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]
2 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]2 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
Give an example of a strong manager and an organization that you worked with in the past or presently.
hjlf
Tacobell and I had a amazing manager named big john!
3 0
3 years ago
Long Construction Company uses the percentage-of-completion method of accounting for long-term construction contracts. During 20
LUCKY_DIMON [66]

Answer:

$400 million less ($176+$84)=$14 million

Explanation:

the percentage of completion method of accounting is more like of income statement because it is used to assess the companys performance and financial position

8 0
3 years ago
A transaction in which things of value are traded by buyers and sellers
cluponka [151]
<span>Barter. Things of value are directly exchanged between a buyer and a seller without the involvement of money or other financial instruments. It is the simplest and oldest form of trade where a transaction is merely an exchange of one thing for another.</span>
3 0
2 years ago
Between the u. s. and nepal, nepal invests less in new factories and equipment. This will likely cause?
salantis [7]

As Nepal is investing less in capital goods so as to shift the PPF of America outward quicker in comparison to Nepal which is extra eating. the answer is "C".

Capital goods are bodily assets that a company makes use of within the manufacturing process to fabricate products and services that consumers will later use. Capital goods include buildings, equipment, system, automobiles, and gear.

Capital goods check with merchandise that can be used within the manufacturing of other merchandise but isn't included in the brand new product. these consist of gadget tools, commercial equipment, method plant gadget, production & mining gadget, electrical system, fabric equipment, printing & packaging machinery, and so on.

Capital items are the assets used by agencies within the course of producing their services and products and can consist of homes, equipment, gear, and equipment.

Learn more about Capital goods here: brainly.com/question/14848187

#SPJ4

7 0
1 year ago
Discuss how firms can benefit from (1) related diversification and also can benefit from (2) unrelated diversification. Discuss
igor_vitrenko [27]

Answer:

Benefits from related & unrelated diversification.

Explanation:

Firms' benefit(s) from related diversification :

  • Building & developing market power - By sharing the  related diversification going on in entire industry.
  • Sharing activities & market linkages with other businesses - Associated diversification implies forward & backward linkages.

Firms' benefit(s) from unrelated diversification :

  • Leveraging & enhancing different core competencies, USP - By Focusing on self paced unique diversification
  • Creating a different ostentation brand - Creating a strong brand, capable of becoming a market leader, rather than market follower

Key concepts explaining firm success or failure from either diversification are implicit within above explanation.

6 0
2 years ago
Other questions:
  • Cardero Midwifery's cost formula for its wages and salaries is $2,280 per month plus $348 per birth. For the month of August, th
    6·1 answer
  • High unemployment especially unemployment as the result of layoffs, CAN BE DEVASTATING FOR INDIVIDUALS AND BUSINESS.ALL OF THE F
    13·2 answers
  • Cameron is an accountant in the accounting department of Data Analytics Company. Cameron's son's college tuition is due within a
    13·1 answer
  • One difference between services in the production of goods is that the services are consumed blank where as good as can be blank
    7·1 answer
  • Motorola's worldwide advertising campaign for cell phones is an attempt to provide a common theme and presentation in all market
    12·1 answer
  • What types of technology have enable gig jobs to become a larger part of the workforce?<br>​
    9·1 answer
  • Assume that investment spending
    10·1 answer
  • . You use the utility company’s budget plan for paying your home heating bills. You pay $75 per month for 9 months. Your actual
    10·1 answer
  • How can technology affect the international business?​
    14·1 answer
  • The demand for seats in 10 a.m. classes at the College of the Canyons is higher than the demand for seats in 8 a.m. classes. The
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!