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Grace [21]
4 years ago
12

. The current spot exchange rate is $1.50/€ and the three-month forward rate is $1.55/€. Based on your analysis of the exchange

rate, you are confident that the spot exchange rate will be $1.62/€ in three months. Assume that you would like to buy or sell €1,000,000. What actions do you need to take to speculate in the forward market? What is the expected dollar profit from speculation? A. Sell €1,000,000 forward for $1.50/€, and you expect to gain $120,000. B. Buy €1,000,000 forward for $1.55/€, and you expect to gain $70,000. C. Buy €1,000,000 forward for $1.50/€, and you expect to gain $120,000. D. Wait for three months, if your forecast is correct buy €1,000,000 at $1.62/€.
Business
1 answer:
Andre45 [30]4 years ago
6 0

Answer:

B) Buy €1,000,000 forward for $1.55/€.

Explanation:

To calculate the expected profit consider the following data and formula:

Amount in actions: 1.000.000

Spot exchange rate: 1.62

Three month forward calculation: 1.55

Expected profit=1,000, 000 *( 1.62 - 1.55) = 70,000.00.

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Setler79 [48]
True i think but i could be wrong
8 0
3 years ago
Because risk is associated with the potential for higher profits, businesspersons are motivated to choose organizational forms t
avanturin [10]

Answer:

The correct answer is A. True.

Explanation:

Risk management models are a great tool to anticipate and prevent possible losses that could occur when investing a certain capital, implementing appropriate precautionary measures; Therefore, organizations and investors that have a culture of risk, create a competitive advantage over others, by assuming assessed risks, gain experience in risk management, anticipate adverse changes, protect or cover their investments in advance and obtain higher profits by taking greater risks.

3 0
4 years ago
The slope of the _________________ is determined by the relative price of the two goods, which is calculated by taking the price
sleet_krkn [62]

Answer:

C) budget constraint

Explanation:

The budget constraint is a graph of all the combinations of goods and services a consumer can purchase given prices and income of the consumer.

The absolute slope of the budget constraint is the relative price of the two goods represented on the graph.

I hope my answer helps you

8 0
3 years ago
Animeat is a company that sells food for exotic animals in the UAE. Business is going well but they predict they will have some
N76 [4]

Answer:

Animeat should access a flexible line of credit.

Explanation:

While it is common knowledge that businesses including those that are profitable would at one time or another have cash flow problems, yet it is pertinent for business owners and managers to always plan ahead against lack or shortage of cash flow as such could lead to total collapse of the business or customers/suppliers loss.

With regard to the above scenario, I would suggest Animeat access a flexible line of credit like invoice finance,overdraft facilities or short term business loan etc, inorder to meet up with it's food supply when the time comes. This would give the business quick access to funds/cash hence cushion the effect of cash flow problem during the predicted time.

The most important source of finance is to find the one that suit the business need and in which interest payment will be seamless so that available cash will not be depleted.

3 0
3 years ago
One day, a local theme park charges $40 per person for admission, and 10,000 people visit the park. On another day, the park cha
slega [8]

Answer:

The low-attendance day falls on an autumn Wednesday, while the high-attendance day falls on a summer Saturday.

Explanation:

There are no rare class of goods which do not follow the Law of Demand

The most probable reason may be the dates are at different time period, when the demand is lower and therefore the price must be lower to generate  enought attendance  to make it profitable. While, the second date is onpeak demand.

8 0
3 years ago
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