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Analyse the current state of the financial markets. An amusing example of purchasing power parity is The Economist's Big Mac index. Under PPP, movements in countries' exchange rates should in the long-term mean that the prices of an identical basket of goods or services are equalised. The McDonalds Big Mac represents this basket. The index compares local Big Mac prices with the price of Big Macs in America. This comparison is used to forecast what exchange rates should be, and this is then compared with the actual exchange rates to decide which currencies are over and under-valued.
Required: Select one currency from The Economist's Big Mac index. Conduct a secondary research on this currency and its recent trends. Analyse their historical 5 values and determine whether they have been over or undervalued based on the Big mac index.
how should this affect the (a) U.S. demand for Canadian dollars, (b) supply of Canadian dollars for sale, and (c) equilibrium value of the Canadian dollar?
Yesterday, a bond had a clean price of $927.40. Today, the same bond has a clean price of $933.80. Based on this information, you know that:
The creation of a portfolio is very important to diversification to anyone including corporations.
Merck inc has 100 million dollars of 20 year bonds outstanding with a coupon rate of 9% with annual payments. Similiar risk bonds selling for YTM of 7%. Merck is going to call the bond this year (they had a call provison at 104), four years after the..
Shane's Toys, Inc., just purchased a $474,000 machine to produce toy cars. What is the financial break-even point point for the project?
Bob can afford to make a mortgage payment of $725 a month, the going interest rates for people in his situation is 6.75% and he would finance the house for 30 years. How much house can Bob afford?
Machine A requires an initial investment of $ 5,000, has a 10 year life expectancy, and is expected to reduce the company's operating costs by $ 1,200. annually in real terms. This machine would have no sales value at the end of its useful life. The ..
When firms use multiple sources of capital, they need to calculate the appropriate discount rate for valuing their firm's cash flows as:
Cash Flow Estimation Salvage Value: XYZ Corporation is considering an expansion project. To date they have spent $62,600 investigating the viability of the project and have decided to proceed. The CEO of XYZ spent $17,800 last year on his business tr..
Last year Nowitzki inc. entered into an agreement with Duncan partners, an investment bank. At the time of issue, Duncan Partners has agreed to purchase all offered shares from Nowitzki and then try to sell all shares in the primary market.
If the United States announces that it will borrow an additional $10 billion, this announcement will normally cause the bond traders to expect. Which of the following bonds is most susceptible to interest rate risk from an investor's perspective? __..
The internal rate of return is most reliable when evaluating:
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