Question 9Not yet graded / 8 ptsAn investor residing in the US bought shares of a Spanish company last year at43.25 euros per share when the exchange rate was $1.07 per euro. The investorjust received a dividend payment of 1 euro per share and is considering sellingits investment at a price of 49.18 euros per share when the exchange rate is$1.12 per euro.Following the approach to calculations we used in class this semester, what arethe two sources or components of the return for the investor (that is, what isthe foreign return, and the currency gain or loss?) Give numerical answers.Show your work (you will not receive full credit if you don't show any work)

Answered: Question 9 Not yet graded / 8 pts An…

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

Problem 1PS

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Suppose you are a euro-based investor who just sold Amazon.com Inc. shares that you hadbought six months ago. You had invested 10,000 euros to buy Amazon shares for $120 pershare; the exchange rate was $1.15 per euro. You sold the stock for $135 per share and convertedthe dollar proceeds into euro at the exchange rate of $1.06 per euro. a) Determine the profit from this investment in euro terms.b) Compute the rate of return on your investment in euro terms.c) How much of the return is due to the exchange rate movement?
A1 2b Your Canadian company processes raw sugar for sale in the United States, and the firm has just received a container of raw material from the UK. You have an invoice that asks you to pay £20,000 in 30 days. The current exchange rate is $1.75/£. Invoice amount = £20,000 Exchange rate 1£ = $ 1.75 Cost of bill today in Canadian $ = Invoice amount*Exchange rate 1£ = 20,000*1.75 = Canadian $ 35,000 If you thought the dollar would trade at $2.0/£ in 30 days, what should you do?
QUESTION 9 Kim PLC and Edith PLC are two Irish companies. Both companies can lend or borrow money at either fixed or floating rates. On 1st March Kim PLC needed to borrow €1,000,000 and it chose a fixed rate loan. On the same date Edith PLC had cash of C1,000,000 which it chose to put on deposit at a floating rate. Which of the following statements is most plausible: O Kim expects interest rates to fall but Edith expects interest rates to rise O Both companies expect interest rates to fall O Both companies expect interest rates to rise O Edith expects interest rates to fall but Kim expects interest rates to rise
H6
6
Problem 19-4 (Algo) Required: Suppose a U.S. investor wishes to invest in a British firm currently selling for £33 per share. The investor has $66,000 to invest, and the current exchange rate is $2/£. Consider three possible prices per share at £31, £36, and £41 after 1 year. Also, consider three possible exchange rates at $1.60/£, $2/£, and $2.40/£ after 1 year. Calculate the standard deviation of both the pound- and dollar- denominated rates of return if each of the nine outcomes (three possible prices per share in pounds times three possible exchange rates) is equally likely. (Do not round intermediate calculations. Round your percentage answers to 2 decimal places.) X Answer is complete but not entirely correct. Standard deviation of pound-denominated return Standard deviation of dollar-denominated return 12.37 19.68 %
Question 2 You have the opportunity to store your hard-earned money in a French or a Japanese bank account. The Japanese bank account promises an interest rate of 2% a year. If you deposit 1000 Euro in the French bank account, interests will accrue so that you will have 1105 Euros in two years. Today's exchange rate is 1 Euro to 129.60 Yen. a) What should the 1-year forward exchange rate be for you to be indifferent between the two accounts? Make sure you explain what theories justify your calculations b) If the yearly inflation rate for France is 4%, what do you expect the Japanese inflation to be?
The table below lists the terms to maturity, the coupon rates, coupon payment dates and yields to maturity for three UK government bonds at the close of business on 7th January 2018. Gilts Prices Close of Business 7th January 2018 Maturity Date Coupon Rate Coupon Payment Dates Yield to Maturity 07/04/2022 3.75% 7th April, 7th October 0.784735% 20/08/2027 1.70% 20th February, 20th August 1.394042% 07/06/2035 4.00% 7th June, 7th December 1.868424% The coupon rates are quoted as annual rates. But UK government bonds divide the annual coupon into two equal instalments payable every six months. Work out the time periods to maturity, the periodic coupons and the periodic yields for each of the three bonds. Use the information to calculate the clean price of each bond. Your mathematical workings should be clearly outlined in your written presentation.
Finance 5. On 4/10/2022, the exchange rates are as follows: 1 British Pound = USD $1.30 1 Australian dollar = 0.57 British Pound 1 Australian dollar = 87.59 Japanese Yen $1 USD = 1.34 Australian dollar $1 USD = 124.46 Japanese Yen (a) ABC is considering expanding its sales of orange juice overseas. If the product is produced in ABC’s Australian brunch with cost 2.20 Australian dollars, ship to UK, where it can be sold for 1.54 British pound. What is the profit measured by US dollars on the sale? (b) If ABC produces a liter of orange juice in its US headquarters and ship it to Japan for USD $1.45 per unit. If the firm wants a 25% markup on the project, what should be the price of the juice sold in Japan measured by Yen, if using the exchange rate as shown above? (c) If the shipped orange juice in Japan is actually sold for 215 Yen, by PPP, what is the exchange rate between USD and Yen (Yen/USD $1) implied? Do not provide handwritten solution. Maintain accuracy and quality in your…
Question A .Full explain this question and text typing work only We should answer our question within 2 hours takes more time then we will reduce Rating Dont ignore this line
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