Answer:
C) Sell £2,278.13 forward at the 1-year forward rate, F1($/£), that prevails at time zero.
Explanation:
given data
State 1 State 2 State 3
Probability 25% 50% 25%
Spot rate $ 2.50 /£ $ 2.00 /£ $ 1.60 /£
P* £ 1,800 £ 2,250 £ 2,812.50
P $4,500 $4,500 $4,500
solution
company holds portfolio in pound. so to get hedge, they will sell that of the same amount.
we get here average value of the portfolio that is
The average value of the portfolio = £ (0.25*1800 + 0.5*2250 + 0.25*2812.5)
The average value of the portfolio = 2278.13
so correct option is C) Sell £2,278.13 forward at the 1-year forward rate, F1($/£), that prevails at time zero.
Answer:
Solvency
Explanation:
Solvency is defined as the ability of a company to meet it's long term financial obligations like having the ability to pay off debts as they mature. Solvency measures if a company is able to pay off it's debt in long term.
Although solvency and liquidity are similar, difference is liquidity is more concerned with paying off short term debts.
A company or firm is said to be solvent when the current assets exceeds current liabilities.
Answer:
The price level will be equal to what it was before there was a rise in the aggregate supply.
Explanation:
In economics, natural gross domestic product (Natural Real GDP) can be described as the maximum level of real GDP that can be sustained by an economy over the long term. The Natural Real GDP is also known as the potential output.
From the question, since the economy has moved back to producing Natural Real GDP which is the maximum real GDP sustainable, the price level will be equal to what it was before there was a rise in the aggregate supply.
Therefore, the price level will be equal to what it was before there was a rise in the aggregate supply.
Answer: misconception
Explanation:
A misconception is simply a misunderstanding, a mistaken thought or idea. Misconception is an opinion or a view by s person which is incorrect based on the faulty thinking of the person.
For example, Jane will finish high school the following year and therefore, won't need to further her education. This is an example of misconception.
Yes this is true but you dont have to pay it back right after but it's best you pay it off before you buy something else so you dont go in debt
