1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Lelu [443]
3 years ago
5

. Assume that the dollar-Euro exchange rate (E$/€) = 1.1, the U.S. interest rate is 4% and the Euro interest rate is 1%, and tha

t covered interest parity holds. a. How many Euros will an American investor with $1,000 have a year from now? b. What is the forward exchange rate (F$/€) ?
Business
1 answer:
emmainna [20.7K]3 years ago
3 0

Answer:

1) €918

2) E$/€)= 1.13

Explanation:

1) the dollar-Euro exchange rate (E$/€) if 1.1 means that from one Euro you can buy 1.1 dollars. So if an American investor invests $1,000 today in Euros he will get 1000/1.1= 909.09 Euros. Then if he invests 909.09 euros at an interest rate of 1% he will have (909.09*1.01)=918 euros.

The formula for forward exchange rate is

FWD= Spot price *(1+Interest rate of variable currency *Days/Annual Base)/(1+interest rate of base currency *days/annual base)

In this case the spot price is 1.1, the euro is the base currency and the dollar is the variable currency. The annual base is 365 and the days are also 365 since the we to find 1 year forward rate so days/annual base is 1.

FWD= 1.1*(1.04*1)/(1.01*1)= 1.13

This means that in a one year forward one Euro will cost $1.13

You might be interested in
A seven-year-old boy breaks his tibia and requires immobilization by a hard cast for six weeks until the break heals. A potentia
klemol [59]
Detereation of muscle tissue causing weakness in the limb
5 0
3 years ago
Read 2 more answers
c) Explain ONE way in which the adoption of laissez-faire economic policies led to an increase in the share of global manufactur
Alinara [238K]

Answer:

Laissez faire economics advocates for less government regulation and intervention. Extreme laissez faire views dislike all types of taxes and controls.  Of course something like that will never happen, but different economic policies favor certain laissez faire views.

For example, during the 1800s, many politicians believed that business owners were entitled to exploit their workers in order to make higher profits. As a result of these types of policies, 14 or 16 hour long labor days were common, no safety regulations existed, and the wages were not high. Since governments didn't regulate labor markets, businesses were able to benefit form this and increase total production.

8 0
3 years ago
Which career would benefit from an apprenticeship?
Mars2501 [29]
Arts Direction
that is the answer
hope it works
5 0
3 years ago
Read 2 more answers
Which industry is Amazon involved in ?​
k0ka [10]

Answer:

Cloud computing e-commerce artificial intelligence consumer electronics digital distribution self-driving cars

Explanation:

8 0
3 years ago
Read 2 more answers
"Nancy works for a nonprofit organization in which she reports directly to the area director, who reports directly to the distri
guajiro [1.7K]

Answer:

flat divisional structure

Explanation:

Generally organizations can be structured in three different ways:

  1. divisional: the organization is divided into divisions, and each division has its own complete set of resources, e.g. marketing, finance, production, IT, etc.
  2. functional: the organization is divided into departments, and the people that work at each department share similar sets of skills, e.g. finance department, marketing department, production department, etc.  
  3. matrix: combinations of divisional and functional structures

In this case, Nancy reports to an area director ⇒ district director ⇒ CEO

Since the number of layers between Nancy and the CEO (top management) are rather few, we can assume that this is a flat organization, with very few hierarchical levels. On the other hand, tall organizations have many levels, filled with supervisors and middle managers.

6 0
3 years ago
Read 2 more answers
Other questions:
  • Which element of the promotional mix has the inherent weakness of high absolute costs and an inability to obtain direct feedback
    8·1 answer
  • Walk Co’s average total assets are $200,000, net sales total to $100,000, and net income is $40,000. How much net income did Wal
    7·1 answer
  • Why do police officers get paid less than professional baseball players?
    14·1 answer
  • Gross investment includes _____. rev: 04_09_2018 Multiple Choice fixed investment, residential investment, and financial investm
    7·1 answer
  • [The following information applies to the questions displayed below.]
    9·1 answer
  • 1. The Aggie Company has EBIT of $50,000 and market value debt of $100,000 outstanding with a 9% coupon rate. The cost of equity
    7·2 answers
  • 5. Risk analysis in capital budgeting Projects differ in risk, and risk analysis is a critical component of the capital budgetin
    9·1 answer
  • What’s the purpose of balancing or monitoring your checking account?
    7·1 answer
  • The marginal seller is the seller who Group of answer choices cannot compete with the other sellers in the market. would leave t
    8·1 answer
  • A new operating system for an existing machine is expected to cost $565,000 and have a useful life of six years. The system yiel
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!