Answer:
Borrow in dollars then at spot rate convert money to british pound. Invest in the pounds for half a year and convert back to dollars.
Explanation:
Access to credit = $20000000
We do a conversion to pounds
= 20000000/2
= £10000000
When this is invested for 6 months
10000000 x 1 +4% x6/12
= 10000000(1+0.04*0.5)
= 10000000x1.02
= 10200000
We then make a conversion back to dollars
10200000 x 2.2
= 22,440,000 dollars
Loan to be repaid
20000000(1+6%x6/12)
= 20000000 x 1 +0.06*0.5
= 20000000 x 1.03
= 20,600,000
Then arbitrage profit = 22440000 - 20600000
= 1840000
The semi annual interest payment on a $10,000 5% bond would be $250
Answer:
the increase in the flow of goods, services, capital, people, and ideas across international boundaries.
it would be a to d, c to b, d to e
Answer:
<u>Part a: What will be the equilabrium price that Dumphy and Funke will charge?</u>
Answer: Price charged = $30
<u>Part b: What are the profits for Dumphy and Funke at the equilibrium price?</u>
Answer: Profit on equilibrium price = $0
<u>Part c: What type of competition would Funke and Dumphy likely engage in after the decrease in demand?</u>
Answer: Price competition
Explanation:
<u>Part a: What will be the equilabrium price that Dumphy and Funke will charge?</u>
Answer:
Price charged by each of the artists will be equal to their marginal cost.
Thus, equilibrium P = MC = $30.
<u>Part b: What are the profits for Dumphy and Funke at the equilibrium price?</u>
Answer:
Equilibrium profits will be 0 at the equilibrium because price charged is equal to MC, leading to no profits.
<u>Part c: What type of competition would Funke and Dumphy likely engage in after the decrease in demand?</u>
Answer:
Price competition - as changes in price will lead to changes in demand and thus sales
