Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Pls answer and explain in detail Question:Dealer A quotes 3.6800-3.6833 for the SAR/USD exchange
rate to Dealer B. (a) The price at which A is willing to buy the US dollar? (b) The price at which A is
willing to buy the Saudi Arabian riyal? (c) The price at which B can buy the US dollar? (d) The price at which B can buy the Saudi Arabian riyal? (e) The price at which A is willing to sell the US dollar? (f)
The price at which A is willing to sell the Saudi Arabian riyal? (g) The price at which B can sell the US
dollar? (h) The price at which B can sell the Saudi Arabian riyal?
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- Peter Sheffield has Euros (€) amounting to €500,000 and is provided with the following quotes: Bank A: Euro/US dollar = €0.8418/$ Bank A: British pound /US dollar = £0.7538/S Bank B: British pound/Euro = £0.8863/€ Determine whether an arbitrage opportunity exists. Show your calculation in the space below and briefly explain (in one or two sentences) why the arbitrage opportunity exists or not. For example, show your calculation as follows (The currencies used in the example are not applicable to your calculation. It just provide you with information how you should show your calculation): Yen/ZAR = 11.7654/1.3954 = 8.4316 (Round your answer to 4 decimals) Reason why arbitrage opportunity exists/ does not exist:arrow_forward= Iberico plc, a Spanish firm whose functional currency is EUR, sold goods to a British customer for 10,000 GBP on credit. The exchange rate on the date of sale was 1 GBP : 1.2 EUR. Which the journal entry shall Iberico plc prepare regarding the sale? Question 6 Select one: a. DR Cash 12,000 EUR, CR Sale 12, 000 EUR b. DR Cash 10,000 GBP, CR Sale 10,000 GBP c. DR Receivable 10,000 GBP, CR Sale 10,000 GBP d. DR Receivable 12,000 EUR, CR Sale 12,000 EURarrow_forwardPlease explain how the bolded option is the correct answerarrow_forward
- 2.Jameson Ltd purchased goods on credit from a European supplier costing Euros 80,000 on 29th May 2020 when the exchange rate was A$1 = O.78 Euros. At 30th June 2020, its balance date . the exchange rate was A$1 = 0.79 Euros . Jameson Ltd paid the European supplier on 5th July 2020 when the exchange rate was A$1= 0.76 Euros Required: Prepare the journal entries for the abovearrow_forwardQ1-10 If a PPP estimate of the dollar/pound exchange rate is $1.61/£ and the current spot rate is observed to be $1.68/£, on the basis of these two rates you should, viewing the long-run, a. expect the dollar to appreciate against the pound. b. take a "short" position in dollars. c. expect the pound to appreciate against the dollar. d. have no expectation regarding the likely movement of the dollar/pound exchange rate.arrow_forwardAssume 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_forward
- Express this quotation in an indirect form where the dealer is presenting prices to buy and sell the USD - that is make sure this currency is treated as the "foreign currency". USD/HRK 7.3658 / 7.3708 a. 7.3658 / 7.3708 O b. None of the other options O c.0.1357/0.1358 O d. 0.1358/0.1357 O e. 7.3708/ 7.3658arrow_forwardGanado Europe (A). Using facts in the chapter for Ganado Europe, assume the exchange rate on January 2, 2016, in Exhibit 11.5 dropped in value from $1.1400/€ to $0.8700/€. Recalculate Ganado Europe's translated balance sheet for January 2, 2016, with the new exchange rate using the current rate method as shown in the popup window,. What is the amount of translation gain or loss? a. What is the amount of translation gain or loss? Enter a positive number for a gain and negative for a loss. $ (Round to the nearest dollar.) Where should it appear in the financial statements? The translation gain (loss) for the year is added to the balance in the Cumulative Translation Adjustment (CTA) account.arrow_forwardSuppose Dassie Bank quoted the exchange rate of Singapore dollar in US$ at $0.60, the pound rate in US$ at $1.50, and the pound rate in Singapore dollars at S$2.6. For a US resident having $1,000 to do triangular arbitrage, she/he will end up withAnswerUS dollars after the arbitrage.arrow_forward
- Suppose Dassie Bank quoted the exchange rate of Singapore dollar in US$ at $0.60, the pound rate in US$ at $1.50, and the pound rate in Singapore dollars at S$2.6. As a result of triangular arbitrages among the three currencies and its supply/demand effects, the quoted rate of Singapore dollars in US$ tends to _____. a. depreciate b. remain the same c. appreciatearrow_forwardGanado Europe (C). Using facts in the chapter for Ganado Europe, assume the exchange rate on January 2, 2016, in Exhibit 11.5 appreciated from $1.2900/€ to $1.5800/€. Calculate Ganado Europe's translated balance sheet for January 2, 2016, with the new exchange rate using the current rate method as shown in the popup window, a. What is the amount of translation gain or loss? b. Where should it appear in the financial statements? Data table a. What is the amount of translation gain or loss? Enter a positive number for a gain and negative for a loss. (Round to the nearest dollar.) (Click on the following icon in order to copy its contents into a spreadsheet.) EXHIBIT 11.5 Ganado Europe's Translation Loss After Depreciation of the Euro: Current Rate Method Assets Cash In Euros (€) (US$/euro) December 31, 2015 Exchange Rate Translated Accounts (US$) January 2, 2016 Exchange Rate (US$/euro) Translated Accounts (US$) 1,500,000 1.2900 $1,935,000 1.5800 $2,370,000 Accounts receivable Inventory…arrow_forward
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