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WARRIOR [948]
3 years ago
6

The current spot exchange rate is $1.55 = €1.00 and the three-month forward rate is $1.60 = €1.00. Consider a three-month Americ

an call option on €62,500 with a strike price of $1.50 = €1.00. If you pay an option premium of $5,000 to buy this call, at what exchange rate will you break-even?
Business
1 answer:
Ad libitum [116K]3 years ago
6 0

Answer:

$1.58 = €1.00

Explanation:

To calculate the exchange rate breakeven point, you divide the longer-term bond figure by the shorter-term bond figure, after which you’ll do a further exponential calculation, increasing the figure to the power of one divided by the disparity in the years of the two maturities.

the solution to the question is:

$5,000 option premium on €62,500 amounts to $0.08 per euro.

With a strike price of $1.50 =€1.00 the exchange rate will have to be ($1.50+$.80), therefore $1.58 = €1.00 for you to break even.

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Answer:

II) The unemployment, III) Inflation

Explanation:

  • The man concerns for the macro-environmental analysis is the growth and unemployment and the inflation rates the price indexes along with the GDP.
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3 0
3 years ago
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The market price of a security is $50. Its expected rate of return is 14%. The risk-free rate is 6%, and the market risk premium
MatroZZZ [7]

The market price of a security is $50. Its expected rate of return is 14%, and the market price of the security  is mathematically given as

MR=27.368

<h3>What will be the market price of the security if its correlation coefficient with the market portfolio doubles?</h3>

Generally, the equation for expected rate return is mathematically given as

RR=(Rf+beta*(Rm-Rf)

Therefore

RR=(Rf+beta*(Rm-Rf)

Beta= (13-7)/8

Beta=0.75

In conclusion, the market price of a security

MR=DPs/RR

Where

Po=DPS/RR'

DPS=40*0.13

DPS=$5.23

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RR=&+1.5*8

RR=19%

Hence

MR=$5.23/0.19

MR=27.368

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brainly.com/question/17205622

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7 0
2 years ago
Kylie has been practicing repeating phrases such as, "I know I don’t wear the latest fashions, but I am comfortable. Surely othe
Alex787 [66]

Answer: Self-affirmations

Explanation:

Here, in this particular case Kylie has been using affirmations that act as the positive statements in order to help her overthrow the self-hindering, sabotaging ,disrupting negative thoughts and ideas. For an individual to use these affirmations, they should first examine the thoughts and attitudes that they would like to change.

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4 years ago
What are the general guidelines for a business letters?
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-Address with formal name
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3 0
4 years ago
arren has a loan with an effective interest rate of 5 percent per annum. He makes payments at the end of each year for 10 years.
Bond [772]

Answer:

interest portion of fifth payment = $66.89 ≈ $67

Explanation:

effective interest rate = 5% yearly

first payment = $200

second payment = $210

third payment = $220

fourth payment = $230

fifth payment = $240

sixth payment = $250

seventh payment = $260

eighth payment = $270

ninth payment = $280

tenth = $290

using a financial calculator, I determined the present value (principal) of the loan = $1,860.87

then I prepared an amortization schedule:

interest portion of fifth payment = $66.89 ≈ $67

Download pdf
6 0
3 years ago
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