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Rasek [7]
3 years ago
6

Suppose that the annual rate of returns on dollar deposits equals 2% and the rate of return on euro deposits is 1%. Furthermore,

assume that expected exchange rate in a year is $1.1=1 euro and the current exchange rate is $1.08=1 euro. Should you invest in dollar deposits or euro deposits?
Business
1 answer:
Oliga [24]3 years ago
5 0

Answer:

I should invest in dollar deposits.

Explanation:

Current exchange rate is 1 euro = $1.08

Assuming I have y euro, the equivalent in dollar is $1.08y

Rate of return on dollar deposit = 2% = 0.02

Return on investment = $1.08y + (0.02 × $1.08y) = $1.08y + $0.0216y = $1.1016y

Rate of return on euro deposit = 1% = 0.01

Return on investment = y euro + (0.01 × y euro) = y euro + 0.01 y euro = 1.01y euro = 1.01y × $1.08 = $1.0908y

I should invest in dollar deposits because the return on investment is greater than euro deposits.

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Suppose someone borrows $552,000 today to buy a house in Davis, CA. If the annual interest rate is 4%, with monthly compounding,
galina1969 [7]

Answer:

Monthly Repayment on Loan  = $2634.06

Explanation:

given data

principal =  $552,000

annual interest rate = 4% = 0.333% monthly

solution

for get here fair value monthly mortgage payment we consider here time period is 30 year = 360 months

so now we apply here Monthly Repayment on Loan formula that is

Monthly Repayment on Loan  = principal ×  \frac{r(1+r)^t}{(1+r)^t -1}    .................1

put here value and we get

Monthly Repayment on Loan  = 552000 × \frac{r(1+0.333)^{360}}{(1+0.333)^{360} -1}    

Monthly Repayment on Loan  = $2634.06

4 0
3 years ago
Do all rational consumers think alike why or why not
jeka57 [31]
Being rational does not necessarily mean that you have to think what others might be thinking for rationality means you consider what is most beneficial and try to balance it out with the negative effects of a specific actions. The benefits and detriments of a certain act might be varied in each person. 
4 0
3 years ago
A firm operates in a perfectly competitive industry. Suppose it has a short run total cost function given by TC= 10000 +0.04q2 .
iren2701 [21]

Answer:

700

Explanation:

The condition for maximizing profits is Marginal cost = Price.

1. We need to calculate the marginal cost, which is the first derivative of the total cost function.

  • marginal cost = (TC=10000+0.04q2=) '

  • MC=0.08q

2. Now, we equalize the MC to the price and solve for q.

0.08q=56

q=56/0.08

<h2>q=700</h2>

6 0
3 years ago
Importance of technology in today's industry?​
Crank

Answer:

Without technology we can’t improve our life.  And without improving technology we are stuck.  Technology is solving all kinds of problems in the world. You can’t remove the problems, there will still be here even if you stop improving technology. And if you solve them, more problems will come.  So technology is used to continuously solve problems, to improve people’s life, economy, education, and so on.  What I think is that technology is one of the pillar of world development. If you remove it, everything else will fall.

3 0
3 years ago
What is the real advantage to a franchise? They already have all of their signs and menus prepared. When a company is able to of
11111nata11111 [884]

Answer:  When a company is able to offer a good product and enjoy strong customer demand, a franchise owner not only is able to take advantage of the corporate identity but its strong customer base, as well.

A franchise is a kind of a license which allows the party who acquires it (franchisor) access to an business' (franchisor's) proprietary knowledge and processes  in order to sell products or provide services under the franchisor's name.

A franchisee associates itself with a well proven business model and gains access to the franchisor's customer base. Additionally, the franchisor provides  assistance by training the franchisee and his personnel to provide a uniform product or service experience to customers across all the stores.

All these factors help in eliminating business risk and this constitutes a real advantage to a franchise.

6 0
3 years ago
Read 2 more answers
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