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1-) Explain the basic differences between the operation of a currency forward market and a futures market?
2-) In the October 23 , 1999 , issue , The Economist reports that the interest rate per annum is 5.93 percent in the United States and 70.0 percent in Turkey. Why do you think the interest rate is so high in Turkey? On the basis of the reported interest rates, how would you predict the change of the exchange rate between the US dollar and the Turkish Lira?
3-) Assume that the euro is trading at a spot price of $1.49/€. Further assume that the premium of an American call ( put ) option with an exercise price of $1.50 is 1.55 (3.70) cents. Calculate the intrinsic value and the time value of the call and the put option.
4-) A Bank is quoting the following exchange rates against the dollar for the Swiss franc and the Australian dollar
SFr/$ = 1.5960-70
A$/$ = 1.7225-35
An Australian firm asks the bank for an A$/SFr quote. What cross rate would the bank quote?
5-) Explain the following three concepts of purchasing power parity. (PPP)
a) The law of one price
b) Absolute PPP
c) Relative PPP
Allen Air Lines must liquidate some equipment that is being replaced. The equipment originally cost $12 million, of which 75% has been depreciated. The used equipment can be sold today for $4 million, and its tax rate is 40%. What is the equipment's ..
If the appropriate discount rate is 12% and the tax rate is 40%, which copier should be selected? Why? Be sure to quantify your answer.
Briefly explain why you are using the computational method chosen. (Hint: you will need to decide to use the APV or WACC formula.
Justify and criticize the usual assumption made in financial management literature that the objective of a company is to maximize the wealth of its shareholders.
The firm estimates the revenues and expenses for the new and the old lathes to be as shown in the following table. The firm is subject to a 40% tax rate. Should the new lathe be purchased?
Determine the WACC given the above assumptions and indicate how these might be useful to determine the feasibility of the capital project.
How does the above relate to the market that the business is in, i.e. need to perform competitive and economic analysis and macro economic analysis is company's sales cyclical or counter cyclical for example
what if in L receives $220 worth of P non-voting preferred stock (rather than P bonds) in exchange for his T bonds?
What is the difference of WACC based on market value weights and book weights - Please show formulas.A balance sheet shows a total of noncallable $45 million.
The winner's prize money was $150. In 2006, the winner's check was $1,225,000. What was the annual percentage increase in the winner's check over this period? If the winner's prize increases at the same rate, what will it be in 2040?
Discuss primary financial statements published by a corporation, the various classifications used in a balance sheet-What is the purpose of a Balance Sheet? What information does it provide?
Evaluate Sharpes Beta Coefficient, Evaluate the Beta Coefficient for Stock X and Stock Y using both regression and the formula given in your text. Highlight your answers in red.
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