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bogdanovich [222]
4 years ago
11

Assume the spot rate for the British pound currently is $1.5701/£. Also assume the one-year forward rate is $1.5574/£. A risk-fr

ee asset in the U.S. is currently earning 3.2 percent interest rate. If interest rate parity holds, what rate can you earn on a one-year risk-free British security? A) 2.37 percent B) 4.57 percent C) 3.67 percent D) 4.04 percent E) 4.92 percent
Business
1 answer:
olga nikolaevna [1]4 years ago
7 0

Answer:

D) 4.04 percent

Explanation:

Spot rate is £1 = $1.5701

Forward exchange rate after 1 year is £1 = $1.5574

Risk free rate in US = 3.2 %

Forward rate = {Spot rate * (1 + risk free rate in US)} / (1 + risk free rate in UK)

1.5574 = {1.5701 * ( 1 + 0.032)} / (1 + risk free rate in UK)

(1 + risk free rate in UK) = (1.5701 * 1.032) / 1.5574

Risk free rate in UK = (1.62034 / 1.5574) - 1

Risk free rate in UK = 1.0404 - 1

Risk free rate in UK = 0.0404

Risk free rate in UK = 4.04%

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Explanation:

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Then we calcualte the interest

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We post our know values and sovle for time

1,300 x 0.08 x time = 625

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Answer:

The graph following these guidelines:

A graph titled Percentage changes in investment rate and G D P has year on the x-axis, from 2008 to 2012, and percentage changed on the y-axis from negative 20 to positive 10 percent, in increments of 5. Both the lines representing investment rate and G D P follow the same trend.

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1. Harley Davidson has its engine plant in Milwaukee and its motorcycle assembly plant in Pennsylvania. Engines are transported
Serggg [28]

Answer:

Company should load 1,479.9 motorcycles on each truck.

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Demand for motorcycles = 300 per day

Cost per engine = $500

Holding cost =  20% of $500

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Assuming that company plant works for 365 days in a year,

Annual demand = 300 motorcycles × 365 days

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Economic\ order\ quantity\ for\ each\ truck=\sqrt{\frac{2DS}{H}}

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D = Annual demand in units

S = Set up cost per order

H = Handling cost per order

Economic\ order\ quantity\ for\ each\ truck=\sqrt{\frac{2\times109,500\times1,000}{100}}

=\sqrt{\frac{219,000,000}{100} }

\sqrt{2,190,000}

= 1,479.9

Thus, the company should load 1,479.9 motorcycles on each truck.

5 0
3 years ago
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