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krok68 [10]
2 years ago
7

A Japanese investor can earn a 1 percent annual interest rate in Japan or about 4.1 percent per year in the United States. If th

e spot exchange rate is 101 yen to the dollar, at what one-year forward rate would an investor be indifferent between the U.S. and Japanese investments? a. 95.99 b. 96.99 c. 97.99 d 98.99 e. 99.99 f. 100.99 g. 101.99 h. 102.99 yens per dollar
Business
1 answer:
Whitepunk [10]2 years ago
4 0

Answer: 97.99

Explanation:

The one-year forward rate that an investor would be indifferent between the U.S. and Japanese investments will be:

= Spot rate × (1 + Japanese rate / 1 + U.S rate)

= 101 × (1 + 1% / 1 + 4.1%)

= 101 × [(1 + 0.01) / (1 + 0.041)]

= 101 × (1.01/1.041)

= 101 × 0.9702209

= 97.99

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nirvana33 [79]

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B, A

Explanation:

A: 16% = 1.0F + 6%; F = 10%; B: 12% = 0.8F + 6%: F = 7.5%; thus, short B and take a long position in A.

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Which of the following statements is correct? ACars typically lose the most value in the first year after purchase. BHouses will
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3 years ago
Read 2 more answers
Problem 3.22: Trade Deficits and J-curve Adjustment Path Assume the United States has the following import/export volumes and pr
Sergio039 [100]

Answer:

The pre-devaluation cost is ($880) and the pst-devaluation trade balance is ($1398)

Explanation:

Assumptions Values

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Price of imports, foreign currency (fc) * 12.0000

Quantity of exports, units * 100

Quantity of imports, units * 120

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Price elasticity of demand, imports * (0.900)

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8 0
3 years ago
Goodwill arises when one firm acquires the net assets of another firm and pays more for those net assets than their current fair
liberstina [14]

Answer:

Takeover Co.

a) Goodwill = $146,000

b) Target's ROI = 36.42%

c) Takeover's ROI = 21.07%

d) False

Explanation:

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Purchase price of Target = $255,000 ($93,000 + $162,000)

5 0
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