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kumpel [21]
2 years ago
11

Consider a US firm sells a gas turbine generator to a British firm; in March 201x for British pound BP 1,000,000. Payment is due

three months later in June 201x. The firm’s cost of capital is 12%. The following quotes are current in the market:1. spot rate: $1.764 per British pound2. 3-month forward rate: $1.754 per British pound3. 3-month interest rate for borrowing in U.K.: 2.5% Per quarter4. UK 3-month investment rate: 2.0% /quarter5. US 3-month borrowing rate: 2.0% /quarter6. US 3-month investment rate: 1.5% per quarter7. June put option in the over the counter market for British pound 1,000,000; strike price $1.71 (out-of-the money): 1% premium8. June put option on the Philadelphia Stock Exchange: a. British pound BP 31,250 per contract at strike price of $1.75 costb. 2.5 cents per pound premium, and brokerage cost $50 per contract9. the firm’s foreign exchange advisory service forecasts that the spot rate in three months will be $1.76 per pound.Show all your calculations of cost of the following alternatives:(i) Unhedged Position; (ii) Money Market Hedge; (iii) Forward market hedge; and (iv) Options Hedge;(Show your work. This means that No work is No credits)

Business
1 answer:
Varvara68 [4.7K]2 years ago
8 0

Answer:

Please see attachment

Explanation:

Please see attachment

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7) Suppose the real exchange rate is 10, the domestic price level is 8, and the foreign price level is 4. (a) What is the nomina
konstantin123 [22]

Answer and Explanation:

The computation is shown below:

1. Nominal exchange rate is

= (Real exchange rate) × (foreign price level ÷ domestic price level)

= 10 × (4 ÷ 8)

= 5

2. Change in Nominal exchange rate is

Change in  Nominal exchange rate = (real exchange rate change )  + foreign inflation - domestic inflation

= 10 + 4 - 6

= 8%

3.) foreign inflation rate

= Change in Nominal exchange rate - real exchange rate change + domestic inflation

= 5 - 8 + 3

= 0%

We simply applied the above formulas

4 0
3 years ago
If the demand for steak (a normal good) shifts to the left, the most likely reason is that:______.
S_A_V [24]

If the demand for steak (a normal good) shifts to the left, the most likely reason is that consumer income has fallen.

<h3>What is a normal good?</h3>

Normal goods are goods that are goods whose demand increases when income increases and falls when income falls.

The demand curve shows the relationship between price and quantity demanded. A shift to the left of the demand curve indicates that demand has decreased.

To learn more about normal goods, please check: brainly.com/question/2934596

#SPJ1

4 0
1 year ago
The systems viewpoint sees organizations as entities made up of four interrelated parts known as Group of answer choices inputs,
Reil [10]

Answer:

inputs, outputs, transformation processes, and feedback.

Explanation:

The viewpoint of the system that could see the organziation as the entities as they should be made of the input as the raw material, output as the finished product, transformation process as when the raw material is converted into the finished product and the feedback as the client feedback related to the product and service

So as per the given situation the above should be the answer

6 0
3 years ago
You just hung up the phone after a 3-hour conference call with your colleagues in India. After the call, one of your co-workers
Llana [10]

Answer: Examine your expectations for conducting the meeting and determine how they might be different than your Indian colleagues.

Explanation:

Cross-cultural communication looks at how people from different cultural backgrounds communicate among themselves. The aim of cross-cultural communication is to bring together people with cultural differencces in such a way that the cultural differences shouldn't be a barrier.

Cross-cultural communication is understanding ways by which culturally distinct individuals relate and communicate with each other.

Regarding the question, the best way to improve one's cross cultural communication will be to examine the expectations one has for conducting the meeting and then determine how the expectations might be different from my Indian colleagues.

6 0
2 years ago
Optimization using total value calculates ________.
Jlenok [28]

Answer:

A

Explanation:

Optimization using total value calculates the total value of each feasible option and then picks the option with the highest total value.

Optimization using marginal analysis calculates the change in total value when a person switches from one feasible option to another, and the uses these marginal comparisons to choose the option with the highest total value.

Both gives identical answers.

Optimization can be implemented using many different techniques.

One of it, is Total value total benefit - total cost (net benefit).

It translate all cost and benefits into common units, like dollar per month.

Calculate the total net benefit of each alternative.

Pick the alternative with the highest net benefit.

7 0
2 years ago
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