Answer:
a.) The proportional up movement , u, for the currency can be calculated using the following formula:
u = eStd Dev * Square root of t
u = e0.06*square root of 0.25
u = 1.0305
b.) Probability of up movement, p , = (a - d) / (u - d)
where a = ert where r = 0.025, t = 0.25
a = e0.025*0.25 = 1.0063
d = 1 / u = 1 / 1.3050 = 0.7663
p = (1.0063-0.7663) / (1.3050-0.7663)
p = 0.46
1-p = 1-0.46 = 0.54
c) Price of an American Call Option on the currency : we use binomial tree for that , as follows: The amounts below line indicate the option price and figures above line indicate the underlying asset price which is 0.55555
Answer and Explanation:
Please find answer and explanation attached
Answer:
The following multiple choices are missing:
$8.10 per machine-hour
$2.10 per machine-hour
$3.90 per machine-hour
$6.00 per machine-hour
The predetermined overhead rate is $6
Explanation:
The predetermined overhead rate is the sum of the fixed manufacturing overhead cost per machine hour and variable manufacturing overhead per machine hour
fixed manufacturing overhead cost per machine=total fixed manufacturing overhead/total machine hours
fixed manufacturing overhead=$312,000
total machine hours is 80,000 hours
fixed manufacturing overhead cost per machine=$312,000/80,000=$3.9
variable manufacturing overhead per machine hour is $2.10
Predetermined overhead rate =$3.9+$2.1=$6
The last option is the correct one
Answer:
open market operation
Explanation:
Open market operation is the mechanism of Fed to alter money supply. To increase the money supply, Fed will buy financial securities such as Treasury bills from large banks or security dealers so there is more money deposit in the account of those who buy securities from Fed. Thus, there is more money available for loan hold by the banks resulting in an increase in the money supply. Fed does otherwise to reduce the money supply.