Britain can produce either 3 units of almonds or 1 unit of carrots with one hour of labor, while Lacs can produce either4 units of almonds or 2 units of carrots with one hour of labor. Assuming that labor is the only input, mutuallybeneficial exchange can take place between Britain and Laos.ifAсELaos exchanges 2 units of carrots for 1unit of almondsBBritain exchanges 2.5 units of almondsfor 1 unit of carrots000,00Laos exchanges 1 unit of carrots for 1unit of almondsDBritain exchanges 0.5 a unit of almondsfor 1 unit of carrotsBritain exchanges-1.5 units of almondsfor 1 unit of carrots

Given, Britain can produce either 3 units of almonds or 1 unit of carrot. Laos can produce either 4…

Answered: Britain can produce either 3 units of…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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(6)(a)Identify the revenue and cost related motives for direct foreign investment. (b)Suppose a U.S. based MNC plans to invest in a new plant either in the U.S or in Zambia. The MNC intends to invest 30% of its investment spending in this new plant while the remainder is devoted to the firm's existing structure in the U.S. The characteristics of the proposed new project are given below: If located in U.S If located in Zambia Mean expected annual returns on investment 25% 25% Standard deviation of expected annual returns on investment 0.09 0.11 Correlation of expected annual returns on investment with returns on prevailing U.S business 0.80 -0.05 Determine, with robust quantitative explanation, which location will best provide the firm with a more stable flow of revenue.
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The small happy Kingdom of Pollyanna does not trade with the rest of the world, but uses U.S dollars for its currency. Its domestic price of tofu is $1 per pound and the Kingdom produces and consumes 5 tons of tofu. The world price of tofu is just $0.50 per pound. At this price, the Kingdom would produce only 2 tons of tofu and would consume 8 tons of tofu, and thus have to import 6 tons of tofu. Suppose the Kingdom decides to open up to trade, but imposes a tariff of 0.25/lb on all imports of tofu. How much money does the Kingdom collect from this tariff? (Note: 1 ton = 2000 lbs.)
If a Big Mac costs 550 yen in Japan and the exchange rate of Japanese yen against US dollar is 100 yen/$, and a Big Mac costs $5 in the U.S., does PPP hold? (show your calculations instead of only answering Yes or No)
Assume your firm has transferred you to Zurich Switzerland. You work in the triangular arbitrage division. View the following exchange rates. Is an arbitrage opportunity available? If not, explain why an opportunity does not exist. If so, from the Swiss point of view show how to exploit the opportunity. CHF .8976 = $1.00, $.0130 = INR 1.00, INR 92.7904 = CHF 1 Now say instead of working in Zurich, you were employed in Mumbai, India. How does that change your thinking on the arbitrage? PLEASE ANWSER CORRECTLY AND SHOW WORK
XYZ Marbles (PTY) Ltd has entered into agreement with Buy and Deliver (Pty) Ltd to provide thefollowing goods to its customer in South Korea. The terms of the agreement are as below:1. Buy and Deliver (Pty) Ltd is to arrange for the transport of the marbles from Namibia to the SouthKorean customer. The cost of transport will be on XYZ Marbles (Pty) Ltd2. Buy and Deliver (Pty) Ltd is to clear all the export requirements XYZ (Pty) Ltd in Namibia.3. XYZ Marbles (Pty) holds the risk of the Marbles stock until they reach the customer.4. XYZ (Pty) Ltd has set the price of the Marbles at N$ 1,000,000.00. Buy and Deliver is not allowed tomake any changes to the price set. The transaction has been completed as below:01 January 2020XYZ Marbles (Pty) Ltd completes the extraction of the marbles.30 January 2020Buy and Deliver arranges the transport to South Korea of the Marbles 28 February 2020 The customer receives the goods and pays over the sale amount of N$ 1,000,000 to XYZ Marbles (Pty) Ltd 28…
Suppose a U.S. multinational company needs to buy Canadian dollar but the exchange rate between US dollar and Canadian dollar is not favorable for the company because of high bid-ask spread. However, the currency pair between Canadian dollar and Japanese Yen is favorable due to its low bid-ask spread. So, you want to find the cross-exchange rate between Canadian dollar and Japanese Yen. Assume the Canadian dollar is equal to $.76, and the Japanese Yen is equal to $.007. The value of the Canadian dollars is Japanese Yen. 93.67 108.57 164.54 118.34 27
Which of the following is an example of managing economic exposure by flexible sourcing policy? An American company sells its products in Brazil and Portugal. Reduced sales in Brazil due to the dollar appreciation against the “real” can be compensated by increased sales in Portugal due to the dollar depreciation against the euro. If yen is strong, it is preferable for a Japanese company to open a manufacturing subsidiary in the U.S. to produce and sell its products there. An American IT company hires software developers in Ukraine because of the weak position of grivna against dollar. A Canadian company spends a lot of money for research & development activities to improve its reputation and gain more customers.
A Detroit investor purchased a $100,000 Canadian dollar CD in Windsor, Canada 180 days ago at a rate of 7 percent. The Canadian spot rate was 1.367 CS/U.S.S when the investment was made. If the U.S. investor had purchased a 180 day forward foreign exchange contract for 1.386 CS/U.S.S. what equivalent U.S. annual rate 180 days ago would have made the investor indifferent between a Detroit bank CD and the Windsor, Canada CD above? CA 5.53 percent 3.50 percent Oc7.00 percent 04.16 percent
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