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Helen [10]
3 years ago
13

Suppose that instead of using a forward contract, you consider using options. A one-year call option to buy euros at a strike pr

ice of $1.25/€ is trading for $0.10/€. Similarly a one year put option to sell euros at a strike price of $1.25/€ is trading for $0.10/€. To hedge the risk of your profits, should you buy or sell the call or the put?
Business
1 answer:
Stells [14]3 years ago
5 0

Answer:

Sell the put option. The put option is better and advantageous .

Explanation:

The call option is trading far below the strike price and poses risk. The price may not go up to $1.25 and hence not advisable. The put option is better as we stand to make a profit margin ($1.15 / Euro) if it sells the put at he strike price immediately. Given that the difference is high, it is unlikely that the price will move against us and we shall exercise the option as soon as the margin starts reducing.

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Market segment profiles are used to describe _____________ members of a market segment, and to explain ______________members in
irga5000 [103]

Market segment profiles are used to describe the similarities among potential members of a market segment, and explain the differences among members in different market segments.

<h3>What is Market segment profiles?</h3>

The process of segmenting a market of potential customers into smaller, more focused groups based on shared traits like demographics, interests, needs, or location.

There are four primary categories of market segmentation-

  • demographic.
  • Psychographic.
  • Geographic.
  • Behavioral.
<h3>What are the levels of market segmentation?</h3>

There are four levels of market segmentation-

  • Mass Marketing.
  • Segment Marketing.
  • Niche Marketing.
  • Micro Marketing.

Learn more about Market segment profiles brainly.com/question/9016551

#SPJ4

7 0
2 years ago
McGaha Enterprises expects earnings and dividends to grow at a rate of 25% for the next 4 years, after the growth rate in earnin
Lerok [7]

Answer:

The correct option is B,$29.05

Explanation:

The required rate of return is can be computed using  Miller and Modgiliani CAPM formula below:

Ke=Rf+Beta*Mrp

Ke is the cost of equity which is unknown

Rf is the risk free rate of 3.00%

Mrp is the market risk premium of 5.50%

Beta is 1.2

Ke=3.00%+(1.2*5.50%)

Ke =9.6%

The current price of the common stock is the present value of dividends payment and stock price(terminal value) as shown below discounted with Ke of 9.6%

Year 1 $1.25*(1+25%)=$1.56 *1/(1+9.6%)^1=$1.43

Year 2 $1.56*(1+25%)=$1.95 *1/(1+9.6%)^2=$1.63

Year 3 $1.95*(1+25%)=$2.44 *1/(1+9.6%)^3=$1.85

Year 4  $2.44*(1+25%)=$3.05 *1/(1+9.6%)^4=$2.11

Terminal value=year 4 dividend/ke=$3.05/9.6%=$31.79*1/(1+9.6%)^4=$22.03

Total present values=$1.43 +$1.63+$1.85 +$2.11 +$22.03=$29.05

7 0
3 years ago
*ASAP WILL GIVE BRAINLIEST*<br> Attached is a micro-Econ question
valentinak56 [21]

Answer:

No, it is not a violation of the <em>law of demand</em>, hence why it is a "law."

Explanation:

During summer months, the demand for beach resorts increases. This is <u>different</u> from an increase in <em>quantity</em> demanded. The curve is shifting instead, towards the right, while the supply is stable. Since the demand curve shifts right, the price will increase to restore market equilibrium.

It is best to draw a graph for these questions, and know your demand determinants.

5 0
3 years ago
Jewelry Company has a sales budget for next month of $450,000. Cost of goods sold is expected to be 45 percent of sales. All goo
lukranit [14]

Answer:

The cost of goods sold for next month is expected to be $202,500

Explanation:

Given that,

Sales budget = $450,000

Cost of Good sold = 45% of sales

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Ending inventory = $24,000

Beginning accounts payable = $206,500

Since, in the given question, it is mentioned that the cost of good sold is 45% of sales.

So,

Cost of Goods Sold (COGS) = 0.45 × $450,000

                                              = $202,500

Hence, the cost of goods sold for next month is expected to be $202,500

Note: we don't considered other things which is mentioned in the question.

7 0
3 years ago
In the Plan Risk Responses process, an accept strategy for a negative risk or threat indicates that the project team has decided
jenyasd209 [6]

Answer:

C. Not to change the project management plan to deal with a risk, or it is unable to identify any other suitable response strategy.

Explanation:

4 0
3 years ago
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