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julsineya [31]
3 years ago
14

If the interest rate in the United Kingdom is 8 percent, the interest rate in the United States is 10 percent, the spot exchange

rate is $1.75/£1, and interest rate parity holds, what must be the one-year forward exchange rate?
Business
1 answer:
NISA [10]3 years ago
3 0

Answer:

The answer is $1.78 / £1

Explanation:

Solution

Given that

Interest rate of United kingdom = 8%

Interest rate of United States =10%

Spot exchange rate =$1.75£1

The next step is to find the one year forward rate of exchange

Thus

Forward Rate = S₀ * [ ( 1 + Rus) / ( 1 + RE) ]

=$ 1.75 * ( ( 1 + 10%) / ( 1 + 8%) )

$1.78

Therefore, the forward exchange rate is $ 1.78 / £1

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Liberal humanism is a philosophical stance that highlights the agency and value of human beings, both individually and collectively.
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3 years ago
Suppose you purchase one share of the stock of Red Devil Corporation at the beginning of year 1 for $42.50. At the end of year 1
kkurt [141]

Answer:

17.76%

Explanation:

The computation of the time-weighted return on your investment is given below

But before that we have to do the following calculations

Year 1 = ($46.50 - $42.50) + 2 ÷ ($42.50) × 100 = 14.12%

Year 2 = ($54.50 - $46.50) + 2 ÷ ($46.50) × 100 = 21.51%

Now the time weighted return is

(1 + t)^2 = (1 + 14.12%) × (1 + 21.51%)

= 1.1412 × 1.2151

= √1.3867 - 1

= 17.76%

8 0
2 years ago
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Firdavs [7]

Answer:

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4 0
3 years ago
Assume that a parent company owns a 100% controlling interest in its long-held subsidiary. On December 31, 2013, a parent compan
Vlad [161]

Answer:

Related to the transferred equipment, the items that is true regarding the preparation of the consolidated financial statements for the year ending December 31, 2013 is:

C. The consolidation entries will include a $26,000 debit to "Gain on Sale of Equipment."

Explanation:

a) Data and Calculations:

Original cost of the equipment to the parent = $180,000

Transfer of equipment to subsidiary =                 (118,000)

Accumulated depreciation to December 31,        (36,000)

Unaccounted balance =                                          26,000

b) The unaccounted balance of $26,000 needs to be credited to the parent's Equipment account to remove it from the account.  This will have a corresponding debit entry in another account.  The only correct entry among the options is C.

5 0
3 years ago
You find a zero coupon bond with a par value of $10,000 and 19 years to maturity. The yield to maturity on this bond is 4.7 perc
Nikitich [7]

Answer:

$4,136.77

Explanation:

In this question, we use the present value formula which is shown in the attachment below:

Given that,  

Future value = $10,000

Rate of interest = 4.7%  ÷ 2 = 2.35

NPER = 19 years  × 2 = 38 years

PMT = $0

The formula is shown below:

= -PV(Rate;NPER;PMT;FV;type)

After solving this, the price of the bond is $4,136.77

8 0
3 years ago
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