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blsea [12.9K]
3 years ago
14

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

te, you are confident that the spot exchange rate will be $1.52/£ 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/£.
b. Buy £1,000,000 forward for $1.50/£.
c. Wait three months, if your forecast is correct buy £1,000,000 at $1.52/£
d. Sell £1,000,000 today at $1.55/£; wait three months, if your forecast is correct buy £1,000,000 back at $1.52/£
Business
1 answer:
Misha Larkins [42]3 years ago
4 0

Answer:

b. Buy £1,000,000 forward for $1.50/£.

Explanation:

Let's say for instance, we agree to make purchase of €1,000,000 and then forward for $1.50/€ and we assume that the price turns out to become $1.62/€ in three months time, the expected profit will be $12,000 = €1,000,000 ($1.62 - $1.50)As we can see, answer d looks convincing from an accounting standpoint, but it is wrong because the question asks us to make money with a forward contract, not by holding a particular spot. The correct option should be option b.

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NeTakaya

Scanner-based research is a system for gathering information from a single group of respondents by continuously monitoring the advertising, promotion, and pricing they re exposed to and the things they buy.

  • scanner-based investigation.
  • A method of acquiring data from a single group of respondents by tracking the products they purchase and the advertising, promotions, and prices they are exposed to.
  • The information that shops record when customers make purchases is known as scanner data.
  • They consist of the number of items sold and the sales price for each item purchased on a particular day in a store.

What is scanner data used for?

  • For a specific time period, typically a week or a month, scanner data sets contain product quantities sold and money collected by the store for these products.
  • NSOs can use this data to determine a product's price by dividing its revenue by the number of units it has sold.

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3 0
2 years ago
A company issued 260 shares of $100 par value common stock for $31,000 cash. The total amount of paid-in capital in excess of pa
Lelu [443]

Answer:

The total amount of paid-in capital in excess of par is: $5,000.

Explanation:

When Common Stocks are classified as par value Stocks, any price paid in excess of the par value of the Stock is accounted for in the Share Premium account.

<u>Here is the Summary of the Transaction provided.</u>

Common Stocks : 260 shares × $100 = $26,000

Paid-in capital in excess of par : $31,000 - $26,000 = $5,000

5 0
3 years ago
$16000 is invested at an APR of 3.5% compounded daily. Write a numerical expression that would compute the value of the investme
babunello [35]

Answer:

The correct answer is $45,720.

Explanation:

According to the scenario, the given data are as follows:

Payment (pmt) = $16,000

Rate of interest (R)= 3.5% = .035

Time (t) = 30 years

Time (compounded daily ) (n) =  365days

(nt) = 365 ×30 = 10950 days

So, we can calculate future value after 30 years by using following formula:

FV = pmt × (1 + r/n )^{nt}

= $16,000 × (1 + .035/365 )^{10950}

= $16,000 × 2.8575

= $45,720

Hence, the future value after 30 years will be $45,720.

5 0
3 years ago
Consider a bond with the following characteristics. Par: $1,000 Two coupon payments per year (i.e., coupons are paid semi-annual
MAXImum [283]

Answer:

The new price of the bond is $928.94

Explanation:

Initially the bond's price is equal to its par value which means the coupon rate on bond and the market interest rates are the same i.e. 6%.

Th bond's price is calculated as the sum of the present value of the annuity of interest payments by the bond and the present value of the face value of the bond that will be received at maturity. The discount rate used to calculate the present values is the market interest rate.

As the bond is a semiannual bond, we will use the semi annual coupon payment, the semi annual percentage of the annual rate of interest on market and the number of semi annual periods outstanding.

Semi annual coupon payment = 1000 * 0.06 * 6/12 = $30

Number of semiannual periods till maturity = 10 * 2 = 20 periods

New market interest rate = 6 + 1 = 7% annual

New semi annual market interest rate = 7% / 2 = 3.5%

Price of bond =  30 * [ (1 - (1+0.035)^-20) / 0.035 ] + 1000 / (1+0.035)^20

Price of bond = $928.938 rounded off to $928.94

We used the present value of annuity ordinary formula for preset value of interest payments and the normal present value of principal formula for the face value.

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3 years ago
communities in which groups of chrisitna men gave up all their private possessions and lived very simply, devoting their lives t
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Monastery is a non secular community of guys who have given up their possessions to devote themselves to a existence of prayer and worship.

<h3>What do monasteries do?</h3>

A monastery was once a building, or buildings, the place humans lived and worshiped, devoting their time and lifestyles to God. The humans who lived in the monastery were known as monks. The monastery was once self contained, that means the whole lot the monks needed was furnished through the monastery community.

<h3>What religion is a monastery for?</h3>

Monasteries have been a part of many religions, including: Buddhism, Daoism, Judaism, and Christianity. Lao Zi created a personal monastery by living in isolation. The first monastic devotees had been hermits, which ability that they were man or woman spiritual followers who lived in total isolation from all different people.

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