You work for a U.S. firm, and your boss has asked you to estimate the cost of capital for countries using the euro. You know that S = $1.201/€ and F₁ = $1.129/€. Suppose the dollar WACC for your company is known to be 10%. If these markets are internationally integrated, estimate the euro cost of capital for a project with free cash flows that are uncorrelated with spot exchange rates. Assume the firm pays the same tax rate no matter where the cash flows are earned. The estimated euro cost of capital is ☐ %. (Round to three decimal places.)

You work for a Space Mountain Rollercoasters, which is a firm whose home currency is the Mexican peso (MXN) and that is considering a foreign investment. The investment yields expected after-tax Turkish lira (TRY) cash flows (in millions) as follows: Year 0 Year 1 -TRY1,100 TRY625 Government bond yield Expected inflation Project required return Year 2 TRY625 Assume that Covered Interest Rate Parity holds and that your firm's management believes that Relative Purchasing Power Parity is the best way to predict future exchange rates over this investment's time horizon. You also have the following information: MXN O a. The gain from hedging with forwards is MXN 67.56 million O b. The gain from hedging with forwards is MXN 69.21 million O c. The gain from hedging with forwards is MXN 66.37 million O d. The gain from hedging with forwards is MXN 65.42 million O e. The gain from hedging with forwards is MXN 67.92 million Year 3 10.16% p.a. 7.00% p.a. 14.811% p.a. TRY625 TRY 14.24% p.a. 12.00%…

Suppose you are a British venture capitalist holding a major stake in an e-commerce start-up inSilicon Valley. As a British resident, you are concerned with the pound value of your U.S. equityposition. Assume that if the American economy booms in the future, your equity stake will be worth $1, 000, 000, and the exchange rate will be $1.66 per pound. If the American economy experiences arecession, on the other hand, your American equity stake will be worth $500, 000, and the exchangerate will be $1.86 per pound. You assess that the American economy will experience a boom with a70 percent probability and a recession with a 30 percent probability. Required: a. Estimate yourexposure to the exchange risk. b. Compute the variance of the pound value of your American equityposition that is attributable to the exchange rate uncertainty. c-1. How would you hedge thisexposure? c-2. If you hedge, what is the variance of the pound value of the hedged position?

Suppose you are a British venture capitalist holding a major stake in an e-commerce start-up in Silicon Valley. As a British resident, you are concerned with the pound value of your U.S. equity position. Assume that if the American economy booms in the future, your equity stake will be worth $1001, and the exchange rate will be $1.28/£. If the American economy experiences a recession, on the other hand, your American equity stake will be worth $792, and the exchange rate will be $1.45/£. You assess that the American economy will experience a boom with a 70 percent probability and a recession with the remaining probability.Estimate the Covariance between P and S

In New York, you can exchange $1 for €0.8575 or £0.7. Suppose that, in Berlin, £1 costs €1.1515. How much profit can you earn on $10,998 using triangle arbitrage?

Suppose you are a British venture capitalist holding a major stake in an e-commerce start-up in Silicon Valley. As a British resident, you are concerned with the pound value of your U.S. equity position. Assume that if the American economy booms in the future, your equity stake will be worth $946, and the exchange rate will be $1.34/£. If the American economy experiences a recession, on the other hand, your American equity stake will be worth $768, and the exchange rate will be $1.39/£. You assess that the American economy will experience a boom with a 80 percent probability and a recession with the remaining probability. Estimate the expected value of the spot rate (in £ X.XXXX)

Suppose you are a British venture capitalist holding a major stake in an e-commerce start-up in Silicon Valley. As a British resident, you are concerned with the pound value of your U.S. equity position. Assume that if the American economy booms in the future, your equity stake will be worth $933, and the exchange rate will be $1.32/£. If the American economy experiences a recession, on the other hand, your American equity stake will be worth $788, and the exchange rate will be $1.39/£. You assess that the American economy will experience a boom with a 50 percent probability and a recession with the remaining probability.Estimate the Covariance between P and S (X.XXX)

Suppose exchange rate of Japanese yen in US $ is $.010, exchange rate of euro in US $ is $1.34, and exchange rate of euro in Japanese yen is 139 yen and you have $100, 000 to invest. By looking the exchange rates, do you see triangular arbitrage opportunity? What is your profit or loss? Show the work to support your answer.

Suppose you are a British venture capitalist holding a major stake in an e-commerce start-up in Silicon Valley. As a British resident, you are concerned with the pound value of your U.S. equity position. Assume that if the American economy booms in the future, your equity stake will be worth $1,002,540, and the exchange rate will be $1.4/E. If the American economy experiences a recession, on the other hand, your American equity stake will be worth $502,880, and the exchange rate will be $16/E. You assess that the American economy will experience a boom with a 50 percent probability and a recession with a 50 percent probability. a. Estimate your exposure to the exchange risk. (Round final answer to nearest dollar.) Exposure b. Compute the variance of the pound value of your American equity position that is attributable to the exchange rate uncertainty (Round final answer to nearest dollar.) Vanance

Suppose you are a British venture capitalist holding a major stake in an e-commerce start-up in Silicon Valley. As a British resident, you are concerned with the pound value of your U.S. equity position. Assume that if the American economy booms in the future, your equity stake will be worth $1,000,000, and the exchange rate will be $1.40/£. If the American economy experiences a recession, on the other hand, your American equity stake will be worth $500,000, and the exchange rate will be $1.60/£. You assess that the American economy will experience a boom with a 70 percent probability and a recession with a 30 percent probability. What is your estimated exposure to the exchange risk? [Pick the closest number for your answer.] £4,511,976 $4,511,976 -$3,445,231 -£3,445,231