End of Year, k Salary (A$) 1 45,000 46,800 48,672 50,619 3 4

Q: What is the FV at the end of year 5 of $2212 put in an account today if the return is 8.6% per year?

A: Future value refers to the estimated value of an investment or cash flow at a specified point in the…

Q: The function f(x) = 600 represents the rate of flow of money in dollars per year. Assume a 10-year…

A:

Q: Suppose that the current 1-year rate (1-year spot rate) and expected 1-year T-bill rates over the…

A: According to the unbiased expectations theory, the current (long-term) rate for a specific maturity…

Q: How many years will it take for something costing $61 today to cost $91 if inflation averages 1% per…

A: Using excel nper function

Q: All prices and costs are expected to rise at the general inflation rate of 2 percent after 1st year.…

A: Real cash flows are required to be discounted using appropriate real discount rate. Nominal cash…

Q: The current minimum wage is P400 per day. If minimum wage is scheduled to be adjusted every 2 years…

A: The minimum wage is the least amount of wage which is guaranteed by the law enforceable in that…

Q: How much is the sum of the present value of the expected return over those periods

A: Cash Flows (Year 1-10) (CF) =  $15,000 per year Annual interest rate (r) = 5% Time Period (t) = 10…

Q: If the annual interest rate is 9% and inflation rate is 5%. What does the tax rate have to be in…

A: Real rate of return=1+annual interest rate1+Inflation rate-1=1.091.05-1=3.8%

Q: Suppose that the current 1-year rate (1-year spot rate) and expected 1-year T-bill rates over the…

A: According to the unbiased expectations theory, the current (long-term) rate for a specific maturity…

Q: he current yield curve for treasuries is as follows: Maturity (years) YTM 1 0.5% 2 0.9% 3 1.01%…

A: A predetermined exchange rate at which payment will be made or received in the future is term as the…

Q: You are given the following information about an investment account for the year 2021: Date January…

A: The time-weighted return assists in removing the effects that money inflows and outflows have on…

Q: Suppose that the current 1-year rate (1-year spot rate) and expected 1-year T-bill rates over the…

A: Current rate = 9%Expected rate in year 2 = 10%Expected rate in year 3 = 10.60%Expected rate in year…

Q: Annual expenses for two alternatives have been estimated on different bases as follows: If the…

A: Answer  -   Step 1 -  Calculation of Nominal Rate -  Formula - (1+RR) x (1+IR) -1 Given, Real rate -…

Q: For each growth rate below, (i) use the rule of 70 to calculate how long it will take incomes to…

A: The rule of 70 is the method of financial management that helps the investors to know the period in…

Q: Suppose that S ¥180/S. The annualized risk - free rates are 4.6% and 2.75% in Japan and the U.S.,…

A: Forward rate is that rate of exchange which is determined on the basis of interest rate between two…

Q: 4. continuously-compounded interest rate tree, with the time interval between two movements being A…

A: The Ho-Lee interest rate model is a short-term interest rate model used to price fixed-income…

Q: Suppose the current forward curve for one-year rates is the following: Time Period      Forward…

A: The conceptual formula used:

Q: an investment that makes 20% one year and loses 20% the next yea following returns for this…

A:

Q: 1. (See image), which assumes continuous compounding, says that the Future value (F) of an amount…

A: Compute the amount in savings account when $2,000 is invested in savings account at 3% annual return…

Q: Suppose that the current one-year rate (one-year spot rate) and expected one-year T-bill rates over…

A: In finance, there exists a theory called the unbiased expectation theory, or unbiased forward rate…

Q: The risk-free rate is 2.9%, and expected inflation is 2.1%. If inflation expectations change such…

A: Risk free rate:The risk-free rate is crucial in finance and economics as it helps determine the…

Q: Assume that the nominal return on U.S. government T-bills was 10% during 20X2, when the rate of…

A: Given: Nominal rate = 10% Inflation rate = 6%

Q: Assume that an investment of $9000 earns an APR of 6% compounded monthly for 30 months. How much…

A: Data given: P=Principal=$9000 r=APR=6% (compounded monthly) n=30 months=2.5 year   Required: Amount…

Q: You want to earn a real rate of return of 6.50% at a time when the inflation rate is 3.25%. What is…

A: Interest refers to the amount charged by the lender on the lent amount. The borrower of the loan is…

Q: Suppose the nominal interest rate in the U.S. is 5% per year, the nominal interest rate in Brazil is…

A: International Fisher Effect states that the future exchange rate between 2 countries is the interest…

Q: ume that time zero is now and the effective interest rate per year is 14%. 1. What is the present…

A: The given problem can be solved using PV function in excel. PV function computes present value for…

Q: Quarterly sales have a trend given by Y = 50,000t – 15,000, where Y is sales in pesos and t is the…

A: Trend for Q2 =  50,000t – 15,000 = (50000*6) -15000 = 285000   * As  Q2 for 2021 is period 6 from Q1…

Q: In 10 years from now, how many future dollars will have the same buying power as $24,000 today? The…

A: Future value refers to the value of annuity at future date. It is the value determined when…

Q: Assume AUD = 0.58 GBP and inflation is 3.5% pa in Australia and 7% pa in Great Britain. Estimate the…

A: Exchange rate depends on the inflation rate and changes based on the inflation in the home country…

Q: What would be the purchasing power (in today's money) of $1,000 (actual $) in 10 years' time from…

A: Future value = fv = $1000 Time = t = 10 years Inflation rate = r  = 5%

Q: Annual expenses for two alternatives have been estimated on different bases as follows: If the…

A: Computation:

Q: You are paying a series of five constant-dollar (or real-dollar) uniform payments of $664.85…

A: The formula used for the computation is:

Q: Alterna Annual Alternative A Annual Expenses FYear Estimated in Estimat Actual Dollars Real Do base…

A: Given information :

Q: A proposed project which requires an investment of R10,000 (now) is expected to generate a series of…

A: Initial investment = R 10000 First payment (A) = R 6000 Growth rate (g) = 5% Interest rate (i) = 11%…

Q: The annual inflation rate is expected to be 4.78% and the nominal (annual) interest rate is 5.75%.…

A: Inflation rate (π) =4.78% Nominal rate of interest (i)=5.75%. Using Fischer equation, real interest…

Q: Suppose you pay $9,700 for a $10,000 par Treasury bill maturing in three months. What is the holding…

A: Holding period return is the return % that an investment generates over the period of time the asset…

Q: What is the future value at the end of year 2 of an income stream that starts out at $2400 per month…

A: Monthly Payout = 2400 Decreases by 75 Monthly Compounding Number of compounding periods = 12 Time…

Q: You invest $50,000 for three years that will earn 3.6 percent compounded continuously. What will be…

A: Given Information: Amount invested=$50,000 Interest Rate=3.6% compounded continuously Time(in…

Q: he price of the product Alfa is now 100 and it is expected to grow nominally by 6%, which is more…

A: Nominal growth rate of price can be defined as the rate of growth of a product in in the current…

Q: Year 1 23 4 Current (Long-term) Rates % % 555 % %

A: Under unbiased expectations theory, the long-term rates are the geometrical average of the…

Q: An item presently costs P2,000. If inflation is at the rate of 8% per year, what will be the cost of…

A: Please see the next step for the solution

Q: What is the annualized investment rate % on a Treasury bill that you purchase for 9310 that will…

A: Value at the maturity (F) = 9533 Purchase price (P) = 9310 n = 91 days

Q: Your aunt's $10,000 investment earned a nominal 7% last year. If the inflation rate was 3.75%, what…

A: Nominal rate (r) = 7% Inflation rate (i) = 3.75%

Instruments of Foreign Exchange Market

Foreign exchange is a worldwide market in which one nation’s currency is converted into another nation’s currency. In further terms, exchanging of nations currency with foreign currencies. Foreign exchange happens at a specified rate which is termed the foreign exchange rate. The exchange rates are not constant continuously changing as they are derived by market forces of supply and demand. Widely used foreign currencies are the United States- dollar, Euro, Japanese Yen, British pound, and Australian dollar. US- dollar is the most denominated foreign currency. The Euro to US dollar is a widely used currency pair in the forex market as these two currencies represent the world’s enormous economy. Forex trade is simple as exchanging currencies at the bank. The main players of forex markets are the central banks, financial institutions, intermediaries, investments banks, and other banks. Central Bank is the supreme player who decides the currency value of their own nation on the forex market. Mostly foreign exchange-traded at FX market (forex market) when tourists’ visits a foreign country, import, and export happens between two countries.