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Example: • Suppose: 7%/year for dollar in New York, 12%/year for £ in London - Spot rate: £ =$1.75, one year forward rate : £ =$1.68 • Is there an arbitrage opportunity? Compute the profit using $?
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Summary of the Liquidity Ratio Comparisons Strong current ratio and weak acid-test ratio indicates a potential problem in the inventories account. Note that this industry has a relatively high level of inventories.
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Mary shows “risk aversion” because her “certainty equivalent” < the expected value of the gamble. Raleigh exhibits “risk indifference” because her “certainty equivalent” equals the expected value of the gamble. Shannon reveals a “risk preference” because her “certainty equivalent” > the expected value of the gamble.
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39. If you had €1,000,000 and traded it for USD at the spot rate, how many USD will you get? 40. USING YOUR PREVIOUS ANSWERS and a bit more work, find the 1-year forward BID exchange rate in $ per € that that satisfies IRP from the perspective of a customer 6-40Chapter 06 International Parity Relationships and Forecasting Foreign Exchange 41. U...
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• Individual national currencies often need to be evaluated against all other currency values to determine relative purchasing power • The objective is to discover whether a nation’s exchange rate is “overvalued” or “undervalued” in terms of PPP • This problem is often dealt with through the calculation of exchange rate indices such as the ...
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The bond’s coupon rate is the stated rate of interest; the annual interest payment divided by the bond’s face value. The discount rate (capitalization rate) is dependent on the risk of the bond and is composed of the risk-free rate plus a premium for risk.
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47. What is the ASK cross-exchange rate for Canadian dollars priced in euro? Hint: Find the price that a currency dealer will take in euro to sell Canadian dollars. A. €0.6094/CAD B. €0.6104/CAD C. €0.6181/CAD D. €0.6191/CAD
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Floating Exchange Rate Countries – Under a floating exchange rate system, the government has no responsibility to peg its foreign exchange rate – Surplus on the BOP currency appreciation price of export goods ↑, price of import goods ↓ export ↓, import ↑ BOT ↓ BOP ↓ – Deficit on the BOP currency depreciation price of export goo...
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What is the Present Value (PV) of the previous problem? The Present Value is simply the $1,000 you originally deposited. That is the value today! Present Value is the current value of a future amount of money, or a series of payments, evaluated at a given interest rate.
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Trong thực tế có nhiều trường hợp “freerider problem” . Ở Mỹ chỉ có 7.5% công chúng nghe radio trả tiền, có nhiều người hưởng tự do. Sử dụng internet, download các tài liệu miễn phí, update các phần nềm miễn phí
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