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
Agata [3.3K]
2 years ago
10

Today, the spot price of the EUR/USD exchange rate is $1.0796. The bid and ask quotes for the six-month EUR/USD forward contract

s are, respectively, 73.56 and 75.68. Recall that quotes are reported in basis points, which is the common practice in FX market. According to the interest rate parity, what is the implied foreign interest rate differential
Business
1 answer:
pantera1 [17]2 years ago
6 0

Answer:

b. 13.63%

Explanation:

Multiple choice <em>"(a) 1.01% (b) 1.37% (c) 0.50% (d) -0.50%"</em>

<em />

Spot rate = future rate /(1 + interest rate differential)

1.0796 = (1.0796 + 0.007356)/(1 + interest rate differential)

1.0796 = 1.086956 / (1 + interest rate differential)

1.0796 * (1 + interest rate differential) = 1.086956

(1 + interest rate differential) = 1.086956/1.0796

(1 + interest rate differential) = 1.006813634679511

Interest rate differential = 1.006813634679511 - 1

Interest rate differential = 0.006813634679511

interest rate differential = 0.006813634679511*2

interest rate differential = 0.013627269359022

interest rate differential = 13.63%

So, the difference between interest rate of Europe and US is 13.63%.

You might be interested in
Which of the following does not allow a company to exclude a short term obligation from current liabilities? Group of answer cho
Neporo4naja [7]

Answer: Actually refinance the obligation.

Management indicated that they are going to refinance the obligation.

Have a contractual right to defer settlement of the liability for at least one year after the balance sheet date.

The liability is contractually due more than one year after the balance sheet date.

Explanation:

A current liability is an obligation payable within a year. A short term liability can be excluded from current abilities if management indicates that they are going to refinance it and show that they are capable of doing so.

Also if the company has a contractual right to defer settlement of the liability for at least one year after the balance sheet date, the short term obligation can be excluded.  The deferment means that it will be recognized in another period.

When the liability is contractually due more than one year after the balance sheet date, it stops being a current liability and becomes a non-current liability payable after a year.

3 0
3 years ago
Which of the following design tips can help make a presentation clear and effective?
Alenkasestr [34]
From this list, none are really the perfect solution to have a clear presentation but most likely it would be: C. Using a large font, since it will allow viewers from a long distance to be able to understand better.
4 0
3 years ago
Read 2 more answers
Click this link to view O*NET’s Wages and Employment section for Construction Managers. According to O*NET, what is the projecte
Aleks04 [339]
Do you know the answer cause I. Need help aswellllllllllll
4 0
3 years ago
Read 2 more answers
Company X currently has a capital structure that consists of 40% equity, 20% preferred equity, and 40% of debt. The risk-free ra
Sindrei [870]

Answer:

14.58%

Explanation:

WACC = weight of equity x cost of equity + weight of debt x cost of debt x (1 - tax rate) + weight of preferred equity x dividend yield

According to the capital asset price model: Expected rate of return = risk free + beta x (market rate of return - risk free rate of return)

r= 3% + 1.1 x 8 = 11.8

equity = 0.4 x 11.8% = 4.72

d = 0.4 x 5 x (1 -0.21) = 1.58

p = 0.2 x 6 =  1.2

11.8 + 1.58 + 1.2 =

8 0
3 years ago
Which of the following has the elements of the supply chain in the correct order?
irina1246 [14]

I believe the answer would be C because first we gather materials like cotton strings ect, then we produce it and make something out of cotton and strings ect, and then we distribute it to retail to get sold and earn money. Hope this helps!

6 0
3 years ago
Other questions:
  • Suppose we are looking at a cash flow statement constructed using the INDIRECT method. We see a NEGATIVE adjustment of $5000 rel
    13·1 answer
  • Courier Logistics Corp. will issue $2,400,000 in 8-year bonds that pay 5% annually. The market rate for bonds of similar riskine
    7·1 answer
  • Tyler and Josie formed a partnership. Tyler received a 25 percent interest in partnership capital and profits in exchange for la
    15·2 answers
  • Indicate which of the following transactions will be included in (that is, directly increase) the GDP of the United States in 20
    7·1 answer
  • A petroleum refinery stockpiles crude oil so that it can easily switch between producing home heating oil and gasoline, dependin
    9·1 answer
  • If farmer sam macdoanld can produce 200 pounds of cabbages and 0 pounds of patotes or 0 pound of cabbes and 100 pounds of potato
    12·1 answer
  • A company opts not to purchase more resources, since additional output will not increase their revenue. Which BEST
    10·1 answer
  • Which number is equivalent to(2.3×107)×(1.1×103)?
    11·1 answer
  • In periods of rising prices, what will lifo produce?.
    8·1 answer
  • If a good is normal, then a decrease in price will cause a substitution effect that is?
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!