1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
SVEN [57.7K]
3 years ago
14

Suppose the U.S. yield curve is flat at 4% and the euro yield curve is flat at 3%. The current exchange rate is $1.50 per euro.

What will be the swap rate on an agreement to exchange currency over a 3-year period
Business
1 answer:
lianna [129]3 years ago
3 0

Answer:

$4.24287 million per year

Explanation:

Missing question:  The swap will call for the exchange of 1 million euros for a given number of dollars in each year.

For structured three separate forward contracts of the exchange of currencies, the forward price could be found as follows

Forward exchange rate * $1 million error = Dollar to be received

Year 1 = 1.50*(1.04/1.03) * 1 million euros

Year 1 =  1.514563106796117 * 1 million euros

Year 1 =    $1.5145 million

Year 2 = 1.50*(1.04/1.03)^2 * 1 million euros

Year 2 = 1.529267602978604 * 1 million euros

Year 2 = $1.5293 million

Year 3 = 1.50*(1.04/1.03)^3 * 1 million euros

Year 3 = $1.5441 million

The number of dollars each year is determined by computing the present value:

= 1.5145 / 1.04 + 1.5293 /(1.04)^2 +1.5441 / (1.04)^3

= 1.45625 + 1.41392 + 1.3727

= $4.24287 million per year

You might be interested in
The use of index funds as investment vehicles for asset classes:_________
Scilla [17]

Answer:

I & IV

Explanation:

6 0
3 years ago
Joe is a single, self-employed individual who owns his own business. During 2019, Joe reported $200,000 gross income and $60,000
Soloha48 [4]

Answer:

Adjusted Gross Income =$ 102,000

Explanation:

Gross Income $ 200,000

Business Expenses $ 60000

Gross income earned from your self-employment $140,000

Less alimony to his former spouse $30000

Less Health Insurance Premium $6000

Less Medicine and Doctor fees $ 2000 (Assuming its under Qualified Medical Expenses)

Adjusted Gross Income =$ 102,000

Since mortgage interest relates to personal home, it is not deductiable.

5 0
3 years ago
Splish Company provides the following information about its defined benefit pension plan for the year 2017. Service cost $110,00
kipiarov [429]

Answer: $155,520

Explanation:

Pension Expense = Service Cost - Expected return on plan assets + Prior service cost amortization + Interest cost

Interest Cost

= Interest rate * Projected benefit obligation

= 0.09 * 728,000

= $65,520

Pension Expense = 110,000 - 30,000 + 10,000 + 65,520

= $155,520

3 0
3 years ago
Linda wants to apply for a job in a company of her choice. Which information would her potential employers likely review in her
alukav5142 [94]

Answer:A

Explanation:

 

3 0
3 years ago
A(n) ________ is a tool management uses to assess the potential of a firm's business portfolio. It helps management decide how t
frozen [14]

Answer:

3. portfolio analysis

Explanation:

Some example is portfolio analysis are:

Unilever has a portfolio of supplying tea and ice cream.

Gillette provides shaving products and batteries.

Protfolio analysis is the process by which the portfolio or products of a business are reviewed. It is done to analyse risk and returns. When portfolio analysis is done frequently it helps the business make changes in portfolio allocation based on changing market needs.

4 0
3 years ago
Other questions:
  • The following labor standards have been established for a particular product: Standard labor-hours per unit of output 10 hours S
    8·1 answer
  • Identify whether each of the examples represent a "House of Brands" or a "Branded House" for of brand architecture. Procter &amp
    13·1 answer
  • Which of the following statements is CORRECT?
    15·1 answer
  • The Marchetti Soup Company entered into the following transactions during the month of June:
    11·1 answer
  • In the process of reconciling its bank statement for January, Maxi's Clothing's accountant compiles the following information:
    6·1 answer
  • If the reserve ratio is 10%, and banks do not hold excess reserves, when the Fed purchases $10 million of government bonds, bank
    5·1 answer
  • Tech giant, TimeHop was concerned about creating a workspace that was inviting and encouraged collaboration. Knowing that most o
    14·1 answer
  • Maurice has the following utility function: U (X Y) =20X+80Y-X^2-2Y^2, where X is his consumption of CDs with a price of ​$11 an
    9·1 answer
  • Kilala moba ako filipino ako panget mo ​
    11·1 answer
  • If the supply of aisle seats equals the supply of middle seats on an airplane, and the demand for aisle seats is _____________ t
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!