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djyliett [7]
4 years ago
13

You can buy or sell the £ spot at $1.98 to the pound. You can buy or sell the pound one-year forward at $2.01 to the pound. If U

.S. annual interest rates are 5 percent, what must be the approximate one-year British interest rate if interest rate parity holds?
Business
1 answer:
Aleonysh [2.5K]4 years ago
5 0

Answer:

X= 3.45%

Explanation:

Data provided

One year future exchange rate = $2.01

Spot exchange rate = $1.98

Interest rate is USA = 5%

The computation of British interest rate is shown below:-

Assume Interest rate in UK = X%

One year future exchange rate = Spot exchange rate × (1 + Interest rate is USA) ÷ (1 + X%)

$2.01 = $1.98 × (1 + 5%) ÷ (1 + X%)

$2.01 ÷ $1.98 = (1 + 5%) ÷ (1 + X%)

(1 + X%) = 1.05 ÷ 1.01515

X= 3.45%

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The correct answer is option (C) $ 1,750

Explanation:

Given data:

Amount received from corporate bond = $ 2,200

Amount received from a savings account = $ 600

Thus, the total income = $ 2,200 + $ 600

or

The total income = $ 2800

Now,

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Hence, the total taxable income = Total income - standard deduction

or

the total taxable income = $ 2,800 - $ 1,050 = $ 1,750

Hence, the correct answer is option (C) $ 1,750

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4 years ago
What differences and similarities exist between monopolistic competitive firms and perfect competitive firms?
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Explanation:

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4 0
3 years ago
If you own a business, the loan payment, rent, and your salary are examples of "
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The general liabilities? could just be liabilities.
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3 years ago
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Zach has decided to start his own photography studio. To purchase the necessary equipment, Zach withdrew $10,000 from his saving
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Answer:

Zach's annual opportunity cost of the financial capital(implicit + explicit)that has been invested in the business is $700.        

Explanation:

opportunity cost = 3%($10,000) +8%($5,000)

                           = $300 + $400

                           = $700

Therefore, Zach's annual opportunity cost of the financial capital(implicit + explicit)that has been invested in the business is $700.        

   

3 0
3 years ago
What is the yield to maturity of a ten-year, $1000 bond with a 5.2% coupon rate and semiannual coupons if this bond is currently
Anna35 [415]

Answer:

A. 6.82%

Explanation:

Yield to Maturity is a discounting rate which equals all the cash outflows related to bond with the present /current market value of bond. YTM is calculated by trial and error method. Since the options are available in the question, we can use those options to find out correct YTM.

First we are taking YTM 6.82%

Semi-annual YTM = 3.41%

Coupon Interest semi annual = 1000*5.2%*1/2

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No of times interest paid = 10*2

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Present Value of bond

= Coupon Interest*PVIFA (YTM, 20) + Par Value x PVIF (YTM, 20)

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Therefore, The correct YTM is 6.82%

4 0
3 years ago
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