Answer:
1) €918
2) E$/€)= 1.13
Explanation:
1) the dollar-Euro exchange rate (E$/€) if 1.1 means that from one Euro you can buy 1.1 dollars. So if an American investor invests $1,000 today in Euros he will get 1000/1.1= 909.09 Euros. Then if he invests 909.09 euros at an interest rate of 1% he will have (909.09*1.01)=918 euros.
The formula for forward exchange rate is
FWD= Spot price *(1+Interest rate of variable currency *Days/Annual Base)/(1+interest rate of base currency *days/annual base)
In this case the spot price is 1.1, the euro is the base currency and the dollar is the variable currency. The annual base is 365 and the days are also 365 since the we to find 1 year forward rate so days/annual base is 1.
FWD= 1.1*(1.04*1)/(1.01*1)= 1.13
This means that in a one year forward one Euro will cost $1.13
<span> The term budget constraint denotes the consumption limitation because of a certain income.</span><span>
The slope of the budget constraint is determined by the relative price of the two goods, which is calculated by taking the price of one good and dividing it by the price of the other good.
</span><span>The concept of budget constraint is used to analyze consumer choices. </span>
Answer:
incentives and allowances
Explanation:
According to the price equation, the actual price is the list price less blank incentives and allowances, plus extra fees.
Answer:
$607,000
Explanation:
False Value Hardware began 2016 with a credit balance of $32,000 in the allowance for sales returns account.
Sales and cash collections from customers during the year were $650,000 and $610,000, respectively.
False Value estimates that 6% of all sales will be returned.
During 2016, customers returned merchandise for credit of $28,000 to their accounts.
False Value's 2016 income statement would report net sales of:
The closing balance in the allowance for sales returns account will be: 32,000 opening balance + 6% 0f 650,000 - sales returns within the year of 28,000 = $43,000
Hence Net Sales will be 650,000 - 43,000 = $607,000
Answer:
Assume that the uncovered interest parity condition holds. Also assume that the U.S. interest rate is greater than the U.K. interest rate. Given this information, we know that investors expect the pound to appreciate.
Explanation:
Considering the assumption that the uncovered interest parity condition holds and also that the interest rate in the U.S is greater than the U.K interest rate.
The above assumptions imply that there will be a depreciation in the dollar and an appreciation in the pound.
Therefore, investors would expect the pound to appreciate.
