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2 years ago

Suppose the spot exchange rate for the Canadian dollar is Can$1.12 and the six-month forward rate is Can$1.14.

Business

1 answer:

andreyandreev [35.5K]2 years ago

6 0

Answer:

Explanation:

Given that:

1$ = Can $1.12

It takes a value of 1 U.S dollar to have 1.12 Canadian dollars. This signifies that the U.S dollar is worth more than Canadian dollars.

Assuming that the absolute Purchasing Power Parity PPP holds,

Since 1$ = Can $1.12, the cost in the United States of an Elkhead beer, if the price in Canada is Can$2.85 can be determined to be:

= $\dfrac{2.85}{1.12}$

= $2.545

Yes, the U.S. dollar is selling at a premium relative to the Canadian dollar.

This is because we are being told that the spot exchange rate for the Canadian dollar is Can $1.12 & in six (6) months time the forward rate will be Can $1.14.

The U.S dollar is expected to appreciate in value because it is trading at a premium in the forward market.

Canada has higher interest rates. This determined by using the formula:

= $\dfrac{(\dfrac{Fwd}{Spot }-1)}{n}$

where; n= numbers of years = 6 month/12 month = 0.5 year

Then;

$=\dfrac{(\dfrac{1.14}{1.12 }-1)}{0.5}$

$= \dfrac{(1.0178-1)}{0.5}$

$= \dfrac{(0.0178)}{0.5}$

= 0.0356

= 3.56%

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The common stock of Zeta Group sells for $42 per share, has a rate of return of 12.2 percent, and a dividend growth rate of 1.8

Soloha48 [4]

Answer:

The amount of the last annual dividend paid is $4.3.

Explanation:

Given:

The common stock of Zeta Group sells for $42 per share, has a rate of return of 12.2 percent, and a dividend growth rate of 1.8 percent annually.

Now, to find the amount of last annual dividend paid.

Let the amount of last annual dividend paid be $l.$

Price of per share ( $p$ ) = $\$42.$

Rate of return ( $r$ ) = $12.2\%.$

Rate of dividend growth ( $g$ ) = $1.8\%.$

Now, to get the amount of last dividend paid we put formula:

$p=\frac{l(1+g)}{r-g}$

$42=\frac{l(1+1.8\%)}{12.2\%-1.8\%}$

$42=\frac{l(1+0.018)}{0.122-0.018}$

$42=\frac{l\times 1.018}{0.104}$

Multiplying both sides by 0.104 we get:

$4.368=1.018l$

Dividing both sides by 1.018 we get:

$4.3=l$

$l=\$4.3.$

Therefore, the amount of the last annual dividend paid is $4.3.

6 0

3 years ago

1. ) Which task is common to both restaurant and lodging workers, but not to recreation workers? PLEASE HELP ME ON MY FINAL ANYT

bija089 [108]

Totally d because if you read it

8 0

3 years ago

Read 2 more answers

A(n) ___________ distribution strategy distributes a product through only a preferred group of retailers in a given area. intens

hjlf

The answer is selective distribution strategy. This type of distribution strategy focuses more on the products that are distributed are to be given to only specific areas and are only selected by the company or the distributor in which is in lined with the statement given above.

6 0

2 years ago

Janis just won a scholarship that will pay her $500 a month, starting today, and continuing for the next 48 months. Which one of

ExtremeBDS [4]

Answer:

B. Annuity due

Explanation:

Annuity Due

This is the repetition of money paid that is made at the beginning of each defined period. Period could be monthly, quarterly, yearly and so on. A common example used in explaining this is Rent paid at the beginning of each month. Annuity due have all payments in the same amount, like in this case, Janis is going to be paid $500 a month for 48 months. Meaning the amount tonbe paid doesnt changes. Also another characteristic of annuity payments is that all payments are paid at thesame time interval. Again, here, Janis is being paid every month at the same time interval NOT, today monthly and the next payment weekly.

It is a series of payments that is made or received over a predetermined period of time.

6 0

2 years ago

On January 1, 2020, Tamarisk Corporation issued $700,000 of 9% bonds, due in 8 years. The bonds were issued for $740,784, and pa

EleoNora [17]

Answer:

Cash 740,783 debit

Bonds payable 700,000 credit

Premium ob BP 40,783 credit

--to record issuance--

Interest expense 29,631.32 debit

premium on BP 1,868.68 debit

cash 31,500 credit

--to reocrd first interest payment--

Interest expense 29,556.57 debit

premium on BP 1,943.43 debit

interest payable 31,500 credit

--to record accrued interest at year-end on BP--

Explanation:

procceds 740,783

face value 700,000

premium on bonds payable 40,783

When comparing, the firm received more than the face value hence, there is a premium on the bonds as the coupon payment are above the market rate.

Now, the interest will be calculate as follow:

carrying value x market rate:

740,783 x 0.08/2 = 29,631.32 interest expense

cash outlay:

700,000 x 0.09/2 = 31,500

amortization on premium (difference) 1,868.68

new carrying value: 740,783 - 1,868,68 = 738,914

second payment accrual:

738,914 x 0.04 = 29,556.57

cash outlay 31500

amortization 1,943.43

7 0

2 years ago