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Romashka [77]
3 years ago
8

Suppose the U.S. yield curve is flat at 3% and the euro yield curve is flat at 4%. The current exchange rate is $1.35 per euro.

What will be the swap rate on an agreement to exchange currency over a 3-year period? The swap will call for the exchange of 2.1 million euros for a given number of dollars in each year. (Do not round intermediate calculations. Enter your answer in millions rounded to 4 decimal places.)
Business
1 answer:
Debora [2.8K]3 years ago
3 0

Answer:

2.7814 millions per year

Explanation:

The rate that is determined by the contracting parties of a swap is known as swap rate.

The swap rate is decided by the receiver and paid by the payer in order to compensate the uncertainty bear by the receiver related to the fluctuations in floating rate.

Amount Delivered = Forward Exchange Rate * Exchange Amount

Year 1  

= $1.35 * ( 1.03 / 1.04 ) * Euro 2.1 million

= $2.8077 millions

Year 2

= $1.35 * ( 1.03 / 1.04 )∧2 * Euro 2.1 million

= $2.7807 millions

Year 3  

= $1.35 * ( 1.03 / 1.04 )∧3 * Euro 2.1 million

= $2.7540 millions

Now Swap per year =

[F/(1+0.3) + F/(1+0.03)∧2 + F/(1+0.03)∧3 ]= [ $2.8077 ( 1+0.03)∧2 + $2.7807 (1+0.03) + $2.7540 ] / ( 1+0.03)∧3

= F [ 2.8286 ] = 7.8674

F = 2.7814 millions per year

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Robin Company has the following balances for the current month: Direct materials used $ 24,000 Direct labor $ 36,800 Sales salar
Irina-Kira [14]

Answer:

total manufacturing cost =  $60800

Explanation:

given data

Direct materials used = $24,000

Direct labor = $36,800

Sales salaries  = $19,200

Indirect labor = $4,800

Production manager's salary =  $9,600

Marketing costs = $14,400

Factory lease = $6,400

solution

we get here total manufacturing cost that is express as

total manufacturing cost =  Direct Material + Direct Labor    ..............1

put here value and we get

total manufacturing cost =  $24000  + $36800

total manufacturing cost =  $60800

3 0
3 years ago
The country of Growpaw does not trade with any other country. Its GDP is $20 billion. Its government purchases $3 billion worth
Anna [14]

Answer:

option a) 5 billion

Explanation:

Data provided in the question:

GDP = $20 billion

Cost of goods and services = $3 billion

Tax collected = $6 billion

Transfer payments to households = $2 billion

Private saving in Growpaw = $4 billion

Now,

Disposable income = GDP - taxes + transfer payments

=$20 billion - $6 billion + $2 billion

= $16 billion

Consumption = Disposable income - Savings

= $16 billion - $4 billion

= $12 billion

Thus,

Investment = GDP - consumption - government purchases

= $20 billion - $12 billion - $3 billion

= $5 billion

Hence,

the correct answer is option a) 5 billion

8 0
3 years ago
Burke tires just paid a dividend of $2.42. analysts expect the company's dividend to grow by 30% this year, 20% next year (year
Ivanshal [37]

Answer:

There is no correct answer is these options. But the correct answer is $113.41

Explanation:

The formula to solve this is:

Po = D1/r - g

Po is the Current price of the common stock

D1 is the future dividend payment

r is the rate of return

g is the growth rate.

This is quite different from the usual(single stage). This is Two-stage Dividend Discount Model. To solve this;

D1(Dividend in year 1) is $3.15( $2.42 x 1.3)

D2(Dividend in year 2) is $3.78(3.15 x 1.2)

D3(Dividend in year 3) is $4.15($3.78 x 1.1)

D in subsequent years is $4.36(4.15 x 1.05)

P3(price of stock in year 3) = $4.36/0.083 - 0.05

=$132.12

Now the stock's current market value is

$3.15/1.08 + $3.78/1.08^2 + $4.15/1.08^3 + $132.12^3

The price of the stock is $113.41

4 0
3 years ago
Ortein, a shoe manufacturing company, wanted to cut costs and hence laid off half its employees from two of its departments. It
jonny [76]

Answer:

b) synergy

Explanation:

Synergy -

It describes the benefit gain by strategically organizing itself to maximize  innovation and cooperation .

These organization with synergic approach achieves more as a group than with individual .

hence , in the question , the approach shown by the Ortein company is an example of b) synergy .

4 0
3 years ago
The advanced machinery used for limestone quarrying in a particular region leads to noise pollution and affects the hearing abil
Tanzania [10]

Answer:

A. Recent environmental research reveals that the dust from the limestone quarrying site has severely contaminated the water at a nearby lake.

Explanation:

The limestone production results in huge social effects like, noise pollution, soil pollution, which affects lives of people. And since the manufacturers or producers of limestone do not care about the social results of such production, they shall be liable to pay huge taxes.

As for this, the cause as stated in statement A is absolutely suitable.

Also the prices are more in this area even after so much of social destruction.

Accordingly high taxes as a penalty for such social destruction shall be charged.

4 0
3 years ago
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