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RoseWind [281]
3 years ago
12

15 points) Assume the following information regarding U.S. and European annualized interest rates: Currency Lending Rate Borrowi

ng Rate U.S. Dollar ($) 6.73% 7.20% Euro (€) 6.80% 7.28% Trainor Bank can borrow either $20 million or €20 million. The current spot rate of the euro is $1.13. Furthermore, Trainor Bank expects the spot rate of the euro to be $1.10 in 90 days. What is Trainor Bank's dollar profit from speculating if the spot rate of the euro is in fact $1.10 in 90 days?
Business
1 answer:
Masja [62]3 years ago
5 0

Answer:

The Trainor Bank's dollar profit from speculating if the spot rate of the euro is in fact $1.10 in 90 days is $5,79,845

Explanation:

Bank Z borrow = €20 million

Spot rate 1€ = $1.13  

Convert € in to $

€20 million *1.13 = $22.60 million  

Lend $2,26,00,000 at interest rate of 6.73% for 90 days ( Assume total number of days in a year is 360)

= $2,26,00,000 + $2,26,00,000*(90/360)*6.73%

= $2,29,80,245

We need to find the euro to be repaid  = €2,00,00,000 + €2,00,00,000*7.28%*(90/360)

= €2,03,64,000

To be repaid in $:-

€2,03,64,000*1.10 = $2,24,00,400

Profit from speculating in $ = $2,29,80,245 - $2,24,00,400

                                             = $5,79,845

Therefore, The Trainor Bank's dollar profit from speculating if the spot rate of the euro is in fact $1.10 in 90 days is $5,79,845

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Answer:

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Explanation:

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3 years ago
On April 1, the price of gas at Bob’s Corner Station was $4.95 per gallon. On May 1, the price was $5.45 per gallon. On June 1,
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Answer: Please refer to Explanation

Explanation:

1. a. Between April 1 and May 1, Bob’s price increased by $0.50 , or by ___ %.

To calculate, divide the difference in the amounts by the amount the change occured from.

The price increased by $0.50 from $4.95. Percentage Increase should be,

= 0.5 / 4.96 * 100%

= <u>10.1%</u>

b. Between May 1 and June 1, Bob’s price decreased by $ , or ____ %.

The Price by $0.5 from $5.95 to $4.95

= 0.5/5.95

<u>= -9.17% (</u>negative because it was a price decrease)

2. Across the street, their price is 20% higher than Bob's.

When Bob's prices are $5.45, there's are,

= 5.45 * ( 1 + 20%)

= 5.45 * 1.2

= $6.54

Difference is,

= 6.54 - 5.45

= <u>$1.09</u>

3. The Fed raised it's rate from 2% to 2.75%.

The change is,

= 2.75% - 2%

= 0.75%

This is a percentage Change of,

= 0.75/2 * 100%

= 37.5%

This change of <u>0.75</u> percentage points means that the Fed raised its target by approximately <u>37.5%.</u>

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3 years ago
Goschan Bank is a multinational bank. The employees from the bank's branches in underdeveloped countries are not given higher po
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Answer:

B) adverse impact

Explanation:

Adverse impact refers to those practices that seems to be neutral for all the people but have a discriminatory effect on a certain group. It takes place in activities like hiring, promotion, training etc. of employees.

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3 years ago
During the first month of operations ended August 31, Kodiak Fridgeration Company manufactured 48,000 mini refrigerators, of whi
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Answer:

Part a.

Income statement based on the absorption costing concept.

Sales                                                                                      $8,800,000.00

Less Cost of Sales

Beginning  Inventory                                          $0

Add Manufacturing Cost                          $6,048,000.00

Less Ending Inventory                                ($504,000.00) ($5,544,000.00)

Gross Profit                                                                            $3,256,000.00

Less Expenses :

Selling and administrative expenses:

Variable                                                      $528,000.00

Fixed                                                           $352,000.00     ($880,000.00)

Net Income/(loss)                                                                   $2,376,000.00

Part b.

Income statement based on the variable costing concept.

Sales                                                                                      $8,800,000.00

Less Cost of Sales

Beginning  Inventory                                          $0

Add Manufacturing Cost                          $5,520,000.00

Less Ending Inventory                                ($460,000.00) ($5,060,000.00)

Contribution                                                                            $3,740,000.00

Less Expenses :

Fixed manufacturing cost                          $528,000.00

Selling and administrative expenses:

Variable                                                      $528,000.00

Fixed                                                           $352,000.00      ($1,408,000.00)

Net Income/(loss)                                                                    $2,332,000.00

Part c.

Reason : Fixed Costs deferred in Ending Inventory in Absorption Costing has resulted in a higher Income.

Explanation:

<u>Units in Ending Inventory Calculation :</u>

Production                             48,000

Less Sales                            (44,000)

Ending Inventory                    4,000

Absorption Costing Calcs

<u>Variable Manufacturing Costs</u>

Direct materials                         $3,360,000.00

Direct labor                                 $1,344,000.00

Variable manufacturing cost        $816,000.00

Fixed manufacturing cost            $528,000.00

Total                                           $6,048,000.00

Ending Inventory =  $6,048,000.00 × 4,000 / 48,000

                            =   $504,000

Variable Costing Calcs

<u>Variable Manufacturing Costs</u>

Direct materials                         $3,360,000.00

Direct labor                                 $1,344,000.00

Variable manufacturing cost        $816,000.00

Total                                           $5,520,000.00

Ending Inventory =  $5,520,000.00 × 4,000 / 48,000

                            =   $460,000

4 0
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Explanation:

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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
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