1 years' time at 60 sol. Assume the current spot rate for 1 US dollar is 4 sol and the dollar is expected to rise to 5 sol in a years' time. The expected net return on Peruvian stock(assuming

Essentials Of Investments
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Chapter1: Investments: Background And Issues
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Economics
5) You can purchase a share of stock in Peru for
50 Peruvian sol. The stock typically pays a 5 sol
per share dividend and you expect it will trade in
1 years' time at 60 sol. Assume the current spot
rate for 1 US dollar is 4 sol and the dollar is
expected to rise to 5 sol in a years' time. The
expected net return on Peruvian stock(assuming
it is sold ex-dividend) expressed in terms of US
dollars is ___%?
9) An exporter located in Germany has been
asked to accept a payment in 1 years' time of
945,000,000 Rupee for a shipment of car parts
to Sri Lanka. Unfortunately, there is no foreign
exchange option for Krona-Rupee exchange
and the exporter cannot readily find someone to
take the other side of a forward contract. The
exporter observes that The Swedish Krona is
currently trading at $.12 US dollars. The Sri
Lankan Rupee is trading at $.005 US dollars. A
bank in Sri Lanka posts an annual interest rate of
35% on all deposits and loans. A bank in Sweden
posts an annual interest rate of 2% on all
deposits and loans. Using the two banks and the
current spot rates, the exporter is assured of
Swedish Krona for her exports?
Transcribed Image Text:Economics 5) You can purchase a share of stock in Peru for 50 Peruvian sol. The stock typically pays a 5 sol per share dividend and you expect it will trade in 1 years' time at 60 sol. Assume the current spot rate for 1 US dollar is 4 sol and the dollar is expected to rise to 5 sol in a years' time. The expected net return on Peruvian stock(assuming it is sold ex-dividend) expressed in terms of US dollars is ___%? 9) An exporter located in Germany has been asked to accept a payment in 1 years' time of 945,000,000 Rupee for a shipment of car parts to Sri Lanka. Unfortunately, there is no foreign exchange option for Krona-Rupee exchange and the exporter cannot readily find someone to take the other side of a forward contract. The exporter observes that The Swedish Krona is currently trading at $.12 US dollars. The Sri Lankan Rupee is trading at $.005 US dollars. A bank in Sri Lanka posts an annual interest rate of 35% on all deposits and loans. A bank in Sweden posts an annual interest rate of 2% on all deposits and loans. Using the two banks and the current spot rates, the exporter is assured of Swedish Krona for her exports?
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