Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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How should I resolve this question, please?
Your friend from Australia purchased a computer for C$3,900 while visiting you for the holidays, when the exchange rate was C$1 = A$1.0227. If the exchange rate changed to C$1 = A$1.0426, what was the change in value of the computer in Australian dollars?
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- A U.S. firm, sells merchandise today to a British company for £100,000. The current exchange rate is $1.38/£, the account is payable in three months, and the firm chooses to hedge by borrowing £98,765.43 today and exchanging the proceeds today for dollars; the loan will be paid back with the £100,000 accounts receivable (money market hedge). If Husky converted the borrowed pounds into dollars today and invested that amount at its WACC of 6% (1.5% for 90 days), how much much money in U.S. dollars will Husky Sporting Goods Company have in 90 days?arrow_forwardChapter 18, Question 2. Was incorrect the first time. Attached is a similar question with answersarrow_forwardBefore boarding his flight to Zurich, Switzerland, Ian purchased CHF900 from his bank when the exchange rate was C$1 = CHF0.9753. However, Ian had to cancel the trip. Ian returned to the bank to convert the Swiss currency back into Canadian dollars. If the exchange rate changed to C$1 = CHF0.984, how many Canadian dollars would Ian have lost in these transactions? Assume the bank has a 1.00% commission on both the sale and the purchase of the funds. C Round to the nearest cent Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for surearrow_forward
- Last year, the Mexican peso/U.S. dollar exchange rate was MXN13.3872/$. Today, the exchange rate is MXN16.5307/$. A U.S. firm has total assets worth MXN14,790,000 located in Mexico that did not change in value over the year. What was the change in the value of the assets in dollars on the company's U.S. balance sheet? Multiple Choice −$193,736.57 $210,087.71 −$210,087.71 $0 $193,736.57arrow_forwardPlease explain how the bolded option is the correct answerarrow_forwardRobert purchased US$10,000 from a bank in America, which charged her a commission of 0.8%, and sold the US dollars to a bank in Canada, which charged her a 0.24% commission. How much money did she lose or gain? Assume that the exchange rate was C$1 = US$0.8993. C$ Round to the nearest cent Answer as positive is there was a gain, and negative if there was a loss 0.00arrow_forward
- 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 WORKarrow_forwardSuppose the world price of notebooks is $4.00. Suppose the pre-trade price of notebooks in France is $5.00. What would happen if France allowed trade in notebooks?arrow_forwardA friend of yours tells you that in Japan a specific Japanese treasury note matures for $1000 in two years can be bought or sold for $925. What is the annualized risk-free rate in this example? ) You happen to notice the same security can be purchased or sold domestically for $945, how do you arbitrage this position? How many times should you make this trade? How likely is it that your friend’s information is current and correct?arrow_forward
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