Answer:
Please see explanation
Explanation:
To answer the given question, first we will calculate the theoretical future price which shall be determined using continuous compounding formula as follows:
Theoretical future price=400*e^(10%-4%)*4/12
=$408.08
The actual future price of a contract deliverable in 4 months is only $405 which means that the index future price is too low in relation to the index.
The suitable arbitrage strategy shall be:
1. to purchase the future contracts
2.Short sale the shares which are underlying the index
Answer:
A) whether collaboration pays for itself.
Explanation:
Collaboration refers to a situation where two separate companies decide to leverage each other on an operational basis, in order for them to perform better together than they did separately.
The whole idea behind collaboration is to make more money by working together, therefore the collaboration should not only pay for itself but should also increase both companies' profits by boosting sales, engage in larger contracts, cut costs, etc.
If they are not going to win anything by working together, why should they do it?
Answer:
c. This increases only U.S. net capital outflow.
Explanation:
The net capitaloutflow is determinated by comparing the investemnt abroad with the investment of other countries in the national economy.
investment in foreing countries - investment from foreing countries.
In this case the US firm is investing abroad, therefore inceasing the net capital outflow of the US.
The Korea net capital outflow will decrease. because it is receiving investment.
Answer:
cash is one example of a physical capital
