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arsen [322]
2 years ago
15

A currency speculator expects the spot rate of British Pounds (GBP) to change from $2.00 to $2.20 in 6-months. Assume the specul

ator has access to credit lines of USD 20,000,000 in the US and GBP 10,000,000 in UK. The annual borrowing and lending rates are 6 percent in US and 4 percent in UK. In order for the speculator to take advantage from the expected spot rate change in GBP, it should
Business
1 answer:
Vedmedyk [2.9K]2 years ago
5 0

Answer:

Borrow in dollars then at spot rate convert money to british pound. Invest in the pounds for half a year and convert back to dollars.

Explanation:

Access to credit = $20000000

We do a conversion to pounds

= 20000000/2

= £10000000

When this is invested for 6 months

10000000 x 1 +4% x6/12

= 10000000(1+0.04*0.5)

= 10000000x1.02

= 10200000

We then make a conversion back to dollars

10200000 x 2.2

= 22,440,000 dollars

Loan to be repaid

20000000(1+6%x6/12)

= 20000000 x 1 +0.06*0.5

= 20000000 x 1.03

= 20,600,000

Then arbitrage profit = 22440000 - 20600000

= 1840000

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The Dogwood Technology Company managerial accountant computes the May total variance report. The budgeted fixed overhead was $ 4
Jobisdone [24]

Answer:

$750 favorable ; $200 unfavorable

Explanation:

The computations are shown below:

For fixed overhead budget variance:

= Budgeted fixed overhead - actual fixed overhead

= $47,420 - $46,670

= $750 favorable

For fixed overhead volume variance:

= Budgeted fixed overhead - standard fixed overhead cost allocated to production

= $47,420 - $47,220

= $200 unfavorable

Hence we consider all the given information

8 0
3 years ago
The following is the Bravo Unlimited adjusted Trial Balance.
ivanzaharov [21]

Explanation:

The preparation of the Assets section is shown below:-

                                         Alpha Dog Company

                                         Adjusted Trial Balance

                                           December 31, 2016

Particulars                                               Assets

Cash                                                        $88,450

Accounts Receivable                             $150,000

Supplies                                                  $29,255

Total current assets                               $179,255

Fixed Assets

Equipment                            $295,285

Accumulated Depreciation -$238,760  $56,525

Stock Investment                                     $172,000

Total Fixed assets                                    $228,525

Total Assets                                              $407,780

Total Assets = Total current assets + Total fixed assets

7 0
3 years ago
Free cash flow describes the net cash provided by operating activities after adjusting for A : current liabilities. B : both cap
Nikolay [14]

Answer:

The answer is B, both capital expenditure and dividends paid.

Explanation:

In the Statement os Cash Flow, cash provided by operating activities fails to take into account that a company must invest in a new property, plant, and equipment and must maintain dividends at current levels to satisfy investors.

Free cash flow describer the net cash provided by operating activities after adjusting for capital expenditures and dividens paid.

7 0
2 years ago
Consider three investment plans at an annual rate of 9.38%.
PolarNik [594]

Answer:

Investor A = $545216 .

Investor B = $352377

Investor C = $897594

Explanation:

Annual rate ( r )  = 9.38%

N = 41 years

<u> Calculate the balance at age of 65</u>

1) For Investor A

balance at the end of 10 years

= $2000 (FIA, 9.38 %, 10) (1 + 0.0938) ≈ $33845

Hence at the end of 65 years ( balance )

= $33845 (FIP, 9.38 %, 31) ≈ $545216 .

2) For investor B

 at the age of 65 years ( balance )

= $2000 (FIP, 9.38%, 31) = $322159 x (1 + 0.0938) ≈ $352377

3) For Investor C

at the age of 65 years ( balance )

= $2000 (FIP, 9.38%, 41) = $820620 x (1 + 0.0938) ≈ $897594

7 0
2 years ago
Organic Eats provides an organic, vegan menu. Since there are very few restaurants that offer the same unique services, customer
Sphinxa [80]

Answer:

Focused differentiation strategy

Explanation:

A focused differentiation strategy is used by organizations that concentrate on having products that have a unique feature that fulfills the needs of a specific target market that is willing to pay more for these products. According to this, the answer is that in this scenario, Organic Eats is following a focused differentiation strategy.

3 0
2 years ago
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