Monica buys a futures contract for April delivery (April 20) of GBP 62,500 on October 20. The futures exchange rate is GBP 1 = USD 1.22. She believes that the spot rate for GBP will be GBP 1 = USD 1.26 on April 20. The margin requirement is 2%. If her expectations are correct, her annualized rate of return on investment will be how much in USD terms?

Q: OCF analysis

A: Operating Cashflow Analysis  = Net Income + Depreciation and Amortization- Net Working capital

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A: Banks provide various services to the organizations such as lock box facility, overdraft facility,…

Q: Define terminal value

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Q: Describe the PW method?

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Q: Define NRV method.

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Q: Explain rebalance

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A: Correct option is 4- Neither I nor II

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Q: What is PNL?

A: The term PNL is used in accounting, finance, and business to refer profit and loss.

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Q: What is the LIFO conformity rule?

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A: A collateralize mortgage obligation (CMO) refers to a type of mortgage-backed security that contains…

Q: Define synergy

A:

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A: In US, calculation as well as disclosure of Annual Percentage Rate is basically government by an act…

Q: Define spin-out

A: Introduction: Spinouts helps the parent corporation by permitting it to emphasis on its core…

Q: Define Indirect method

A: Hey there ! Since particular concept is not given, indirect method is assumed under cash flow…

Exchange Rate Risk

It is the possibility that the value of a currency will fluctuate in the future. In the wake of globalization, business establishments have increasingly ventured into international markets. The volume of international trade has prospered excellently in the near past and is expected to be more affluent in the future. The use of exchange-traded derivative financial instruments has been multi-folded to provide for the requirements of various MNCs and offshore potential investors. Most banks and financial institutions have helped integrate the global economies. Our Government has introduced some bold and extreme measures to fulfil the purpose behind the fiscal, industrial, and monetary policies. The enactment of GST is a huge step towards streamlining the taxation system of the country. Owing to Covid-19, this aspect of corporate risk management has become critical.