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Flauer [41]
3 years ago
14

Suppose the interest on a foreign government bonds is 7.5%, and the current exchange rate is $0.03571/foreign currency (i.e. 28

foreign currencies per dollar). If the forward exchange rate is $0.03508/foreign currency (i.e. 28.5 foreign currencies per dollar), and the current US risk-free rate is 4.5%, if the effective foreign risk-free rate is 6.366%. Which of the following is most likely to be correct?
A) The foreign government bond is a superior investment than the US Treasury bond.
B) The foreign government bond is less risky than the US Treasury bond.
C) The implied country risk premium of the foreign government bond is positive.
D) The fluctuation of $/foreign currency exchange rate will not affect the risk premium of the foreign government bond.
E) The capital markets between the US and the foreign country must be fully integrated.
Business
1 answer:
shutvik [7]3 years ago
7 0

Answer: C) The implied country risk premium of the foreign government bond is positive.

Explanation:

Given that the effective foreign risk-free rate is 6.336% and the interest on the foreign Govt. bonds is 7.5%, this would mean that the foreign govt. is offering higher on it's bonds than its risk free rate which means there is a premium.

The premium is;

= 7.5% - 6.366%

= 1.134%

This means that the implied country risk premium of the foreign government bond is positive.

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Diano4ka-milaya [45]

Ensuring proper collection preservation and safeguarding of federal records is the responsibility of <u>All Air Force Personal</u>.

<h3>What is Record Management Policy?</h3>
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There are numerous types of federal records, including but not restricted to:

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5 0
1 year ago
Alpha company anticipated unit sales of widgets are January, 5,000; February, 4,000; and March 8,000. Alpha consistently maintai
alexdok [17]

Answer:

1. 4,200 units

2.7,200 units

Explanation:

<u>Prepare the Production Budget for January and February</u>

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Budgeted Sales                                       5,000                       4,000

<em>Add </em>Budgeted Closing Stock                 3,200                       6,400

Total Production Needed                       8,200                      10,400

<em>Less</em> Budgeted Opening Stock             (4,000)                     (3,200)

Budgeted Production                             4,200                        7,200

Budgeted Opening Stock for January comes from 80% of closing inventory from December !

5 0
3 years ago
the covenant whereby one warrants that he is the possessor and owner of property being conveyed is the covenant of: select one:
Sophie [7]

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7 0
1 year ago
Which of the following is NOT a chief advantage of mass transit over other forms of transportation?
Aleksandr [31]
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8 0
3 years ago
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galben [10]

Answer:

6.54%

Explanation:

Face Value = $2,000

Current Price = 2000 x 99.727% =  1994.54

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We can find the coupon rate by a simple formula

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We need to find interest first in order to find coupon rate

YTM = Interest / Current price

6.56% x 1994.54 = Interest

130.84 = Interest

Coupon Rate = (130.84 / 2000) x 100

Coupon Rate = 6.54%

6 0
3 years ago
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