Suppose the Japanese yen exchange rate is ¥116 = $1 and the British pound exchange rate is £1 = $1.27. a. What is the cross-rate in terms of yen per pound? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. b. Suppose the cross-rate is ¥156 = £1. What is the arbitrage profit per dollar? Note: Do not round intermediate calculations and round your answer to 4 decimal places, e.g., .1616. a. Cross-rate b. Arbitrage profit per dollar 155

Q: Compare M&M Theorem Proposition 1 and Proposition 2 in perfectly efficient market and in the real…

A: The M&M (Modigliani & Miller) approach is used to make investment decisions easily by…

Q: Masego Pty Ltd considers buying a Truck as the business expands. They are considering between buying…

A: The payback period is one of simple capital budegting technique that is used in financial decision…

Q: You have borrowed $ 14300 at a compound annual interest rate of 15%. You feel that you will be able…

A: Here, Borrowed amount (PV)  $ 14,300.00 Interest rate (RATE) 15.00% Annual payments (PMT)  $…

Q: How does a short-term cash flow crisis impact a firm's competitive strategy?

A: It is very important for any business to have cash in hand or at the bank for meeting day-to-day…

Q: From the information generated in the previous two questions; Identify two investment alternatives…

A:

Q: ST. KITTS-NEVIS-ANGUILLA NATIONAL BANK LIMITED Notes to Consolidated Financial Statements June 30,…

A: The liquidity gap ratio is used to measure the liquidity position of the company. It is calculated…

Q: Performance evaluation allows us to assess the performance of fund managers going beyond historical…

A: The total risk is divided into two parts- 1. Systematic Risk that cannot be diversified…

Q: The board of directors of Mystery Entertainment, Inc., wants the CEO to boost return on equity…

A: * Return on equity (ROE) is a profitability ratio that measures the profitability of equity funds…

Q: State of Economy Probability T Bills Phillips Payup Rubbermade Market Index Recession 0.2 7…

A: Probability T-Bills Philips Pay-up Rubber-Made Market Index 0.2 7.00 -22.00 28.00 10.00 -13.00…

Q: Assume you purchase (at par) one 12-year bond with a 6.10 percent coupon and a $1,000 face value.…

A: Bonds are kind of debt instruments which have coupon payments and the face value of paid on the…

Q: Explain how cash flows are esrimated for captial budgeting. What are sunk costs and opportunity…

A: Capital budgeting is an important aspect of finance. It is the process through which a company…

Q: Last year you purchased a 15-year bond at 98 with a coupon rate of 5%. The current market rate is…

A: Return on investment for a bond = ((Coupon+(Price today - Purchase price))/Purchase price)*100

Q: You win a competition, and you can claim a prize of £8, 000 now or an annuity which pays £1, 000 at…

A:

Q: An oil company has paid the Irish Govt. €15m for oil exploration rights. If oil is found, the oil…

A: The break even point is where there is no loss and no profit. If selling is above the break even…

Q: STATEMENT BALANCE. Your credit card statement period CLOSES on the 1st of every month and a new…

A: Statement close date, billing date and payment due dates have been specified. We have to find the…

Q: Given an interest rate of 8 percent, compute the year 8 future value if deposits of $1,700 and…

A: Here, To Find: Future value (FV) =?

Q: The Jones Company has just completed the third year of a five-year MACF recovery period for a piece…

A: MACRS is modified accelerated depreciation system in which there is more depreciation during the…

Q: You are a head of division in Kinetic Robotics Ltd, a large robotics company, and your team has put…

A: Net present Value:- It is one of the methods of capital budgeting that can be calculated by…

Q: Hudson Corporation will pay a dividend of $3.20 per share next year. The company pledges to increase…

A: The dividend next year is $3.20 The growth rate is 5.30% The required return is 8.60%   To Find:…

Q: 8. A firm has to pay a dividend of $1.20 per share till perpetuity, a zero growth rate of dividends,…

A: Solution: Preferred shares are those shares which get a fixed dividend amount each period. Value of…

Q: The Dental Clinic, Inc. is contemplating replacing an obsolete word processing system with one of…

A:

Q: Consider the following information about the various states of economy and the returns of various…

A: State of the economy Probability T-Bills Philips Pay-up Rubber-Made Market Index Recession 0.2 7%…

Q: Find the simple interest. Assume a​ 360-day year. ​$5566.49 at 3.1​% for 65 days the simple interst…

A: Simple interest is very simple and there is no interest on interest and there is no compounding of…

Q: You want to be able to withdraw $35,000 each year for 25 years. Your account earns 5% interest. a)…

A:

Q: Plot the Security Market Line (SML) b) Superimpose the CAPM’s required return on the SML c) Indicate…

A: When the expected return or mean is more than the required return, stock is undervalued. When the…

Q: Health Supplement Inc. Nutritional supplements provide nutrients, which may not be ingested in…

A: Solution: Payback period is the period at which the accumulated cash flows from the project becomes…

Q: teven is thinking about buying a duplex. His monthly expenses will be $888 for the mortgage, $480…

A: The mortgage can be defined as a type of loan taken to purchase land, home, property, etc by making…

Q: Sadaplast has a target capital structure of 65% common equity, 30% debt, and 5% preferred stock. The…

A: Weighted average cost of capital WACC gives the firms combined cost of capital, including the…

Q: Bond A pays annual interest, has 6 percent annual coupons, $1,000 face value, and currently has 6…

A: Bond Bonds are considered debt instruments that companies use to raise money from investors. The…

Q: A stock has had the following year-end prices and dividends: Year Price Dividend 1 $ 64.78 — 2…

A: Year Price Dividend 1  $ 64.78   2  $ 71.65  $      0.69 3  $ 77.45  $      0.74 4  $ 63.72…

Q: Dave's Guitar Shop is thinking about building an additional property onto the back of its existing…

A: The debt ratio is a measure of any business's solvency position by dividing a business's total…

Q: Jack and Jill buy a used car from Rockies Auto for $7,000. They put $700 down and finance the rest…

A: of J and J took a loan to buy RA for $7,000 and their loan needs to be repaid in three years we need…

Q: Question 2 Jeanius plc is considering an investment of £10 million in a new trouser production…

A: The initial Cash flow requirement is 10 million The required return is 7.5% Total units of…

Q: Define "Present Value (PV)" Select one: O A. The process of computing PV is called discounting O B.…

A: Solution: Present value stands for the value calculated in today's terms.

Q: Biotec has estimated the costs of debt and equity capital for various proportions of debt in its…

A:

Q: A. Average age of inventory + average collection period – average payment period. B. Average…

A: Cash conversion cycle indicates the number of days a firm takes to churn its inventory to generate…

Q: their Corporate Social Investment plan, Ginter Ltd plans to donate R55000 annually in four years’…

A: The money required today depends on the time period and interst rate of the cash flow and it…

Q: Why do i need to divide by 2?

A: Given: The bonds make semiannual coupon payments

Q: The cost of money is expressed through interest rates. Describe three different “premiums” that have…

A: Solution:- Interest rate is the price of money. It can be interpreted in 3 ways: i) Required rate of…

Q: Year 0 1 2 3 Cash Flow -$ 18,500 10,800 9,700 6,200 a. What is the profitability index for the set…

A: Year Cash flow 0  $-18,500.00 1  $  10,800.00 2  $   9,700.00 3  $   6,200.00 To Find:…

Q: On May 3, 2020, Leven Corporation negotiated a short-term loan of $870,000. The loan is due October…

A: Given Principal amount is $870,000 Interest rate is 6.80%

Q: Jewelry Company receives a jewelry order to be made in 6 months from now, it needs to use 10,000…

A: Futures contracts are basically used to hedge an underlying exposure. These contracts trade on an…

Q: Adiminus Inc had sales of R15 million, a net profit margin of 8%, total assets of R20 million,…

A: a). Net income = Net profit margin*Sales = 0.08*R15,000,000 = R1,200,000 Earnings per share(EPS) is…

Q: If a car is depreciated in four years, the rate of depreciation using twice the straight-line rate…

A: Solution:- Depreciation rate means the wear and tear cost of the asset. It is the cost of use of the…

Q: What is the difference between CAPM beta and cash-flow beta (from certainty equivalency approach)?…

A: The certainty equivalent is the amount of guaranteed money that an investor will accept now rather…

Q: حص Summer Leisure unlimined purchased a Color printer for $1,134. Devivory Cost totaled handling…

A: Solution:- Depreciation is the wear and tear cost of an asset. It is the cost of using an asset. As…

Q: You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a…

A: Since equally invested in risk free asset and 2 stocks Weight of each stock=(1/3)

Q: Determine the outstanding principal of the given mortgage. HINT [See Example 7.] (Assume monthly…

A: Loan amount,PV is $100,000 The time period is 35 years The interest rate is 4.6% compounded monthly…

Q: Vin decides he wants a brand new sports car to race. He has just taken out an $90,000 loan to…

A: Loan options for lumpsum amounts can be compared using the future value concept. Effective rate of…

Q: ADD-ON LOANS vs SIMPLE INTEREST LOANS. You are borrowing $500,000 on a 30 year, 5.5% interest loan…

A: Add on loans  are loan where the monthly payments are calculated by dividing the total principal by…

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.