International Financial Management
14th Edition
ISBN: 9780357130698
Author: Madura
Publisher: Cengage
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- 1, Consider the following table for an eight-year period: Year T-bill return Inflation 1 7.47% 8.53% 2 8.94 12.16 3 6.05 6.76 4 5.97 5.04 5 5.63 6.52 6 8.54 8.84 7 10.74 13.11 8 13.00 12.34 a, Calculate the average return for Treasury bills and the average annual inflation rate (consumer price index) for this period. b, Calculate the standard deviation of Treasury bill returns and inflation over this time period. c, Calculate the real return for each year. d, What is the average real return for Treasury bills?arrow_forwardGiven the cash flows in actual dollars provided in the following table, convert the cash flows to equivalent cash flows in constant dollars if the base year is time 0. Assume that the market interest rate is 16% and that the general inflation rate(f) is estimated at 4% per year. n Cash Flow (In Actual Dollars) 0 $20,5004 $41,5005 $36,5007 $55,500arrow_forwardGiven the cash flows in actual dollars provided in the following table, convertthe cash flows to equivalent cash flows in constant dollars if the base year is time 0. Assume that the market interest rate is 16% and that the general inflation rate(/) is estimated at 4% per year. n Cash Flow 0 $20,500 4 $41,500 5 $36,500 7 $55,500arrow_forward
- Suppose the price of wheat over the next year is expected rise to $3.50 in the United States and to £1.60 in England. What should the one-year $:£ forward rate bearrow_forwardThe current 90-day forward rate for the baht is $.021. By what percentage is the value of the baht expected to change over the next quarter according to a market-based forecast using the forward rate? What will be the value of the baht in 90 days according to this forecast?arrow_forwardUsing the Treasury yield information in part c, calculate the following rates using geometric averages (round your answers to three decimal places): The 1-year rate, 1 year from now The 5-year rate, 5 years from now The 10-year rate, 10 years from now The 10-year rate, 20 years from nowarrow_forward
- Some of the websites show graphs indicating how one currency has done relative to another currency. a. Over the past year, how has the pound performed against the dollar? Does the dollar buy more or less pounds today than it did 1 year ago? b. Over the past year, how has the dollar performed against the yen? Does the dollar buy more or less yen today than it did 1 year ago?arrow_forwardSuppose we have the following Treasury bill returns and inflation rates over an eight year period: Year Treasury Bills Inflation 1 10.45% 12.55% 2 11.36 16.00 3 9.06 10.29 4 8.34 7.97 5 8.88 10.29 6 11.23 12.77 7 14.11 16.98 8 15.97 16.90 a. Calculate the average return for Treasury bills and the average annual inflation rate for this period. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Treasury bills % Inflation % b. Calculate the standard deviation of Treasury bill returns and inflation over this period. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Treasury bills % Inflation %…arrow_forward
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