Earn on a one-year risk-free us security

Assignment Help Financial Management

Reference no: EM13951431

The spot rate for the Japanese yen currently is ¥107 per $1. The one-year forward rate is ¥106 per $1. A risk-free asset in Japan is currently earning 7 percent. If interest rate parity holds, what rate can you earn on a one-year risk-free U.S. security?

6.07 percent

7.94 percent

8.01 percent

8.08 percent

6.00 percent

Reference no: EM13951431

Questions Cloud

Promotional budget and sales budget : All else constant, what would Chester’s SG&A/Sales ratio be if the company had spent an additional $1,500,000 for Cat’s promotional budget and $750,000 for Cat’s sales budget?

The optimal capital structure simultaneously maximizes eps : The optimal capital structure simultaneously maximizes EPS and minimizes the WACC. The optimal capital structure minimizes the cost of equity, which is a necessary condition for maximizing the stock price. The optimal capital structure simultaneously..

Account boasts a nominal annual return : Suppose your uncle takes the $40,000 now and wishes to invest it. He calls you because he is confused from an ad he sees. Investments-R-Us is offering the Euler Fund which compounds continuously and the Daley Fund which compounds 360 days per year. “..

Assuming no dividends are paid and no stock is issued : The Digby's balance sheet has $119,413,000 in equity. Further, the company is expecting $3,000,000 in net income next year. Assuming no dividends are paid and no stock is issued, what would their Book Value be next year?

Earn on a one-year risk-free us security : The spot rate for the Japanese yen currently is ¥107 per $1. The one-year forward rate is ¥106 per $1. A risk-free asset in Japan is currently earning 7 percent. If interest rate parity holds, what rate can you earn on a one-year risk-free U.S. secur..

Current spot rate-using covered interest arbitrage : The current spot rate is C$1.379 and the one-year forward rate is C$1.319. The nominal risk-free rate in Canada is 4 percent while it is 8 percent in the U.S. Using covered interest arbitrage you can earn an extra _____ profit over that which you wou..

Weight of debt-calculating the cost of capital : Bennington Industrial Machines issued 153,000 zero coupon bonds six years ago. The bonds originally had 30 years to maturity with a yield to maturity of 7.3 percent. Interest rates have recently increased, and the bonds now have a yield to maturity o..

How they can improve in processes and increase productivity : Assume Chester Corp. is downsizing the size of their workforce by 20% (to the nearest person) next year from various strategic initiatives. Chester is planning to conduct exit interviews to learn more about how they can improve in processes and inc..

Per value bond will exceed the bonds yield to maturity : The current yield on a par value bond will exceed the bond's yield to maturity. A premium bond has a current yield that exceeds the bond's coupon rate. The yield to maturity on a premium bond exceeds the bond's coupon rate.

User Account

All Pages