Petrus Company has a unique opportunity to invest in a two-year project in Australia. The project is expected to generate 1,000,
000 Australian dollars (A$) in the first year and 2,000,000 Australian dollars in the second. Petrus would have to invest $1,500,000 in the project. Petrus has determined that the cost of capital for similar projects is 14%. What is the net present value of this project if the spot rate of the Australian dollar for the two years is forecasted to be $.55 and $.60, respectively
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Arbitrage is the financial practice in which the prices of two or more different markets are taken advantage of to make profit as a result of tthe imbalance in the prices of the markets.
Also known as 3 point or cross currency arbitrage, Triangular arbitrage is the taking advantage/ exploiting of the pricing differences between 3 currencies on the foreign exchange market.
Simply put, triangular arbitrage is a situation in which the exchange rates between 3 currencies are not the same.
Triangular arbitrage is difficult to come by as it requires very advanced computer systems to detect and take advantage of.
Explanation: Drill-down capability refers to the capability necessary to achieve a goal such as a desired level of output. It enables users to get details, and details of details, of information, and it also involves the aggregation of information and features simple roll-ups to information that are complex and interrelated.
What this means is that, Drill down is a capability that takes the person who needs information from a more general view of the data to a view that is more specific and precise. For example, when there is a report that shows sales revenue by state can allow the user to select a specific state, click on it and see sales revenue by county or city within that particular selected state.
