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Dima020 [189]
2 years ago
15

9. Current one-year interest rates in Europe is 4 percent, while one-year interest rates in the U.S. is 2 percent. You convert $

200,000 to euros and invests them in France. One year later, you convert the euros back to dollars. The current spot rate of the euro is $1.20. a. According to the IFE, what should the spot rate of the euro in one year be? b. If the spot rate of the euro in one year is $1.12, what is your percentage return from your investment? c. If the spot rate of the euro in one year is $1.31, what is your percentage return from your investment? d. What must the spot rate of the euro be in one year for your strategy to be successful?
Business
1 answer:
Ulleksa [173]2 years ago
7 0

Solution:

Given ,

1 Year interest rates in Europe = 4 %

1 Year interest rates in the U.S. = 2 %

You are translating $200,000 and spending $200,000 in French

Current spot rate of the euro = $1.20

a.   (2%-4%)/(1+4%)=(S - 1.20) / 1.20  

     S= $1.1769 one year Euro rate

b. ( $1 / 1.20 )( 1 + 4% )* 1.12 = $.9707 return of -2.93% (loss)

c. ( $1 / 1.20) ( 1 + 4%)* 1.31 = $1.1353 return of 13.53% (gain)

d . ($1 / 1.20) ( 1 + 4%) *S = $1 (1+2%) ;

        S=$1.1769          

A spot rate of over $1.17697 (this is the same in part A) would be effective.

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Three identical homes in a neighborhood were listed at the same time in a market where demand was constant. According to the law
irga5000 [103]

Answer:

So then as we can see if the demand is constant the first sold would be the correct answer for this case. Because assuming the demand constant and we have more than 1 supplier with the same price the first one would sold the good or service on this case the house.

Explanation:

The law of demand and supply "is an inverse relationship between the supply and prices of goods and services when demand is unchanged. If there is an increase in supply for goods and services while demand remains the same, prices tend to fall to a lower equilibrium price and a higher equilibrium quantity of goods and services".

So then as we can see if the demand is constant the first sold would be the correct answer for this case. Because assuming the demand constant and we have more than 1 supplier with the same price the first one would sold the good or service on this case the house.

6 0
3 years ago
If a firm decide to eliminate a product line that produce a yearly net lo of $21000 it yearly net income
mina [271]

Option A is the proper response. It will only increase by $21,000 if it can completely eliminate all of the fixed expenses related to that product line.

Net income, in both business and accounting, is an entity's revenue fewer costs, depreciation and amortization, interest, and taxes for a given accounting period.

All fixed expenses related to a discontinued product line should also be discontinued. then the corporation can add $21,000 to its overall net profits. When a product line is discontinued, variable expenses are automatically eliminated.

The correct response is A. only if it can eliminate all of the fixed costs related to that product line will it increase by $21,000.

To learn more about Net Income, refer to this link:

brainly.com/question/1347024

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<u>COMPLETE QUESTION:</u>

If a firm decides to eliminate a product line that produces a yearly net loss of $21,000, its yearly net income

A. will increase by $21,000 only if it can eliminate all of the fixed costs associated with that product line.

B. will increase by $21,000 only if it can eliminate all of the variable costs associated with that product line.

C. will automatically increase by $21,000.

D. will decrease unless the firm can eliminate all of the fixed costs associated with that product line.

4 0
1 year ago
Monopoly has social costs because A. P is greater than MC and this implies economic inefficiency. B. too few resources are being
elena55 [62]

Answer:

Option "D" is the correct answer to the following question.

Explanation:

A monopoly usually has all kinds of social costs. Price under monopoly is more than marginal cost, which also often means that society does not have the economic capacity.

In monopoly business, resources are usually used less and other businesses use more resources, which is why monopoly business is usually associated with social interests.

Monopoly businesses produce fewer goods but charge more on those goods because they are the sole producers of the services or goods they produce, so all three options are correct

4 0
2 years ago
In preparing a bank reconciliation, the amount of an error indicating the recording of a check in the journal for an amount larg
never [62]

The statement is true.

In preparing a bank reconciliation, the amount of an error indicating the recording of a check in the journal for an amount larger than the amount of the check is added to the balance per the company's records because the excess amount would be reduced from the bank balance in the company's records, So the company books are not correct. To make them correct the excess amount should be added back to the balance as per the company's records.

For example, if the check amount was 500 but the company recorded it as $550. Then means that the company records show $50 less compared to the bank statement. Therefore, that $50 is added back and then it comes equal to the bank statement balance.

When a note is written to settle open account an entry that converts the accounts receivable account to a note receivable account is required. This entry is required because when the note is written to settle accounts the company has to receive notes in the future and the amount of the account.

<em>Your question is incomplete. Please read below to find the missing content.</em>

In preparing a bank reconciliation, the amount of an error indicating the recording of a check in the journal for an amount larger than the amount of the check is added to the balance per company's records.

TRUE

FALSE

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6 0
1 year ago
Assume, for Singapore, that the domestic price of soybeans without international trade is higher than the world price of soybean
Lubov Fominskaja [6]

Answer:

C)other countries have a comparative advantage over Singapore and Singapore will import soybeans.

Explanation:

In the case when the domestic price of the soyabeans considered withoiut the international trade and the same should be more than the world price that means the other country would have the comparative advamtage and the singapore would import the soybeans

Therefore the option c is correct

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2 years ago
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