Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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- A bottle of wine made in the European Union sells for €81. Suppose the exchange rate of U.S. dollars for euros changes from $1.00 = €0.85 to $1.00 = €0.63. What has happened to the cost of the bottle of wine in the U.S.? That is, what is the change in the cost of the bottle of wine for consumers in the U.S. in dollars? Provide your answer in dollars rounded to one decimal place. Use a negative sign "-" for negative values. Do not include any symbols, such as "$," "=," "%," or "." in your answer. Your Answer: Answerarrow_forwardMr. James K. Silber, an avid international investor, just sold a share of Nestlé, a Sw iss firm, for SF5,080. The share was boug ht for SF4,600 a year ago. The exchange rate is SF1.60 per U.S. dollar now and wa s SF1.78 per dollar a year ago. Mr. Silber received SF120 as a cash dividend immed iately before the share was sold. Comput e the rate of return on this investment in terms of U.S. dollars.arrow_forwardYou are working for an imports-exports company. In the current financial year, your company has a net income of $851,000 and plans to use a part of it as retained earnings for a new project which will cost $500,000 next year. The company’s stock is currently listed and actively traded on ASX. Required: Your company has an extra cash of A$216 000. The AUD/USA exchange rate in New York is 0.77923. The USD/AUD rate in Sydney is 1.29135. Is there any arbitrage profit possible? Set up an arbitrage scheme with the extra cash, disregarding bid-ask spread. What is the potential gain in AUD dollar?arrow_forward
- Samuel Samosir works for Peregrine Investments in Jakarta, Indonesia. He focuses his time and attention on the U.S. dollar/Singapore dollar ($/S$) cross-rate. The current spot rate is $1.39/S$. After considerable study, he has concluded that the Singapore dollar will depreciate versus the U.S. dollar in the coming 90 days, probably to about $1.35/S$. He is considering trading options to profit and has the following options on the Singapore dollar to choose from: Option choices on the Singapore dollar: Call on S$ Put on S$ Strike price (US$/Singapore dollar) $1.50 $1.37 Premium (US$/Singapore dollar) $0.064 $0.006 Samuel decides to sell call options in Singapore dollars. What is Samuel's (net) profit/loss (in dollars) per option if the spot rate is $1.54/S$ at maturity?arrow_forwardAssume that the British pound is selling in the United States at $1.5985 spot and $1.5939 in the 180-day forward market, and that the Canadian dollar is selling in the United States at $.7336 spot and $.7422 in the 180-day forward market. Both quotes are direct. Which of the following is correct? Show your calculations. the Canadian dollar is selling at 2.3 percent premium in the forward market the Canadian dollar is selling at 1.17 percent premium in the forward market the Canadian dollar is selling at 1.17 percent discount in the forward market the British pound is selling at .57 percent premium in the forward marketarrow_forwardPostal Express has outlets throughout the world. It also keeps funds for transactions purposes in many foreign countries. Assume in 2010 it held 420,000 reals in Brazil worth 350,000 dollars. It drew 9 percent interest, but the Brazilian real declined 18 percent against the dollar. What is the value of its holdings, based on U.S. dollars, at year-end? Note: Do not round intermediate calculations. What is the value of its holdings, based on U.S. dollars, at year-end if instead it drew 6 percent interest and the real went up by 10 percent against the dollar? Note: Do not round intermediate calculations.arrow_forward
- At the start of the year, you purchased some shares in IBM (a US company) for $US 25.44. The exchange rate at the time of purchase was $US1 = $NZ 1.86. Now the exchange rate is $US1 = $NZ 1.72, while the shares are worth $US 27.91. IBM paid no dividends over the year. What is your ($NZ) holding period return from the start of the year until today? 9.71% 2.18% 1.45% -7.53%arrow_forwardIn Jan 2003, the interest rate on the Japanese Yen was 1.91%, and on the Australian dollar was 5.86%. The spot rate was S(V/AU$)-75.49. Tom Bohn, a hedge fund trader specializing in FX trading in Blackrock Inc, started a carry trade between Yen and Australia for one year. Then the carry (interest rate differential) between Yen and AU$ was % (Two decimal places in your answer.arrow_forwardRequired: Mr. James K. Silber, an avid international investor, just sold a share of Néstle, a Swiss firm, for SF5,250. The share was bought for SF4,680 a year ago. The exchange rate is SF2.00 per U.S. dollar now and was SF1.94 per dollar a year ago. Mr. Silber received SF136 as a cash dividend immediately before the share was sold. Suppose that Mr. Silber sold SF4,680, his principal investment amount, forward at the forward exchange rate of SF2.02 per dollar. How would this affect the dollar rate of return on this Swiss stock investment? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Rate of return %arrow_forward
- You invested three thousand US dollars and purchased shares of a German corporation when the exchange rate was US1.00 = 0.70 Euros. After six months, you sold all of the shares for 3,100 euros when the exchange rate was US1.00 = 0.68 euros. No dividends were paid during the time you owned the shares of stock. What is the amount of gain or loss on this investment in US dollars? Group of answer choices $2,458.82 $892.00 Loss $1,000.00 $273.11 none of the given answers is correctarrow_forwardRequired: Mr. James K. Silber, an avid international investor, just sold a share of Néstle, a Swiss firm, for SF5,150. The share was bought for SF4,670 a year ago. The exchange rate is SF1.95 per U.S. dollar now and was SF1.92 per dollar a year ago. Mr. Silber received SF134 as a cash dividend immediately before the share was sold. Suppose that Mr. Silber sold SF4,670, his principal investment amount, forward at the forward exchange rate of SF1.97 per dollar. How would this affect the dollar rate of return on this Swiss stock investment? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Rate of return %arrow_forward
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