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Afina-wow [57]
3 years ago
6

Assume that the interest rate in the home country of Currency X is a much higher interest rate than the U.S. interest rate. Acco

rding to interest rate parity, the forward rate of Currency X:a. should exhibit a discount.
b. should exhibit a premium.
c. should be zero (i.e., it should equal its spot rate).
Business
2 answers:
Rashid [163]3 years ago
6 0

Answer:

A – forward rate of currency X should exhibit a discount

Explanation:

the interest rate parity states that the interest rate differential between 2 countries is equal to the differential between the forward exchange rate and the spot exchange rate (Hayes, 2019). The theory assumes that a currency with lower interest rates will trade at a forward premium in relation to a currency with a higher interest rate (Hayes, 2019). The opposite is true for Currency X and the US Dollar – since currency X is higher than the US interest rate, its forward rate will be a discount. This makes A the correct answer.

Kaylis [27]3 years ago
5 0

Answer:

According to interest rate parity, the forward rate of Currency X should exhibit a discount

Explanation:

Interest rate parity is when the difference between interest rates between two countries is equal to the difference in the spot and forward exchange rates.

Considering country X with currency X.

If currency X has an higher interest rate than US, currency X is expected to exhibit a discount (i.e. a rate used for discounting bills of exchange) in order to balance up with the exchange rate of US by realigning the relationship between the interest rate differential of X and the forward premium (or discount) on the forward exchange rate between the X and USD.

interest rate parity assumes that any currency with lower interest rate will trade at a forward premium compared to a currency with higher interest rate

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According to  conventional wisdom regarding asset allocation by age, you should hold a proportion of stocks equal to 100 minus your age. Therefore, if you are 40 years old, 60% of your portfolio should consist of equity. Criteria might be better changed to 110 minus your age or 120 minus your age because life expectancy increasing.

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8 0
2 years ago
Jason is an employee at Manisch Burger and Meals. He is assigned the task of serving soft drinks to customers who order meals co
VARVARA [1.3K]

Answer:

C) Job specialization

Explanation:

Job specialization defines that who is specialist for a particular field or subject. It shows expertise in a specific sector like finance, operation, Sales manager, customer service, delivery boy, human resource. etc. It indicates talent, skills, competencies of a particular person.

Therefore in the given scenario Jason who is serving the potato fries, a burger, and a roll shows the expertise in his field and that is called Job specialization.

6 0
4 years ago
A firm reports a net margin of 5.00%. The firm has 1,456,800.00 million shares outstanding. The firm has invested in a new produ
n200080 [17]

Answer:

To find Earning per share, we can find this by the following formula:

Increase in Earnings Per Share = Net profit of new products / Number of shares

and

Net Profit of new products = 5% * $4,898,300 = $244,915

Increase in Earnings Per Share = ($244,915) / 1,456,800 = 16.81%

8 0
3 years ago
How do individuals benefit from having health insurance? Why is health insurance likely to become a bigger and more complex issu
SVEN [57.7K]

Answer: Individuals benefit from health insurance because it's helps them pay off health debt when they may not have the funds at the moment to do so, especially in cases where the bills can be very expensive.

Explanation:

Health insurance could be described as insurance that covers the health bills of individuals when they are sick or have an accident.

Individuals benefit from health insurance because it's helps them pay off health debt when they may not have the funds at the moment to do so, especially in cases where the bills can be very expensive.

Health insurance would likely be a problem in the future due to the cost. Health bills can be very expensive, especially when it involves illness that require lots of operations or much bills to pay. This has made organizations begin to withdraw the benefits of health insurance for their staff.

5 0
3 years ago
Assume Ford Motors expects a new hybrid-engine project to produce incremental cash flows of $50 million each year, and expects t
photoshop1234 [79]

Answer:

A) $560 million

Explanation:

First lets calculate the NPV of the cash stream by this investment,

PV Cash stream = Cash flow/ (r-g), where r = avg cost of capital and g = growth of the cash stream.

PV = 50 / (0.09 - 0.04)  = $1000 million

We assume that external finance issuance costs are payable as a part of initial outlay of the project and so,

Total initial outlay = 420 + 20 = $440 million

NPV of the project then,

NPV = 1000 - 440 = $560 million

Hope that helps.

8 0
3 years ago
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