Chapter 3, Problem 25QA

In a daily meeting, the Chief Financial Officer (CFO) gave Ari the following table of market ratesSpot exchange rate: Yen 106/$U.S. dollar interest rate per annum 10% Japanese Yen interest rate per annum 6% and told Ari that the company’s financial analyst expected the Japanese Yento depreciate against the U.S. dollar by 3.46% in 90 days.Assume there are 360 days in a year, and all interest rates are simple interest rates. If the financial analyst’s prediction about the US dollar and Japanese Yen turned out to be true: b.1) What would the spot exchange rate (Yen/$) be in 90 days? b.2) Would Ari make a profit by borrowing 1 million US dollar and investing in the money markets? If yes, how much profit would Ari realize in 90 days?If no, explain why.

In a daily meeting, the Chief Financial Officer (CFO) gave Ari the following table of market rates Spot exchange rate:  Yen 106/$ U.S. dollar interest rate per annum 10% Japanese Yen interest rate per annum 6% and told Ari that the company’s financial analyst expected the Japanese Yen to depreciate against the U.S. dollar by 3.46% in 90 days. Assume there are 360 days in a year, and all interest rates are simple interest rates. If the financial analyst’s prediction about the US dollar and Japanese Yen turned out to be true: What would the spot exchange rate (Yen/$) be in 90 days? Would Ari make a profit by borrowing 1 million US dollar and investing in the money markets?         If yes, how much profit would Ari realize in 90 days?

In a daily meeting, the Chief Financial Officer (CFO) gave Ari the following table of market rates Spot exchange rate:  Yen 106/$ U.S. dollar interest rate per annum 10% Japanese Yen interest rate per annum 6% and told Ari that the company’s financial analyst expected the Japanese Yen to depreciate against the U.S. dollar by 3.46% in 90 days. Assume there are 360 days in a year, and all interest rates are simple interest rates. If the financial analyst’s prediction about the US dollar and Japanese Yen turned out to be true: b.1) What would the spot exchange rate (Yen/$) be in 90 days? b.2) Would Ari make a profit by borrowing 1 million US dollar and investing in the money markets?         If yes, how much profit would Ari realize in 90 days?         If no, explain why.     Thank You

In a daily meeting, the Chief Financial Officer (CFO) gave Ari the following table of market rates: Spot exchange rate: Yen 106/$ U.S. dollar interest rate per annum 10% Japanese Yen interest rate per annum 6% and told Ari that the company’s financial analyst expected the Japanese Yen to depreciate against the U.S. dollar by 3.46% in 90 days. Assume there are 360 days in a year, and all interest rates are simple interest rates.If the financial analyst’s prediction about the US dollar and Japanese Yen turned out to be true: 1) What would the spot exchange rate (Yen/$) be in 90 days? 2) Would Ari make a profit by borrowing 1 million US dollar and investing in the money markets? If yes, how much profit would Ari realise in 90 days? If no, explain why. Please answer 2). Thanks

The Consumer Price Index  (CPI) was recently forecast to be 3.3%., implying that 3.3% will be the annual inflation rate.  What is the minimum rate of return that a Treasury bill must earn to reach your investment goal of a 2% real rate of return? also, if Major Company pays a $2.10 annual cash dividend (D0) and it plans to keep the dividend at $2,10 for the future since no future growth is anticipated. If the stockholders require a rate of return of 12 percent, what is the price of the common stock?

(a) Calculate the euro-based return an Italian investor would have realized by investing €10,000 into a £50 British stock. One year after investment, the stock pays a £1 dividend, and sells for £55 the exchange rate has changed from €1.25 per pound to €1.30 per pound.  (b) Calculate the euro-based return an Italian investor would have realized by investing €10,000 into a £50 British stock using 50 percent margin. One year after investment, the stock pays a £1 dividend, and sells for £54. In the meantime, the exchange rate has changed from €1.25 per pound to €1.30 per pound. The interest on the margin loan is 1 percent per year. The margin loan was denominated in pounds.

Suppose a U.S. investor wishes to invest in a British firm currently selling for 50 pounds per share by buying 200 shares of the British firm. The current exchange rate is $1.31 per pound.  After one year, the exchange rate is $1.60 per pound and the share price is 59 pounds per share. What is the dollar-denominated return in percentage?