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sertanlavr [38]
3 years ago
11

Your company expects to receive CAD 1,200,000 in 90 days. The 90 day forward rate for CAD is $0.80 and the current spot rate is

$0.75. If you use a forward hedge, estimate the cost of hedging the receivable if, 90 days later, the spot rate for CAD 90 days later turns out to be $0.82.
a. $50,000
b. $50,000
c. $75,000
d. $75,000
Business
1 answer:
Masteriza [31]3 years ago
4 0

Answer:

Cost of hedging = $24,000

Explanation:

cost of hedging = 1,200,000 * ($0.80 - $0.82) = 1,200,000 * $0.02 = -$24,000

Since the actual forward rate was higher than th eexpected forward rte, the coampny lost money by hedging the operation. The cost of hedging the operation was $24,000.

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On July 1, 20X4, Pillow Corp. obtained significant influence over Sleep Co. through the purchase of 3,000 shares of Sleep's 10,0
puteri [66]

Answer: $18,000

Explanation:

Income from investment is the percentage of the acquired company's income that the company that acquired it will report as their own based on their percentage of ownership.

By purchasing 3,000 shares out of 10,000, Pillow Corp owns;

= 3,000 / 10,000

= 30% of Sleep Co.

These shares were bough on July 1 so the relevant period will be half a year.

At the end of the year, Pillow Corp will report 30% of half of Sleep Co. income as income from investment for the year.

= 30% * 120,000 * 0.5

= $18,000

3 0
3 years ago
You are bearish on Telecom and decide to sell short 100 shares at the current market price of $50 per share.
Elden [556K]

Answer:

A. $2,500

B. $60

Explanation:

A. Calculation to determine How much in cash or securities must you put into your brokerage account if the broker's initial margin requirement is 50% of the value of the short position

Initial Margin = 100*$50*50%

Initial Margin = $2,500

Therefore The amount of securities that you must put into your brokerage account if the broker's initial margin requirement is 50% of the value of the short position is $2,500

b. Calculation to determine How high can the price of the stock go before you get a margin call if the maintenance margin is 30% of the value of the short position

First step is to calculate the Maintenance Margin per share

Maintenance Margin per share = $50*30%

Maintenance Margin per share =$15

Second step is to calculate the Rise in price required

Rise in price required = $50*50% - $15

Rise in price required= $10

Now let calculate How high can the price of the stock go

Price of stock=$50+$10

Price of stock= $60

Therefore How high can the price of the stock go before you get a margin call if the maintenance margin is 30% of the value of the short position is $60

8 0
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gizmo_the_mogwai [7]
1.) Out of the choices given here, a computer game that can be purchased online and played right away has good time utility. The other choices didn't seem to be a good fit for this particular question. The correct answer is D. 

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FinnZ [79.3K]

Answer:

= 11.85%

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