Dell is selling 20,000 units in Europe at an average price of €1,700 per unit. Both the spot and forward exchange rates are$1.20/€. The cost of each unit in dollars is $1,500 per unit. The elasticity of demand for Dell computers in Europe is & = 1.5.What are respectively the delta and exposure for Dell's dollar profit when passthrough = 0.5?O delta-5.741; exposure €51,660,000 millionmdelta-2.566; exposure = €23,094,000 milliondelta 1.137; exposure = €10,233,000 milliondelta-1.981; exposure = €17,829,000 million

> Given:> European average price = 1700> Dell selling = 20,000 units>Exchange rate =…

Dell is selling 20,000 units in Europe at an average price of €1,700 per unit. Both the spot and forward exchange rates are $1.20/€. The cost of each unit in dollars is $1,500 per unit. The elasticity of demand for Dell computers in Europe is = 1.5. m What are respectively the delta and exposure for Dell's dollar profit when passthrough = 0.5? O delta-5.741: exposure €51,660,000 million W O delta 2.566; exposure €23.094,000 million delta 1.137; exposure €10,233,000 million O delta-1.981: exposure €17.829.000 million

Dell is selling 20,000 units in Europe at an average price of €1,700 per unit. Both the spot and forward exchange rates are $1.20/€. The cost of each unit in dollars is $1,500 per unit. The elasticity of demand for Dell computers in Europe is = 1.5. m What are respectively the delta and exposure for Dell's dollar profit when passthrough = 0.5? O delta-5.741: exposure €51,660,000 million W O delta 2.566; exposure €23.094,000 million delta 1.137; exposure €10,233,000 million O delta-1.981: exposure €17.829.000 million

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

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Apple is selling 30,000 units in Europe at an average price of €1,500 per unit. Both the spot and forward exchange rates are $1.20/€. The cost of each unit in dollars is $1,300 per unit. The elasticity of demand for Apple computers in Europe is €= 1.5. Now consider a depreciation of Euro (relative to US dollar) from $1.20/€ to $1.08/€ and assume zero passthrough. What is Apple's exposure? a. $45 million b. $20 million c. €45 million d. €20 million
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Suppose that gold costs USD 330 an ounce in the United States and GBP 220 an ounce in UK. What must be the GBP / USD rate? •Suppose that gold prices rise by 2% in US and by 5% in UK. What will be the price of gold in the two currencies atthe end of the year? What must be the exchange rate at the end of the year? •Show that at the end of the year each dolar buys 3% more GBP as predicted in PPP. •What are current gold prices in US and UK or EU?
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