or the following practice questions use these rates that your bank has quoted you:   EUR/USD:        1.0175 – 1.0180 GBP/USD:        1.2065 – 1.2070 USD/CAD:        1.2930 – 1.2935 USD/JPY:          134.85 – 134.90 AUD/USD:        .6905 - .6910   Please calculate the following crosses:   EUR/GBP: 0.843 - 0.844   EUR/JPY: 137.210 - 137.328   AUD/JPY: 93.114 - 93.216   GBP/CAD   GBP/JPY

Q: You're evaluating various investment opportunities and you have the following information about five…

A: The Sharpe ratio is used to measure the return of a portfolio that has been adjusted for risk. An…

Q: Before they retire Bob and Beth want their savings to grow to 7.7 million. Bob and Beth have $2.4…

A: Future value (FV) = $7,700,000 Current value (P0) = $2,400,000 Annual rate of return (r) = 0.076 or…

Q: Approximately, what is the value of (P) if A=240, n=4 years, and i= 3% per year? a. 1071 b. 1196 741…

A: Annuity payment (A) = 240 Period (n) = 4 years Interest rate (i) = 0.03 or 3% Present value (P) = ?…

Q: compute the discounted payback statistic for Project X and recommend whether the firm should accept…

A: Discounted payback period shows that how long it will take to recoup an investment using present…

Q: 4) Use this week's activity to write the formula for placing $300 in a 7.5% account compounded…

A: We will use the concept of time value of money here. As per the concept of time value of money the…

Q: General Computers Inc. purchased a computer server for $70,000. It paid 35.00% of the value as a…

A: Purchase of Computer Server = $70,000 Down payment = $24,500 (being 35% of $70,000) A loan is taken…

Q: 14-12. If you are trying to build credit by using a credit card, each time you make a purchase with…

A: Average daily balance method is used to calculate the finance charge on the amount owed to the…

Q: Suppose in 1978 there is a surprise recession expected to last until 1979 and in response the Bank…

A: Recession is referred as the business cycle, which has the contraction at the time of decline in an…

Q: key factors involved in establishing a dividend policy

A: A dividend policy is the dividend distribution criteria established by a company's board of…

Q: Please help on part 4 while showing work

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Q: Colossus Company has the ability to obtain debt financing at 10 percent. It currently has $2,000,000…

A: Given: Cost of debt = 10% Tax rate = 25%

Q: The Dragons (from CBC's Dragon's Den) are considering a venture from an Albertan entrepreneur. His…

A: Required return is 20% To Find: IRR of the project

Q: All rates in this question use semi-annual compounding. You observe a two year spot rate of 5.10%,…

A: Given: 2 year spot rate r2= 5.10% 1 year forward rate 2 years from now "f3" = 4.80% 3 year spot rate…

Q: Describe how the Admati and Pfleiderer (1988) model differs from the Kyle (1985) model of equity…

A: An equity market is referred as the place, where the shares as well as stocks of the corporation is…

Q: . If you are the firm, which instrument would you prefer between bond vs sukuk to finance you…

A: In Islam the interest is considered as Halal and therefore not allowed in based on the principle of…

Q: College Station Bandwagon is the sole provider of the internet in the College Station area. T…

A: Loans are paid by installments these installment carry the payment for interest and also payment of…

Q: The maintenance on a machine is expected to be P3,500, P7,000, P10,500, and P14,000 for the second,…

A: We will have to use the concept of time value of money which states that worth of money changes with…

Q: Moranex Corporation borrowed $75,000.00 at 8% compounded annually for 15 years to buy a warehouse.…

A: When we take a loan we pay equal periodic payments. Here the payments are being made annually.   The…

Q: Today, Joe paid $12,000 for a bond which has $10,000 face value. The bond coupon rate is 10% per…

A: The yield to maturity is rate of return realized on the bond when held till maturity of bond period…

Q: Firm A has 10 shares. The present value (PV) of the firm is 500, i.e., 50 per share. It has an…

A: The stock prices are always determined by various types of market forces and continuous interaction…

Q: Access Enterprise Limited is a private company and has been in operation for over five years. The…

A: Capital Market-It is a place  for raising funds by corporate, government etc., by issuing financial…

Q: Assume interest is paid in full at the end of each year. a. How much would Sauer Food Company save…

A: There is interest to be paid on the loan that depends on the period of loan and interest rate on the…

Q: s the future value (as at year 6) of the following cash flows, given an interest rate of 7% p.a?…

A: The future value of cash flow includes the amount being deposited and amount of compounding interest…

Q: All rates in this question are quoted with semi-annual compounding. You observe two spot rates. The…

A: The forward rate is defined as the effective future yield of a security. It is the rate that the…

Q: A Uniform series estimating the economic worth F(Future value) when A is given is calculated using:…

A: The worth of a series of recurrent payments at a specific future date, assuming a specific rate of…

Q: Don Solomon wants to set up a scholarship program with his alma mater. If P941498 is needed per year…

A: Present value of annual cash flow to be in perpetuity If a cash flow annually occur in perpetuity,…

Q: Oil Drilling company is considering the installation of new automated drilling equipment. The new…

A: Capital Budgeting Capital budgeting and investment appraisal are planning processes used to assess…

Q: River Valley Production Inc. seeks to increase its market share and improve its results. The company…

A: Formula to be used for: Debt to Equity Ratio =Total Debt / Shareholders Equity Price / Earning…

Q: 7.5 UNKNOWN PERIODIC PAYMENTS Often, in a given problem, the present or future value, the interest…

A: Future value of annuity includes the amount being deposited but also accumulated amount of the…

Q: Inflation is a general rise in market prices that affects all goods equally. OA. True OB. False

A: Market prices refer to the prices that are prevailing in the market of goods and services. It is…

Q: Postal Express has outlets throughout the world. It also keeps funds for transactions purposes in…

A: Exchange rate and interest rate differential helps to generate the profit or to result a loss. It is…

Q: Case: Two months ago, Lisa was honorably discharged from the Air Force where she spent four years…

A: Loans and mortgages are given on the basis of capacity to pay back the loan that is based on monthly…

Q: Optimist Company can sell common shares at $30 per share and can obtain debt funding at 8 percent.…

A: There will be a tax saving on interest paid on debt fund therefore the cost of debt will be reduced…

Q: An investment promises two payments of $570, on dates three and six months from today. If the…

A: Present value is the value right now of some amount of money in the future. Investment amount will…

Q: The Bloomberg screen below shows the Nasdaq Index price over the last year. Desc the technical…

A: The chart gives one year candlestick data along with volumes traded (the part below). The technical…

Q: chemicals, and also manufactures fertilizers and food additives. Gupta has concluded that the DDM is…

A: Equity fund refers to the mutual fund schemes that are based on the investment objective of the…

Q: Suppose that you won $1,500,000 in the Illinois state lottery. It will be paid to you over 20 years…

A: An annuity is end of year equal payments made for a fixed period of time at a specified interest…

Q: A design studio received a loan of $7,800 at 6.10% compounded semi-annually to purchase a camera. If…

A: Given, The loan amount is $7,800 Interest rate is 6.10% compounded semi annually. Term of loan is 2…

Q: e ‘Yield Curve’, also known as the ‘Term Structure of Interest Rates’, can take several different…

A: In determining the interest rate in near future or over long period yield curve is very important.…

Q: Your employer contributes 50 a week to your retirement plan. Assume that you work for your employer…

A: Weekly contribution (C) = 50 Weekly discount rate (r) = 0.00125 (i.e. 0.065 / 52) Weekly period of…

Q: xandra received a 30 year loan of $280,000 to purchase a he the loan was 4.60% compounded…

A: Loans are paid by the equal monthly payments and these monthly payments carry the payment for…

Q: In 1975 a 5% coupon bond with face value 1000 has 4 years to maturity. Current shorts are 4% and…

A:

Q: Market risk cannot be eliminated. OA. True OB. False

A: The financial market can be defined as the market place which includes the trading of securities and…

Q: A bond, paying semi-annual coupons of 1% per annum, matures in 7 months time. The interest rate…

A: Dirty price When the price of a bond includes the interest amount that is accrued from the latest…

Q: To attend school, Arianna deposits $160 at the end of every month for three and one-half years. What…

A: To calculate the accumulated amount we will use the below formula   Accumulated amount =…

Q: Let’s pretend that we buy an annuity at the age of 70 with how much money we have in total from our…

A: Given: Value of the annuity “P” = $1368506.12 Interest rate = 5% Per month rate “r” = 5%/12 Number…

Q: XYZ Company has bonds outstanding with 7 years left before maturity. The bonds are currently selling…

A: The effective interest rate that a corporation pays on its obligations, such as bonds and loans, is…

Q: H4. Which statement is true? a. Duration is good for estimating the impact of large interest rate…

A: Price of bond depends on the interest rate prevailing in the market and coupon payment and period of…

Q: Tshepo needs R5 000 urgently. He goes to the bank and borrows the money at an interest rate of 28%…

A: Compound interest is the interest earn on interest. The rate at which compound interest accrues…

Q: Using the macroeconomic environment of a bank explain the effect on margin. Provide an example of…

A: Margin is referred to as the type of deposit that an investor uses to place with their broker at the…

Instruments of Foreign Exchange Market

Foreign exchange is a worldwide market in which one nation’s currency is converted into another nation’s currency. In further terms, exchanging of nations currency with foreign currencies. Foreign exchange happens at a specified rate which is termed the foreign exchange rate. The exchange rates are not constant continuously changing as they are derived by market forces of supply and demand. Widely used foreign currencies are the United States- dollar, Euro, Japanese Yen, British pound, and Australian dollar. US- dollar is the most denominated foreign currency. The Euro to US dollar is a widely used currency pair in the forex market as these two currencies represent the world’s enormous economy. Forex trade is simple as exchanging currencies at the bank. The main players of forex markets are the central banks, financial institutions, intermediaries, investments banks, and other banks. Central Bank is the supreme player who decides the currency value of their own nation on the forex market. Mostly foreign exchange-traded at FX market (forex market) when tourists’ visits a foreign country, import, and export happens between two countries.