Net present value (NPV) is the excess of present value of cash inflows over the…
Q: For this assignment, you are to construct a diagram of the Fraud Triangle and clearly label each…
A: The fraud triangle is a concept that auditors use to explain why someone might choose to conduct a…
Q: O Payback does not consider the time value of money
A: Capital projects refer to a project which is helpful in maintaining and improving the asset of the…
Q: 1. In equity financing, the corporation is required to distribute dividends to its stockholders on a…
A: Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only one…
Q: Irene plans to retire on December 31st, 2019. She has been preparing to retire by making annual…
A: Annuity can be defined as the payment or receipt of equal amount of cash at equal intervals of time.…
Q: A company has profits of $38,982 this year and expects profits to decrease by $1,728 dollars per…
A: Given: Profit = $38,982 Decrease in profit = $1,728 Year = 12 APR = 6.2%
Q: A borrower takes out a 30-year loan for a house worth $250,000. If the annual interest rate is 6%.…
A: Here this is a case of home loan. It should be noted that there are monthly payments towards a home…
Q: Directions: Read each item carefully. Match Column A with the correct answer on Column B, write only…
A: The concept of annuity is the regular payments made by the depositor for earning return or payments…
Q: what amount must you pay if you pay within the discount period?
A: Credit term refers to a method used by the firms to encourage buyer or debtor to pay the amount of…
Q: Value of a retirement annuity. Your bank manager has informed you about a new investment plan that…
A: Annual payment (P) = $5000 Interest rate (R) = 6% Number of annual payment (N) = 20
Q: Crane Corp. is considering purchasing one of two new processing machines. Either machine would make…
A: The net present value is the method of finding the profitability of a project by adding up…
Q: 9. Avicorp has a $11.7 million debt issue outstanding, with a 5.8% coupon rate. The debt has…
A: The cost of debt is the yield to maturity of a bond. It is the rate at which borrowed funds can be…
Q: bond has a Macaulay duration of 12.00 and is priced to yield 10.0%. If interest rates go up so that…
A: % Change is price = - Modified Duration *Change in yield = [- 12/(1 + 0.10) ] * 0.5 = (- 12/1.10) *…
Q: ATIRR. You can buy a building for $1,000 and sell it after 10 years for $1,100. (NOI = 70; Annual…
A: Here, To Find: After-tax rate of return =?
Q: The capital investment committee of Arches Landscaping Company is considering two capital…
A: Given: Front end load: Year Income from Operations Net Cash Flow 1 $46,800.00 $144,000.00 2…
Q: Tuesday, December 1, is the ex-dividend date for Alpha stock. Which one of the following dates is…
A: Answer - The ex-dividend date for stocks is usually set one business day before the record date.…
Q: 3. For the last 15 years, Tina has been receiving a 20/15/5 series discount. Find the equivalent…
A: In finance a discount series is essentially a chain of discounts. Here multiple discounts are…
Q: Historical data suggests Stock X of Company X have been consistently growing at a rate of 8% for the…
A: Stock price = D0 (1 +g)/K -g Given, D0 = Last Dividend declared D0 (1+ g) = Current Dividend…
Q: Toombs Media Corp. recently completed a 3-for-1 stock split. Prior to the split, its stock sold for…
A: Stock split ratio = 3:1 price prior to stock split = $ 80 The firms market value was unchanged after…
Q: A.K. Scott’s stock is selling for $37 a share. A 3-month call on this stock with a strike price of…
A: The put-call parity is a term used to describe the relationship between call and put options in…
Q: The Everly Equipment Company's flange-lipping machine was purchased 5 years ago for $40,000. It had…
A: Net present value is the difference between the present value of cash inflows and present value of…
Q: Desribe the international versions of bonds in brief. Focus clearly on the differences between them…
A: Domestic, euro, and foreign bonds are the three types of international bonds. To split the…
Q: ce Using Return on In Comparative data on three companies in the same service industry are given…
A: Margin = Net operating IncomeSales Turnover = SalesAverage Operating Assets ROI or…
Q: Month Zemin Corp. Market 1 5% 3% 2 2% 1% 3 -1% 1% 4 -2% -1% 5 4%…
A: CAPM: Capital asset pricing model The Capital Asset Pricing Model (CAPM) is a mathematical model…
Q: 1. A man borrows P2,500 for 2 years at 8 %4%. How much and what will be the amount at the end of the…
A: When the bank deducts interest from the loan amount it is known as a discount. When the discount is…
Q: . HighGrowth Company has a stock price of $19. The firm will pay a dividend next year of $0.88, and…
A: Next dividend (D1) = 0.88 Current price (P0) = $19 Growth rate (G) = 4.1%
Q: 19. An investment of P300 is made at the beginning of each month for 4 years and 3 months. How much…
A: Future value can be calculated using FV (rate, nper, pmt, [Pv], [type]) Rate The interest rate Nper…
Q: You have an outstanding debt of $8,000, with 9% simple interest. If you make a partial payment of…
A: Given, Outstanding debt = $8000 Partial payment = $2500 And,Amount of loan = $8000 - $2500 = $…
Q: Tesla, Inc. common stock has a beta of 2.08. If the expected risk-free return is 1.5% and the…
A: Stock beta (b) = 2.08 Risk free rate (Rf) = 0.015 Market return (Rm) = 0.14 Expected return = ?
Q: A company has cost estimates associated with operating and maintaining the currently owned filter…
A: Given, In this question we have to determine the cost of retention and the annual worth of the…
Q: what is the new value of the portfolio, and what return did it earn? After the price change, what…
A: Expected return refers to the return earn by an investor on the amount invested during a period of…
Q: PROBLEM NO.1 Compute the PW: $3500 market value productivity attributable to equipment per year…
A: The net annual cash inflows are the productivity attributable to the asset per year. The present…
Q: The Gable Inn is an all-equity firm with 16,000 shares outstanding at a value per share of $14.50.…
A: Number of shares outstanding before debt issue = 16,000 Value per share = $14.5 Value of firm =…
Q: Suppose you have the opportunity to invest in a bond which matures in three years has a face value…
A: To get the present value of a bond the future cash flows need to be discounted using the discount…
Q: Pompeii's Pizza has a delivery car that it uses for pizza deliveries. The transmission needs to be…
A: Present Car New Car Purchase cost new $32,000.00 Transmission and other repairs $…
Q: retail coffee company is planning to open 105 new coffee outlets that are expected to generate $15.7…
A: NPV = Free Cashflow/( WACC - Growth)
Q: Bermuda Triangle Corporation (BTC) currently has 570,000 shares of stock outstanding that sell for…
A: Stock split used to happen at the time of the company, which used to increase the number of shares…
Q: 8. Norisol Camacho owns a textile plant in Mexico, but the bulk of her raw materials come from East…
A: Risk is the chance of occurring unfavorable situation for an investor. If the market situation does…
Q: a. What is the market value of its equity? b. What is the market value of its debt? c. What…
A: Weighted average cost of capital (WACC) refers to the joint cost of company's capital from all the…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
- In the London market, Rolls-Royce stock closed at £0.875 per share. On the same day, the British Pound sterling to the U.S. dollar spot exchange rate was £0.6366/$1.00. Rolls Royce trades as an ADR in the OTC market in the United States. Five underlying Rolls-Royce shares are packaged into one ADR. If the Rolls Royce ADRs were trading at $5.75 when the underlying shares were trading in London at £0.875, ignoring transaction costs, the arbitrage trading profit would be $0.00. $1.12. $2.12. $3.12.If a certain stock sells for 626.659 dollars on the NYSE, how much will it sell for, in dollars, on the LSE(London stock exchange). Remember that the distance between NYSE and LSE is about 3,460 miles.In each of the following cases, calculate the price of one share of the foreign stock measured in United States dollars (US$). a. A Belgian stock priced at 103.1 euros when the exchange rate is 1.0787 US$/ (i.e., each euro is worth $1.0787). b. A Swiss stock priced at 92.5 Swiss francs (Sf) when the exchange rate is 1.0385 US$/Sf. c. A Japanese stock priced at 1,386 yen (¥) when the exchange rate is113.9988 ¥/US$. Question content area bottom Part 1 a. The Belgian stock priced in U.S. dollars is $111.14 (Round to the nearest cent b. The Swiss stock priced in U.S. dollars is $................ (Round to the nearest cent.) c. The Japanese stock priced in U.S. dollars is $.......... (Round to the nearest cent.)
- What is arbitrage? Explain the arbitrage opportunity when the price of a dually listedmining company stock is $50 (USD) on the New York Stock Exchange and $60 (CAD) on the Toronto Stock Exchange. Assume that the exchange rate is such that 1 USD equals 1.21 CAD. Explain what is likely to happen to prices as traders take advantage of this opportunity.Suppose that a French firm would like to have its stock available through an American Depository Receipt (ADR). If the firm’s stock is currently selling for €75 and that the exchange rate between the € and the $ is €1.0=$1.0592. What price should we expect for the ADR in US dollars? Suppose that over the next year the dollar reaches parity with the Euro, i.e., $1.00=€1.00 and that the price of the French firm’s stock rises to €100. What would expect the price of the ADR to be?Assume that 90-day U.S. securities have a 4.5% annualized interestrate whereas 90-day Swiss securities have a 5% annualized interestrate. In the spot market, 1 U.S. dollar can be exchanged for 1.2Swiss francs. If interest rate parity holds, what is the 90-dayforward rate exchange between U.S. dollars and Swiss francs?(0.8323 $ per SFr or 1.2015 SFr per $)
- A Swiss stock has a monthly risk of 0.01 and the CHF/$ exchange rate has a monthly risk of 0.1. The correlation of these two risks is 0.22. What is the annual risk of a US investment into this stock to three decimal places in decimal terms (eg. 5.1% = .051)At the start of May, you purchased some shares in Apple (a US company) for $US 45.61, and hedged your position using forward contracts (hedging the purchase value of the shares). The exchange rate at the time of purchase was $US1 = $NZ 1.71, while the one month NZ interest rate was 7.10% and the one month US interest rate was 6.40% (both rates are per annum, with monthly compounding). At the end of May, the exchange rate was $US1 = $NZ 1.75, while the shares were worth $US 46.89. Apple paid no dividends during May. What was your ($NZ) holding period return over the month of May? 5.21% 2.81% 3.53% 2.93%A stock price is worth CHF 229 on 01.01.2022 and CHF 152 on 01.01.2023. The exchange rate between CHF and $ is 1.0575 CHF/$ and the exchange rate between CHF and british pounds (GPB) is 0.972 CHF/GPB. a) If the price growth rate was the same in 2021 as in 2022, what was the price, in CHF, on 01.01.2021? (Round your answer to 2 digits after the decimal point if needed)
- Assume that 90-day U.S. securities have a 3.5% annualized interest rate, whereas90-day Canadian securities have a 4% annualized interest rate. In the spot market,1 U.S. dollar can be exchanged for 1.4 Canadian dollars. If interest rate parity holds,what is the 90-day forward exchange rate between U.S. and Canadian dollars?Assume that interest rate parity holds. In the spot market 1 Japanese yen = $0.00905, while in the 90-day forward market 1 Japanese yen = $0.00913. In Japan, 90-day risk-free securities yield 1%. What is the yield on 90-day risk-free securities in the United States? Do not round intermediate calculations. Round your answer to two decimal places.If expected inflation in the U.S. is 8%, expected inflation in France is 12%, and the one-year risk-free rate in the U.S. is 4%, what would the one-year risk-free rate have to be in France for real interest rate parity to hold? A company has total book value of common stock equal to $650000, a par value of $1 per share, 150000 shares issued and outstanding, and the market value of the common stock is $85 a share. a. What is the company's additional paid-in capital? b. What is the market capitalization?