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Evgen [1.6K]
3 years ago
11

Arbitrage and spot exchange rates

Business
1 answer:
agasfer [191]3 years ago
7 0

Answer:

1. buy in Los Angeles, sell in Frankfurt

2. buy in Frankfurt; sell in Los Angeles

3. remain unchanged

Explanation:

Note that as for me working for the bank I'm buying Euros, in turn to sell to receive the Dollar.

1. Thus, in Los Angeles the exchange rate indicates a profit if it is bought there and sold in Frankfurt where the Euros values more than it does in Los Angeles.

2. For the foreign exchange traders who already own Euros and want to buy dollars, they would make a profit by buying Dollars in Frankfurt where the Euros has greater and value and selling the bought dollars in Los Angeles where the dollar has greater value.

3. This is the case because there's a balance in demand as a result of the arbitrage trading.

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7 0
3 years ago
Goodwin Technologies, a relatively young comply, has been wildly successful but has yet to pay a dividend. An analyst forecasts
aleksandrvk [35]

Answer:

Horizon value is $22.59  

Intrinsic value is $16.32

Explanation:

D3=1.5000

D4=1.5000*(1+7.8%)

D4=1.6170

D5=1.6170 *(1+7.8%)

D5=1.7431

D6=1.7431 *(1+3.42%)

D6=1.8027

horizon value is the same as the price of the stock(the terminal value) using the dividend in year 6

P=D5*(1+g)/(r-g)

D5=$1.7431

g is the constant growth rate of 3.42%

r is the required rate of return of 11.40%

P=$1.7431*(1+3.42%)/(11.40%-3.42%)

P=$1.8027/0.0798 =$22.59  

Goodwill Technologies share price is $22.59

Current intrinsic value is the dividends payable in relevant years plus the horizon value discount to present value as follows:

Present value of D3                =1.5000/(1+11.40%)^3=$1.0850

present of value of D4            =1.6170 /(1+11.40%)^4=$1.0500

present value of D5                 =1.7431 /(1+11.40%)^5=1.0160

present value of horizon value=$22.59/(1+11.40%)^5=13.1671

Total present values                                                       $16.32                                      

8 0
3 years ago
We or False: You should calculate your regular monthly pay based on your Gross Pay.
Ilia_Sergeevich [38]

Answer:

False

Explanation:

The gross pay refers to the salary you earn before taxes and other deductions are subtracted. Because of that, the answer is that the statement that says that you should calculate your regular monthly pay based on your Gross Pay is false because this amount is not equal to the amount you actually get when you are paid as the deductions have to be taken out and you receive less money.

4 0
3 years ago
Which of the following are criteria for determining whether to record an asset as a fixed asset?
DochEvi [55]

Answer:must be long lived and used by the company in its normal operations.

Explanation:

6 0
3 years ago
Which of the following statements is true of global agnostics?
astraxan [27]

Answer:

C. They are most likely to lead anti-globalization demonstrations.

Explanation:

A. Are global citizens. Favours international brands.

B. This refers to Antiglobals. Doesn't like international brands because of their skepticism towards their quality.

C. Refers to Global Agnostics. Prefers national and local brands.

D. Are global dreamers.  Favours international brands.

3 0
3 years ago
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