The following is the spot and forward rates of dollar against Euro.Spot30-day forwardEuro/$0.850.90You sign a contract for selling John Deere with the amount of 1 billion euros that will be delivered in30days. You expect the 30day later the spot rates of dollar to be 0.75 with 50% chance and 0.95 with50%. What is the expected dollar amount if no forward has been used? As a risk-neutral person, is it agood idea to use the forward?

in this we have to calculate expected forward rate and find the required amount.

Spot 30-day forward 0.85 0.90 gn a contract for selling John Deere with the amount of 1 billion euros that will be delivered in 's. You expect the 30day later the spot rates of dollar to be 0.75 with 50% chance and 0.95 with What is the expected dollar amount if no forward has been used? As a risk-neutral person, is it a idea to use the forward?

Spot 30-day forward 0.85 0.90 gn a contract for selling John Deere with the amount of 1 billion euros that will be delivered in 's. You expect the 30day later the spot rates of dollar to be 0.75 with 50% chance and 0.95 with What is the expected dollar amount if no forward has been used? As a risk-neutral person, is it a idea to use the forward?

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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A software company Future PLC can invest in either Project C orProject D which have the same initial Year = 0 cost of £275mlm and cash-flows: Project C: £150mln (in Year=1), £250mln (in Year=2)Project D: perpetuity of £25mln (in Year=1) growing at an annual rateof g=7% The problem is, that the firm does not know the risk-adjusted discount rateof Project C but it does know that the cash flow betas are 55 (in Year=1) and 85 (in Year=2). It also knows that Project D has the same risk as a market portfolio, which has an annual return of rm = 15%. Risk-free treasury bonds have an annual return of rf = 5%. Which project should be chosen by the firm?
Fast pls solve this question correctly in 5 min pls I will give u like for sure Surbh
Bak Assume that Richelle Corp imported goods from New York and needs 145,000 New York dollars 180 days from now. It is trying to determine whether to hedge its position. Richelle has developed the following probability distribution for the New York dollar Possible dollar value in 180 days HAE $.45 $0.40 $0.43 $0.51 $067 $0.81 $16.095 and 75% $4653 and 4.5% $3,789 and -89% Probability $3.356 and 35% 5% 10% 30% The 180-day forward rate of New York dollar is $0.63, and the spot rate is $0.59. Determine the expected additional cost of hedging. What is the probability that hedging will be more costly to the firm that not hedging? 30% 20% 5%
4. GN Power is a generating company and LANECO is a retailer. These two companies are negotiating a long-term contract for the delivery of electricity and both forecast that the average spot price for the duration of the contract wil1 be 20. 00 $/MWh. If GN Power is less risk averse than LANECO, what is the price that is more likely to result from these negotiations: 21. 00 $/MWh А. В. 20. 00 $/MWh С. 19. 00 $/MWh. Both of these companies must physically trade through the WESM, but they have signed a two-way contract for difference for 100 MWh at 20. 00 $/MWh. If everything happens as planned, describe how trading is settled if the price on the WESM is 23. 00 $/MWh.
B. Projections for a new investment in lithium batteries are as follows: YEAR COST 0 1 2 3 4 01 5 6 £12,000 £0 £0 £0 £0 £0 BENEFIT £0 £2000 £4000 £6000 £6000 £2000 £0 £1000 What is the payback period on this investment?
A. You want to invest in a riskless project in Sweden. The project has aninitial cost of SKr2.1 million and is expected to produce cash inflowsof SKr810,000 a year for 3 years. The project will be worthless afterthe first 3 years. The expected inflation rate in Sweden is 2 percentwhile it is 5 percent in the U.S. A risk-free security is paying 6percent in the U.S. The current spot rate is $1 = SKr7.55. What is thenet present value of this project in Swedish krona using the foreigncurrency approach? Assume that the international Fisher effect applies. B. In a recent e-news, you observe that the 6-month forward rate is $1.5031/ Euro. Further, if you invest the dollar, it fetches you interest atthe rate of 2% p.a. In comparison, the interest rate in Eurozone is 1%p.a. You also see that CAD 1.5513 are needed to purchase a Euro and CAD1.332 are needed to buy a US$. Is it possible for you to make an arbitrageprofit? If so, which of the arbitrage strategies will you employ andwhat will be…
6. Since the minimum return rate is 6%, which of the following options is more appropriate? option A option B 100 option C 200 option D 500 Investment cost, ECU Annual profit, ECU/yıl 400 100.9 27.7 46.2 125.2 For all options, the service life is 5 years and the scrap value is zero.
A firm evaluates the following projects, when interest rates are 12% for every maturity: Year 0 1 2 с A B -200 -150 -50 150 125 40 150 125 30 If the projects are not mutually exclusive, the firm has a budget of $350 and you can take a project multiple times, what is the max value that you can bring to the firm? O a. $67 O b. O c. O d. O e. $124 Of $108 Og. $132 Oh. $122 $142 $115 $100
4
2. I buy an investment for GBP 2,345,678.91 and sell it one week later for GBP 2,350,000.00. What is my yield?
Please answer fast please arjent help please answer fast

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