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Butoxors [25]
2 years ago
5

Assume that interest rate parity holds and that 90-day risk-free securities yield 6% in the United States and 6.5% in Germany. I

n the spot market, 1 euro equals $1.35. What is the 90-day forward rate
Business
1 answer:
Marianna [84]2 years ago
3 0

Answer: 1.356345

Explanation:

Based on the scenario and information provided in the question, the 90-day forward rate will be calculated as:

= Spot Rate × (1 + Germany Interest Rate) / (1 + United States Interest Rate)

= 1.35 × (1 + 6.5%) / (1 + 6%)

= 1.35 × (1 + 0.065) / (1 + 0.06)

= 1.35 × 1.065/1.06

= 1.35 × 1.0047

= 1.356345

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On January 1, 1997, an investment account is worth 100,000. On April 1, 1997, the value has increased to 103,000 and 8,000 is wi
loris [4]

Answer:

(B) 6.25%

Explanation:

January 1, 1997 = $100,000

April 1. 1997 = $103,000 - $8,000 = $95,000

January 1, 1999 = $103,992

annual interest rate for 1997 = i = (x - 100,000 + 8,000) / [100,000 - 8,000(1 - ³/₁₂) = (x - 100,000 + 8,000) / [100,000 - 8,000(1 - 0.25) = (x - 92,000) / 94,000

x = 92,000 + 94,000i

annual interest rate for 1998 = 1 + i = 103,992/x

x = 103,992/(1 + i)

0 = x(1 + i) - 103,992

now we replace x by 92,000 + 94,000i

0 = (92,000 + 94,000i)(1 + i) - 103,992

0 = (94,000 (1 + i) - 2,000)(1 + i) - 103,992

we now replace 1 + i by Y

0 = (94,000Y - 2,000)Y - 103,992

0 = 94,000Y² - 2,000Y - 103,992

using a calculator, Y = 6.25%

4 0
3 years ago
According to the criterion of _____, a selected segment must be large enough to warrant developing and maintaining a special mar
Nesterboy [21]

Answer:

Substantiality.

Explanation:

Market segmentation is one of the important marketing strategies to divide the entire market into small segments in order to implement a better technique to satisfy the consumer need with specific products and schemes. There are four basic criteria for useful segmentation of the market:

  • Accessibility.
  • Actionability.
  • Substantiality.
  • Responsiveness.

Substantiality: This criterion of segmentation express the notion that the target market must be large enough to be profitable as a small segment can not justify the investment.

Similarly in the given case, it talks about the substantiality criteria of segmentation as it says a selected segment must be large enough to warrant developing and maintaining a special marketing mix.

4 0
2 years ago
The price of a competitive firm's product is $50 per unit. The firm currently has marginal cost equal to $40. To maximize profit
Karo-lina-s [1.5K]

Answer:

should increase its output

6 0
2 years ago
Milk has an inelastic demand, and beef has an elastic demand. Suppose that a mysterious increase in bovine infertility decreases
makkiz [27]

Answer:

b. greater in the beef market than in the milk market.

Explanation:

Elasticity of demand measures the responsiveness of quantity demanded to changes in price.

Demand is elastic if quantity demanded is more sensitive to changes in price. A small change in price leads to a greater change in quantity demanded.

Demand is inelastic if when price changes, there is little or no change in quantity demanded.

If there's bovine fever which decreases the population of beef cattle by 50 percent, supply would fall and price would rise. As a result of the rise in price, quantity demanded of beef would fall more than the quantity demanded of milk because beef has an elastic demand while milk has an inelastic demand.

I hope my answer helps you

7 0
2 years ago
On December 31, Rivera Company receives a utility bill in the mail for $440. Rivera Company intends to pay the bill in early Jan
olga55 [171]

Answer:

(a)overstated

(b)overstated

(c)no effect

Explanation:

(a) As there is an expense account (utilities expense) which, is not included in the income statement, result for the year will be higher than if was.

(b)The revenues account will be oaky. But, the total expenses will be lower, as there are cost of the period which are not included.

So the Net incoem will be higher than a correct income as their expenses do not include this utilities expense

(c) The balance sheet  will have no effect in the total Asset or Total Liaiblities+SE but, it is a change in the composition.

The income (reained earnings) should be lower as the income will be lower and a liability will be create (utilities payable) to fill this so:

with the mistake:

liab 0  equity (+400)

ammending the mistake

liab 400 equity 0

the net effect is zero.

It will decrease equity and increase liability, but the su of both will be the same

7 0
2 years ago
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