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1.Yesterday, you bought a call option on Egyptian Pounds that expires on May 1. This afternoon there is an announcement of a coalition government resolving much uncertainty about the political situation and the government’s fiscal and monetary policy. The financial markets in Egypt have responded with a dramatic decrease in volatility. Assuming that all other variables remain the same; then we expect: _______________.a) the value of your call option will increaseb) the value of your call option will decreasec) the value of your call option will remain the samed) the change in value depends on whether the call option is American style, or European stylee) the change in value depends on whether the option is in the money or out of the moneyf) d and e2. I own a call (put) on Euros. If the value of Euros goes up, then the _________. a) the value of call options will increaseb) the value of call options will decreasec) the value of put options will increased) the value of put options will decreasee) it depends on whether the call option is American style, or European stylef) the value of call and put options will both remain the sameg) a and ch) a and di) b and cj) b and d3. The spot rate on the pound is $1.80 and the 180-day forward rate is $1.84. The difference between the two rates means that we know for sure that (assume that IRP and FEP hold):a) nominal interest rates are higher in Britain relative to the USb) nominal interest rates are lower in Britain relative to the USc) you will have more wealth by investing in Britaind) you will have more wealth by investing in the USe) a and cf) b and d4. The annual interest rate in the U.S. is 3.5%, the direct spot quote for Polish Zlotys (zl) are $0.3374/zl and the 1-year forward quote for the zloty is $0.3395/zl. At what Polish interest rate would interest rate parity hold?a) 2.86%b) 3.72%c) 3.98%d) 4.14%e) 11.86%
5. Alice Inc. imports manufactured goods from Ireland to the U.S. Alice’s revenues are primarily in US dollars and expenses are primarily in Euros. The CEO of Alice is concerned about her currency exposure over the next six months and is considering engaging in an option contract with Euros as the underlying asset (S). Which transaction would you recommend?a) Buy callsb) Buy putsc) Write callsd) Write putse) Options are unable to hedge Euro expenses6. Suppose that I take all profitable trading opportunities that are available. If I engage in covered interest arbitrage but I do not engage in the carry trade (uncovered interest arbitrage) then I must believe the following statements to be true:a) The International Fisher Effect does not holdb) Interest Rate Parity does not holdc) Forward Expectations Parity does not holdd) a and be) b and cf) a and cg) all of the aboveh) none of the above7. Gottfried Hi-Post Co. is a Raleigh based company that is planning on building a hard wood manufacturing site in Brazil. Mr. Gottfried is considering engaging in a currency swap to finance the operations in Brazil. The swap that Gottfried will do will consist of _________.a) Borrowing in US dollars and swapping for a Brazilian Real loanb) Borrowing in Brazilian Reals and swapping for a US dollar loanc) Finding equity investors in Brazil that will swap Reals for dollars to invest in Gottfried Co.d) Finding equity investors in the US that will be willing to swap US assets for Brazilian assetse) None of the above
Suppose that one swiss franc could be purchased in the foreign exchange market for $0.60 today. If the franc appreciated 10% tomorrow against the dollar, how many francs would a dollar buy tomorrow?
The tax rate is 30 percent and the required return on the project is 12 percent. (Use SL depreciation table) What will the cash flows for this project be?
If sales should increase by 30 percent, by what percent would earnings before taxes (and net income) increase?
You have been approved for a $80,000 loan toward the purchase of a new home at 15 percent interest. The mortgage is for thirty years.
As a result of this decision, what other tactical decisions might need to be made in terms of future staffing, raises, other capital projects?
The free cash flow to the firm is reported as $275 million. The interest expense to the firm is $60 million. If the tax rate is 35% and the net debt of the firm increased by $33, what is the free cash flow to the equity holders of the firm?
Sales are projected at 8,800 units over the 3-month life of the project. What are the total variable costs of the project?
If the risk-free rate is 2.5%, beta of the asset is 1.57, and the expected return of the asset is 13.25%, what is the market risk premium?
Being company's stock has PE ratio of 17.12 and pays $1.94 in dividends per share. What is firm's earnings per share (EPS)?
while waterskiing at a cost of $10,000, on December 5, 2004 Nick underwent eye surgery at a cost of $5,000, and on January 5, 2005 Brent was treated for a broken leg at a cost of $2,000. How much will the insurer pay for each of these losses?
If Joan sold the bond today for $1,060.49, what rate of return would she earned for the passed year?
I need some help to start in writing a 700-word paper in APA format with references evaluating financial aspects of the American Red Cross. Answering these questions
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