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salantis [7]
3 years ago
10

Assume the spot Swiss franc is $0.7000 and the six-month forward rate is $0.6950. What is the minimum price that a six-month Ame

rican call option with a strik-ing price of $0.6800 should sell for in a rational market
Business
1 answer:
Rama09 [41]3 years ago
4 0

Answer:

2 cents

Explanation:

The spot price = $0.7000 = 70 cents, The forward rate = $0.6950 = 69.5 cents and the call option with striking price = $0.6800 = 68.00 cents

The annualized six month rate = 3 1/2 % = 3.5 %, therefore the rate = r/n, where n is the number of period per year = 2. Therefore r/n = 3.5% / 2 = 0.035 / 2 = 0.0175

The minimum price = Maximum (spot price - striking price, (forward rate - striking price) / (1 + 0.0175), 0) = Maximum(70 - 68, (69.5 - 68)/ 0.0175, 0)

Minimum price = Maximum (2 , 1.47, 0) = 2 cents

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2) Economic Growth: Use the PPF from above to illustrate the effects of saving and investment upon national GDP. Use a PPF to sh
Inessa [10]

Answer and Explanation:

Economic Growth can be defined as an increment in production capacity of an economy using all its available resources. The PPF illustrates the largest possible quantity of goods and services a nation can produce base on its available resources. An outward shift in the economy’s production possibility frontier (PPF) depicts  a raise in productive capacity of an economy.  An outward shift implies that an economy has capacity to  increase its production outputs. This can be as a result of   the economy employing new technology, allowing specialization, increasing its labour force, using new production approaches etc. Likewise, an inward shifting PPF implies an economy has witness a loss or exhaustion of some of its scarce resources and it will culminate into reduction in an economy’s productive potential.

Effects of saving and investment upon national GDP

level of savings direct related to the level of investment, investment feeds on available finance from saving. If more people save, the banks will be able  to lend more to firms to support their investments.

low savings and investment implies a PPF inward shift. low savings  in economy implies that the economy is opting for short-term consumption over long-term investment, and this will lead to future undue pressure on available infrastructures ad resources.

spending  on consumer goods vs capital goods effect on the economy

In the short run, the economy must prefer using available resources to produce capital rather than consumer goods. Standards of living will be affected, as private consumption will have access to fewer resources. However, in the longer run, the raised production of capital goods will boost  the production of more consumer goods ad therefore standards of living will experience more increase than they would have witness if the economy had spent most of its income on consumer goods.

6 0
3 years ago
Tanuja Singh is a CPA and operates her own accounting firm (Singh CPA, LLC). As a single-member LLC, she reports her accounting
AnnyKZ [126]

Answer:

Tanuja is not entitled to a QBI deduction in 2019.

Explanation:

Tanuja has QBI from her accounting firm of $540,000

W-2 wages = $156,000

Unadjusted basis of property used in the LLC = $425,000

Taxable income before the QBI deduction = $475,000

Modified taxable income = $448,000.

Her accounting firm is a "specified services" business and she and her spouse's taxable income before the QBI deduction is $475,000, which exceeds the threshold for 2019.

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3 years ago
A merchant purchased a jacket for $60 and then determined a selling price that equaled the purchase price of the jacket plus a m
JulsSmile [24]

Answer:

Gross profit will be $4

Explanation:

We have given that merchant purchased a jacket for $60

So purchased price = $60

Let the markup price is x

Now according to question selling price = x+60

Now it is given that marked up price is 25 % of the selling price

So x=(x+60)\times \frac{25}{100}

X = 20

So selling price = 60+20 =80

Now there is discount of 20%

So price after discount = 80-\frac{80\times 20}{100}=$64

So gross profit = $64 -$60 = 4

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Walmart relies on a cost leadership strategy and tries to keep all of its expenses as low as possible. The company relies heavil
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The actions by Walmart clearly relate to:

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<h3>What is Cost Leadership Strategy?</h3>

This refers to the business strategy of trying to gain a competitive advantage by reducing the overhead costs.

With this in mind, we are told that Walmart relies on a cost leadership strategy and they make use of low wage employees and as much automation as possible and these actions shows that Walmart is using the design of power and politics

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brainly.com/question/15359412

5 0
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