Please Show ALL Workings VERY Clearly in FULL! Assuming that an investor enters into a short forward contract to sell Rs 100,000 for USD at an exchange rate of $ 1 = Rs 140, calculate its gain / (loss) if the exchange rate at the end of the contract is $ 1 = Rs 139.
Q: If a stock has a higher volatility, would your broker would want to set the maintenance margin…
A: Maintenance margin is minimum margin amount that we need to maintain as an investor after the…
Q: You are considering an investment in Justus Corporation's stock, which is expected to pay a dividend…
A: The question is related to Gorden's Model of Dividend policy and Capital Asset Pricing Model. As per…
Q: Seeking Internal Rate of Return for option 1, 2 & 3 (info below) The senior VP in charge has asked…
A: Given: Internal rate of return (IRR):At IRR, cash outflow will be equal to the present value of cash…
Q: Compute how much interest a company would pay in 2023 on a 10 year, $100,000+u dollar loan (which it…
A: We have to find the interest payable on a 10 year dollar loan that has a variable rate of interest.…
Q: If you get paid $5,460 per month gross and 10% of that paycheck was chheld for federal income taxes…
A: Monthly gross income = $5,460 Federal income taxes = 10% State income taxes = 6%
Q: Compute how much money you would need to invest each year in the future for u+20 years in order to…
A: Solution:- When an equal amount is invested each period, it is known as annuity. We know, future…
Q: A firm has to choose between two possible projects, the outcome of which depend on whether the…
A: Under Expected NPV (ENPV) method, NPV on the basis of probability has to be calculated and the…
Q: s the capital gains yield simply the interest rate minus the current yield? Isn't capital gains…
A: Capital gains is the amount of decrease or increase in prices of bonds depending on the the period…
Q: A retail tenant signed a lease agreeing to pay $12.00/SF in base rent plus 3% of sales over a…
A: In commercial real estate leasing, percentage leasing is most commonly used, where a tenant pays a…
Q: $7,763 You found out that now you are going to receive payments of $7,000 for the next 14 years.…
A: Present value of annuities will includes the amount that is equivalent today based on the interest…
Q: Combined Communications is a new firm in a rapidly growing industry. The company is planning on…
A: We will apply the dividend discount model here. As per the dividend discount model the fair value or…
Q: Capital Gain Tax consequences of the above transaction.
A: Capital gain means profit arising on sale of assets after deducting all expenses.
Q: The price of a Universal Testing Machine doubles in 15 years. What is the compounded yearly interest…
A: We have; Present Value as $1 Future Value as $2 Time period as 15 years To Find: Compounded yearly…
Q: Sambo Ltd is a levered firm with a debt ratio of 55% and its Net Income for next year is projected…
A: Earnings per share "EPS" is the Net Income divided by number of shares outstanding. Similarly,…
Q: What is the bond's duration in years? Information from prior You see a five-year bond trading in…
A: Duration of bond show the sensitivity of bond prices to change in interest rates.
Q: Problem 4: What end-of-month deposits for the first six m hould Joshua have if he is planning to…
A: The future value of amount includes the amount being deposited and amount of interest being…
Q: Use the ordinary interest method, 360 days, to solve the following word problem. Round to the…
A: Given: Particulars Days for promissory note 90 Interest rate 8.60% Amount $800,000…
Q: Stephanie Carter has been gifted a sum of $50,000 by her grandparents on completing her graduation…
A: 1. Intrinsic value of Pan Elixir Ltd. shares: Share value=Dividend × (1+Growth rate)Required rate of…
Q: 3. Company A's callable bonds have a face value of $1,000 with 6% coupon rate (semi-annual payment)…
A: A bond has been provided with all the details. We have to find the yield to call (YTC) and then…
Q: You have just turned 22 years old, received your bachelor's degree, and accepted your first job. Now…
A: Present Value of Ordinary Annuity refers to the concept which gives out the discounted or today's…
Q: On December 13, 2012 you could read in The New York Times that the piano from Rick's place in the…
A: The historic Piano from the movie Casablanaca were announced to be up for auction in Dec 2012.…
Q: This year, FCF Inc. has earnings before interest and taxes of $9,630,000, depreciation expenses…
A: Free cash flow is the cash available to the company after meeting its operating and capital…
Q: What is the future amount of P10,000 if interest is computed using exact simple in For the period…
A: Simple interest is simple and without any interest on interest that means there is compounding of…
Q: Boris is saving for the down payment on a house. He deposits $13,750.00 today, $6,000.00 in 5…
A: The Future Value of a lumpsum deposit: An amount deposited earns an interest over its investment…
Q: The P Company's recent dividend was $1.50. The dividend growth rate is expected to be constant at 4%…
A: Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: Calculate Eco’s current after-tax cost of long-term debt. Calculate Eco’s current cost of preferred…
A: NOTE: As per our policy, we only answer up to three sub-questions. Therefore, the first three…
Q: Credit ratings affect the yields on bonds. Based on the scenario described in the following table,…
A: Bond Yield: The bond yield represents the return realized on the bond for the bondholder. The bond…
Q: Metal Innovation, an engineering company, is acquiring a new PLC machine and choosing between two…
A:
Q: Shania owns two bonds; both bonds mature in 5 years and have a $1,0000 face value. The bond pays…
A: Bonds are debt instrument that represents a loan made by an investor to a borrower and the borrower…
Q: Name Phil de Cel Manuel Labor Phyllis Stein Adam Sapple Al Nino Chris P. Bacon Douglas S. Halfemptee…
A: Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: which project is more profitable to undertake? $60 million npv for 10 years or $70 million for 30…
A: Solution:- There are many criteria to accept or reject a project. One of the criteria is Net Present…
Q: Solve the following: USE 4 DECIMAL PLACES Nominal Rate 5% compounded semi annually 5% compounded…
A: Equivalent interest rates are interest rates that produce the same return as the given annual…
Q: The best example of a well-stated, specific financial objective is to increase ROA (return on asset)…
A: Financial objective is to achieve and measure the financial performance of the company and increase…
Q: Calculate the expected price change in % if interest rates fall to 8.35% using the duration…
A: Duration of bond show the change in interest rates impact on the price of bond and it tell number of…
Q: You have started a company and are in luck—a venture capitalist has offered to invest. You own 100%…
A: Information provided: Current number of shares = 4.96 million or 4,960,000 VC offer = $1.12 million…
Q: Nominal Rate 5% compounded semi annually 5% compounded quarterly 5% compounded bi monthly 5%…
A: Nominal Rate Compounding Period 5% Semi-annual 5% Quarterly 5% Bi Monthly 5% Continuously
Q: Thuan is expecting to inherit $117,000.00 6 years from now. The interest rate is ¡(4) = 11.450%.…
A: Amount in 6 years (P6) = $117,000 Quarterly interest rate (r) = 0.028625 (i.e. 0.1145 / 4) Quarterly…
Q: Project Cash Flow The financial staff of Cairn Communications has identified the following…
A: Depreciation refers to the method of allocating the cost of the assets over their useful life . It…
Q: An analyst makes the following forecasts of cash flows for a firm with $2.5 billion of debt at the…
A: We have to find the value per share using the discounted free cash flow (FCF) approach. In the…
Q: You can purchase stock from XYZ Corp at a price of $50/share. You purchase 100 shares today, and…
A: Here, To Find: Value of shares after 5 years =?
Q: hen bris et al (2014) split the sample of euro firms between firms in weak euro countries and strong…
A: The exchange rate of currencies are quite volatile and changes according supply and demand in the…
Q: behavioural factors influencing investment decision making
A: Investment decisions are made by investors and investment managers. These decisions are made based…
Q: Westland Manufacturing spends $20,000 to update the lighting in its factory to more energy-efficient…
A: Initial cost = $20,000 Annual saving = $4000 Required return = 8% Discounted payback period = ?…
Q: Which of the following is false? 1. When given the annual withdrawals desired during the retirement…
A: Fully amortizing payments are a specific kind of regular debt repayment. By the conclusion of the…
Q: What is the expected annual return over four years for the second strategy? Information from prior:…
A: Second Strategy Interest rate on 1 year first purchased bond "R1" is 8% Interest rate on 1 year…
Q: A depositor open a new savings account with $6000 at 5% compounded semiannually. At the end of 4…
A: Information provided: Initial investment "P"= $6000 Investment at the end of 4 years "P1"=$7000…
Q: If the Modigliani and Miller hypothesis about dividends is correct, and if one found a group of…
A: Modigliani and Miller hypothesis states that value of the firm is not affected, due to payment of…
Q: Estimate the NPV, ROI, and payback period for the XYZ project using the information below, Estimated…
A: Year 0 1 2 3 Cost 200000 50000 50000 50000 Benefit 150000 150000 150000 Discount Rate =…
Q: Penn Electric just developed a revolutionary new type of method used to hydraulically generate…
A: Growth rate until year 5 = 0.15 Growth rate after year 5 (g) = 0.05 Required return (r) = 0.12 Last…
Q: Mr. and Mrs. MBA are planning to purchase a $200,000 house and have $40,000 as a down payment…
A: House Cost $ 2,00,000.00 Down Payment $…
Please Show ALL Workings VERY Clearly in FULL!
Assuming that an investor enters into a short forward contract to sell Rs 100,000 for USD at an exchange rate of $ 1 = Rs 140, calculate its gain / (loss) if the exchange rate at the end of the contract is $ 1 = Rs 139.
Step by step
Solved in 2 steps
- An investor enters a short forward contract to sell 100,000 British pounds for US dollars at an exchange rate of 1.5000 US dollars per pound. How much does the investor gain or lose if the exchange rate at the end of the contract is (a) 1.4900 and (b) 1.5200?Analyse the scenario below. In each case, explain your reasoning Suppose that the current EUR/GBP exchange rate is £0.92 per euro. The current2-year interest rates are: GBP 4%, EUR 5%. Suppose further that you can use a 2-year forward contract with a EUR/GBP rate of £0.91 per euro. Could this contractbe used for an arbitrage opportunity? If yes, provide an example. Calculatearbitrage profit and explain how this profit can be earnedAssume you have $1,000 to invest in a triangular arbitrage transaction, what is your best course of action based on the following exchange rates? In New York, $1 = 4.5 CHF In Zurich, 1 CHF = 3 DKK In Copenhagen, $1 = 6 DKK $1 = 6 DKK so $1000 = 6000 DKK 2 DKK = 1 CHF means 6000 DKK = 2000 CHF 4.5 CHF = $1 means 2000 CHF = $444.44 $444.44 - $1000 = - $555.56 11) Assume you have $10,000 for an arbitrage transaction, what is your best course of action based on the following exchange rates? In New York, $1 = 1.8146 BZD In Belize, 1 ARS= 0.0285 BZD In Buenos Aires, $1 = 98.6749 ARS 8) Suppose that the return on a U.K. treasury bill is eight percent annum and the return on a U.S. treasury bill is eight percent annum and that you had $1,000,000 earmarked for short term investment for a period of a month. In which of the securities would you place your money? (Assume you are not a speculator). Show your calculations.…
- ABC Corporation agreed that it will buy 1,000 USD at an exchange rate of P52 one month from now. The exchange rate on the transaction date is P54. How much is the net gain/(loss) based on the information above?The following exchange rates are available to you. (You can buy or sell at the stated rates.) Mt Fuji Bank ¥120.00/A$ Mt Rushmore Bank SF1.6000/A$ Mt Blanc Bank ¥80.00/SF Assume that you have SF10, 000,000. Can you make a profit via triangular arbitrage? If so, show the steps that you will follow and calculate the amount of profit in Swiss francs.Suppose you have the following spot exchange rates: USD/AUD 0.5300 AUD/EUR 1.6428 USD/EUR 0.8782 a) Calculate the US dollar profit (per 1 USD), if any, on a three-point arbitrage. b) Calculate AUD profit (per 1 AUD), if any, on a three-point arbitrage. c) How can you explain the answers in (1) and (2)?
- Assume that you are a retail customer. Use the information below to answer the following question. Exchange Rate - Bid Exchange Rate - Ask Interest Rate APR S0($/€) $ 1.42 = € 1.00 $ 1.45 = € 1.00 i$ 4 % F360($/€) $ 1.48 = € 1.00 $ 1.50 = € 1.00 i€ 3 % If you had borrowed $1,000,000, traded them for euros at the spot rate, and invested those euros in Europe, how many euros do you receive in one year?Suppose that two counterparties, A and B, enter a three-month forward contract on January 1st, whereby A buys USD1 million at a forward rate of AUD/USD 1.7662. On March 1st, A decides it no longer needs to buy USD1 million on 31 March, so it enters a one-month forward contract to sell USD1 million on 31 March at a forward rate of AUD/USD 1.8000 from counterparty C. a) Calculate the net cost to counterparty A, before transaction costs. b) Suppose a German importer owes an Australian exporting company 150,000 AUD, due in three months. ?_0 (EUR/AUD) 0.60 Se (EUR/AUD) 0.50 (0.3) and 0.65 (0.7) Premium on AUD call option R = EUR0.02 Exercise exchange rate E = 0.62 Time to expiry 3 months 1) What is the expected spot rate? 2) What is the expected value of payables in AUD under hedge? 3) Will the option to hedge be undertaken on the basis of…Suppose that two counterparties, A and B, enter a three-month forward contract on January 1st, whereby A buys USD1 million at a forward rate of AUD/USD 1.7662. On March 1st, A decides it no longer needs to buy USD1 million on 31 March, so it enters a one-month forward contract to sell USD1 million on 31 March at a forward rate of AUD/USD 1.8000 from counterparty C. a) Calculate the net cost to counterparty A, before transaction costs
- The size of the peso contract is MXP500, 000, and the euro contract is on EUR125, 000. How much would be the gain of loss on MXP500, 000 unit contract and on EUR125, 000 unit contract if the change in the price of the currency unit is USD0.0001?The size of the peso contract is MXP500, 000, and the euro contract is on EUR125, 000. How much would be the gain of loss on MXP500, 000 unit contract and on EUR125, 000 unit contract if the change in the price of the currency unit is USD0.0001? Complete Solution.Suppose that two counterparties, A and B, enter a three-month forward contract on January 1st, whereby A buys USD1 million at a forward rate of AUD/USD 1.7662. On March 1st, A decides it no longer needs to buy USD1 million on 31 March, so it enters a one-month forward contract to sell USD1 million on 31 March at a forward rate of AUD/USD 1.8000 from counterparty Calculate the net cost to counterparty A, before transaction costs.