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MaRussiya [10]
2 years ago
11

Trebble, inc. is a u.s.-based mnc that will need 2 million euros in 90 days to purchase european imports. therefore, trebble pur

chases a forward contract at a forward rate of $1.05. if the spot rate of the euro in 90 days is $1.00, trebble will pay $________ for the euros and ________ incur an opportunity cost.
Business
2 answers:
Korolek [52]2 years ago
8 0
A forward contract is a contract that specifies a trade of a certain commodity at a later date. This is usually done for safety since some products/markets can have very volatile prices. In this case, the contract has been closed so that the price is 1.05$. It does not matter that the Euro dropped later on, the company will still have to pay 2000000*1.05=2100000$. The company will incur an opportunity cost since it did not wait for the price to show up; maybe there could be better planning that made it worth it, but there is still an opportunity cost.
netineya [11]2 years ago
3 0

Answer:  If the spot rate of the euro in 90 days is $1.00, Trebble will pay <u>$2,100,000</u> for the euros and <u>will</u> incur an opportunity cost.

SinceTrebble Inc. has already purchased a forward contract, it has to buy Euros at the contracted forward rate - $1.05 irrespective of the spot rate.

So, it will buy 2 million Euros at 2,000,000*1.05 = 2,100,000 USD

If the spot rate of the euro is $1, then Trebble Inc. will incur a loss of USD 100,000 (2,100,000 -2,000,000).

If Trebble Inc. chose to buy Euros at the prevailing spot rate on the day it wanted to pay for the imports, it would have saved USD100,000. It could have also invested this amount and earned an interest.

So, the opportunity cost here is the $100,000 it lost on the forward contract plus the interest it could have earned on the amount.

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givi [52]

Answer:

a. social

Explanation:

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8 0
2 years ago
The Federal Reserve purchases ​$8 million in U.S. Treasury bonds from a bond​ dealer, and the​ dealer's bank credits the​ dealer
Zinaida [17]

Answer:

The bank will be able to lend:

$42,105,263 ($8 million/ 0.19)

Explanation:

The above amount which the bank can lend from the $8 million received from the Federal Reserve for a customer is a function of $8 million deposit in a customer's account and the reserve ratio.  This is called the money multiplier.

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6 0
2 years ago
Of these common educational requirements for Finance careers, select those you are most interested in achieving. Check all that
Nataly [62]

Answer:

The correct options are Advanced degree after a traditional four year college degree and On the Job training Experience.

Explanation:

If I like to persuade my career in the Finance Field, I would definitely go for the Four Year degree program in finance and then do Advance education in the concerned field. Then i would like to get the on the job training experience in the finance department of a renowned company to have a true learning experience of the finance field in real time. This would prepare me to become fully knowledgeable about the finance matters before entering into the market as a finance professional. So getting advance degree after basic degree in finance and getting the on the job training would be my choices for Finance Careers.  

3 0
3 years ago
Read 2 more answers
Roland Richard, a baker, purchased 200 ounces off of an expensive spice for $400 on 3/1/09. The journal entry to record the purc
kirill [66]

Answer:

The correct adjusting journal entry for 12/31/09:

D. debit Spice Expense and credit Spice Inventory 240

Explanation:

Roland Richard purchased 200 ounces off of an expensive spice for $400.

Cost per ounce = $400/200 = $2

By December, 12/31/09, there were 80 ounces on hand. Roland Richard used 120 ounces of expensive spice with the amount of expense: $2 x 120 = $240

The adjusting journal entry for 12/31/09:

Debit Spice Expense $240

Credit Spice Inventory $240

6 0
3 years ago
Suppose you held a diversified portfolio consisting of a $7,500 investment in each of 20 different common stocks. The portfolio'
agasfer [191]

Answer:

0.68

Explanation:

A portfolio consists of an investment of $7,500

The amount of common stock is 20

The portfolio beta is 0.65

Suppose one of the stock in the portfolio is sold with a beta of 1.0 for $7,500

The proceeds realized is then used to purchase another stock with a beta of 1.50

The first step is the to calculate the change in beta

Change in beta= 1.50-1

= 0.5

The next step is to divide the change in beta by the number of common stock

= 0.5/20

= 0.025

Therefore, the new beta can be calculated as follows

= 0.65+0.025

= 0.68

Hence the new portfolio's beta is 0.68

4 0
3 years ago
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