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OverLord2011 [107]
3 years ago
14

An investor enters into a short forward contract to sell 100,000 British pounds for US dollars at an exchange rate of 1.5000 US

dollars per pound. How much does the investor gain or lose if the exchange rate at the end of the contract is (a) 1.4900 and (b) 1.5200?
Business
1 answer:
goldfiish [28.3K]3 years ago
6 0

Answer:

(a) gain $1,000.

(b) lose $2,000.

Explanation:

If the investor's contract states that he should sell British pounds for US dollars at an exchange rate of 1.5000 US dollars per pound, he will gain money if the exchange rate falls below that value and lose if it rises above it.

(a) 1.4900

G = 100,000*(1.500 - 1.4900) = \$1,000

The investor would gain $1,000.

(b) 1.5200

L = 100,000*(1.5200 - 1.5000) = \$2,000

The investor would lose $2,000.

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3 years ago
The following data is obtained from the general records in the shipping department at Rapid Parcel Delivery Company for August:
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Answer

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Explanation  

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3 years ago
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7 0
3 years ago
Based on current dividend yields and expected capital gains, the expected rates of return on portfolios A and B are 12% and 16%,
monitta

Answer:

Alpha for A is 1.40%; Alpha for B is -0.2%.

Explanation:

First, we use the CAPM to calculate the required returns of the two portfolios A and B given the risks of the two portfolios( beta), the risk-free return rate ( T-bill rate) and the Market return rate (S&P 500) are given.

Required Return for A: Risk-free return rate + Beta for A x ( Market return rate - Risk-free return rate) = 5% + 0.7 x (13% - 5%) = 10.6%;

Required Return for A: Risk-free return rate + Beta for B x ( Market return rate - Risk-free return rate) = 5% + 1.4 x (13% - 5%) = 16.2%;

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8 0
3 years ago
QUESTION 8 of 10: Your average weekly take home wage is $615. You take a one-week paid vacation and a second week unpaid vacatio
levacccp [35]

Answer:

$45

Explanation:

A surplus is when income exceeds expenses.

One year has 52 weeks. If one week was unpaid leave, then payments were received for 51 weeks.

Average payments per week = $615

Total earning per week =$615 x 51

=$31,365  

The total expenses for the year were  $31,320. The surplus amount will be income minus expenses

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=$45

             

7 0
3 years ago
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