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lys-0071 [83]
2 years ago
15

In the Frankfurt market, Aldi stock closed at €5 per share. On the same day, the euro-U.S. dollar spot exchange rate was €.625/$

1.00. Aldi trades as an ADR in the OTC market in the United States. Five underlying Aldi shares are packaged into one ADR. The no-arbitrage U.S. price of one ADR is:_______. A) €25.00. B) $15.63. C) $40.00. D) none of the options
Business
1 answer:
Molodets [167]2 years ago
7 0

Answer:

B) $15.63

Explanation:

Calculation for the no-arbitrage U.S. price of one ADR

First step is to calculate the Equivalent amount of one ADR in euro

Equivalent amount of one ADR in euro = 5 ×€5

Equivalent amount of one ADR in euro = €25

Now let calculate the Dollar value of one ADR

Dollar value of one ADR = €25* €625/1,000

Dollar value of one ADR=€15,625/1,000

Dollar value of one ADR=$15.63

Therefore the no-arbitrage U.S. price of one ADR is:$15.63

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Answer: Actual state

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In the given case, Bessie is sure that she has the same product left at home however she does not have any proof. Bessie decides to not purchase the good she already has one, thus, despite of not having a proof she decides to satisfy her wants by not purchasing the bottle.

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3 years ago
DEF Corporation had two issues of ordinary preferred stock with a $100 par value traded on the NYSE. One issue paid $5.56 annual
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Answer:

5.93%

Explanation:

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share price for both types of preferred stock (95.55+97.5) $193.05

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6 0
3 years ago
Bargain Central Furniture, Inc., completed the following treasury stock transactions:
Genrish500 [490]

Answer:

Bargain Central Furniture, Inc.

R1) Journal entries:

a) Debit Treasury Stock with $1,300

Debit Additional Paid-in Capital with $6,500

Credit Cash Account with $7,800

To record purchase of 1,300 shares of common stock, $1 par at $6 per share.

b) Debit Cash Account with $6,300

Credit Treasury Stock with $700

Credit Additional Paid-in Capital with $5,600

To record resale of 700 shares for $9 per share.

R2) Bargain Central Furniture, Inc.

Balance Sheet as at December 31, 2010:

Treasury Stock $600 ($1,300 - $700)

Explanation:

Treasury Stock is a contra account to the Common Stock.  It represents the shares of common stock repurchased.  Two methods are prevalent in reporting transactions in treasury stock.  They are the the cost method, which reports all treasury stock transactions in the Treasury Stock account.

The other method is the par value method.  This method reports only the par value transactions of treasury stock in the Treasury Stock account.  The above or below par value aspects of each transaction is then taken to the Additional Paid-in Capital account.

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3 years ago
According to the Lewis two-sector model the creation of a Modern (urban) Sector will:
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Answer:

The answer is option B)  According to the Lewis two-sector model the creation of a Modern (urban) Sector will:

Create a flow of labor from the traditional sector into the modern sector.

Explanation:

The two sector model propounded by W. Arthur Lewis is a theory of development that identifies two sectors: the traditional and modern sector.

According to this theory, the creation of a modern sector will generate a flow of excess labor from the traditional sector to the urban sector where there is more demand for labor.

Over time, this migration will create more jobs, stimulate industrialization and a framework for sustainable development.

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2 years ago
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