Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Market Efficiency
Market efficiency refers to the market's ability to provide investors with all available information about investment options for buying and selling securities. Market efficiency reflects the true value of securities without undervaluing or overvaluing t…
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A UK-based MNC has a contract to import raw materials in which it agreed to pay in Philippine peso. The UK-based MNC's pound cash flows are favourably affected if the (a) Peso appreciates (b) Peso depreciates (c) Pound depreciates (d) both b & c When government intervention is used to weaken the USD, the weak dollar can the economy of USA by the US demand for imported items and boosting the foreign for US goods. stimulate; decreasing; demand stimulate; increasing; demand stimulate; increasing; supply stimulate; decreasing; supply ABC Corporation manufactures electronic goods for which substitute goods are produced in all countries. Appreciation of the firm's local currency should: increase local sales as it reduces foreign competition in local markets. increase the firm's exports denominated in the local currency. increase the returns earned on the firm's foreign bank deposits. increase the firm's cash outflow required to pay for imported supplies denominated in a foreign currency. none of the above If inflation rates in Japan are consistently below the rates in USA, then for the PPP to hold: JPY would often appreciate against the USD. JPY would often depreciate against the USD. JPY would appreciate in some periods and depreciate in other periods, but on average have a zero rate of appreciation. JPY would remain constant most of the time. To hedge a forward contract can be obtained to the foreign currency forward. Alternatively, a option contract can be used. receivables; buy; call receivables; buy; put payables; buy; call payables; sell; call ABC Corp. is based in Canada. It exports products to Turkey that are priced in Canadian dollars, and its competitors are located in Turkey. Which of the following statements is not incorrect? the example reflects economic exposure the example reflects transaction exposure the example reflects translation exposure the example reflects both transaction and economic exposure O O
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Transcribed Image Text:A UK-based MNC has a contract to import raw materials in which it agreed to pay in Philippine peso. The UK-based MNC's pound cash flows are favourably affected if the (a) Peso appreciates (b) Peso depreciates (c) Pound depreciates (d) both b & c When government intervention is used to weaken the USD, the weak dollar can the economy of USA by the US demand for imported items and boosting the foreign for US goods. stimulate; decreasing; demand stimulate; increasing; demand stimulate; increasing; supply stimulate; decreasing; supply ABC Corporation manufactures electronic goods for which substitute goods are produced in all countries. Appreciation of the firm's local currency should: increase local sales as it reduces foreign competition in local markets. increase the firm's exports denominated in the local currency. increase the returns earned on the firm's foreign bank deposits. increase the firm's cash outflow required to pay for imported supplies denominated in a foreign currency. none of the above If inflation rates in Japan are consistently below the rates in USA, then for the PPP to hold: JPY would often appreciate against the USD. JPY would often depreciate against the USD. JPY would appreciate in some periods and depreciate in other periods, but on average have a zero rate of appreciation. JPY would remain constant most of the time. To hedge a forward contract can be obtained to the foreign currency forward. Alternatively, a option contract can be used. receivables; buy; call receivables; buy; put payables; buy; call payables; sell; call ABC Corp. is based in Canada. It exports products to Turkey that are priced in Canadian dollars, and its competitors are located in Turkey. Which of the following statements is not incorrect? the example reflects economic exposure the example reflects transaction exposure the example reflects translation exposure the example reflects both transaction and economic exposure O O
When a country's inflation rate rises relative to that of another country, decreased and increased _depress the country's currency. imports; exports; high-inflation expense; revenue; low-inflation exports; imports; high-inflation exports; imports; low-inflation Let's assume that Interest Rate Parity holds. MNM Co., a U.S. firm, plans to use a money market hedge to hedge its receivables of 260,000 Canadian dollars (C$). The amount will be received after one year. The spot rate of the Canadian dollar is C$1.1730, while the one-year forward rate is C$1.2012. What is the total implied home-currency value of this receivable if the company decides to implement money market hedge? C$ 234,600 $ 312,312 $ 221,654 $ 161,134 $ 216,450 Which forecasting method produces the best forecasts if markets are efficient? Fundamental Technical Market-based Zero-line
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Transcribed Image Text:When a country's inflation rate rises relative to that of another country, decreased and increased _depress the country's currency. imports; exports; high-inflation expense; revenue; low-inflation exports; imports; high-inflation exports; imports; low-inflation Let's assume that Interest Rate Parity holds. MNM Co., a U.S. firm, plans to use a money market hedge to hedge its receivables of 260,000 Canadian dollars (C$). The amount will be received after one year. The spot rate of the Canadian dollar is C$1.1730, while the one-year forward rate is C$1.2012. What is the total implied home-currency value of this receivable if the company decides to implement money market hedge? C$ 234,600 $ 312,312 $ 221,654 $ 161,134 $ 216,450 Which forecasting method produces the best forecasts if markets are efficient? Fundamental Technical Market-based Zero-line
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