Economic exposure over the next quarter

Assignment Help Finance Basics
Reference no: EM132540876

A US based firm, Alamo Inc. attempts to determine its economic exposure to movements in the Singapore dollars (SGD), by applying regression analysis to data over the last 36 quarters: SP = b0 + b1e + u where SP represents the percentage change in company stock price per quarter, e represents the percentage change in the Singapore dollar value per quarter, and u is an error term. Based on the analysis, the b0 coefficient is zero and the b1 coefficient is -0.4 and standard deviation is 0.11. The company believes that the inflation differential has a major effect on the value of the SGD (based on purchasing power parity). The inflation in USA is expected to stay the same while the Singapore inflation will increase significantly. How would you expect the stock value of Alamo will be affected by its economic exposure over the next quarter?

Reference no: EM132540876

Questions Cloud

Dollar gross and net gain or loss on position : Calculate your dollar gross and net gain or loss on this position, taking into account both the margin interest and the transaction cost to sell.
Process of selecting appropriate architecture : Describe how you would proceed through the process of selecting an appropriate architecture. What steps are involved in the architecture selection?
Determine the radiology equipment : Determine the radiology equipment. Seventy-Two Inc., a developer of radiology equipment, has stock outstanding as follows: 60,000 shares of cumulative preferred
Big data visualization tools : Several Big Data Visualization tools have been evaluated in this weeks paper.
Economic exposure over the next quarter : A US based firm, Alamo Inc. attempts to determine its economic exposure to movements in the Singapore dollars (SGD), by applying regression analysis to data
What is the number of deluxe models sold at break-even : What is the number of deluxe models sold at break-even? Standlar Company makes wireless speakers. The standard model price is $360 and variable expenses.
Develop list of ethical guidelines : Develop a list of ethical guidelines that you would publish for your employees based on ethical standards from appropriate sources
Compute the total present value of these payments : A lump sum receipt of $4,100 at the end of the sixth year. Compute the total present value of these payments if interest is at 9%
Find the value of the mortgage on house : They pay $75,000 deposit and take a mortgage for the balance at J12=9% p.a. to be amortized over 30 years with monthly payments.

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the value of a share of stock of hov inc

What is the value of a share of stock of HOV Inc. to an investor who requires a 12 percent rate of return if HOV's current dividend is $1.20? Assume earnings and dividends are expected to grow at a compound annual rate of 7 percent.

  Explain why governments must use technology

Explain why governments must use technology. Explain who should be involved in the needs assessment process.

  Discuss cost of a short-term bank loan

Alex is considering getting a 6-months loan with a face value of $150,000 to build a new apartment. His current balance is $10,000 at a bank that offered.

  Computing the yield to maturity on bond

Jack bought a 10-year bond that pays 8.25 percent annually for $977.14. The face value is $1,000. What is the yield to maturity on this bond?

  First century bank wants to earn an effective annual

first century bank wants to earn an effective annual return on its consumer loans of 10 percent per year. the bank uses

  Shares a perfect hedge against a long holding

Is an option for 100 shares a perfect hedge against a long holding of 100 shares of the underlying stock?

  Percent of risk-weighted assets

What is the bank's Tier 1 capital in percent of risk-weighted assets, to the nearest 0.01%? (E.g., if your answer is 5.753%, record it as 5.75.)

  Calculate the optimal replacement cycle for the machine

The residua value can be ignored. The cost of capital of the company is 11% per year. Calculate the optimal replacement cycle for the machine.

  If a bond has a call feature it usually also has a call

1. a firm will exercise its option to call a bond if interest rates rise. a true b false2. a euro-bond is denominated

  Hedging is the act of buying and selling financial claims

hedging is the act of buying and selling financial claims or using other financial tools in order to protect against

  Basic objectives of a competitive intelligence program

If you're Hasbro, how do you defend to key stakeholders, that manufacturing in the U.S. is a good business decision?

  How might a random sample be drawn for a telephone survey

The Parks Department proposes conducting a telephone survey. Does this seem like an appropriate survey vehicle?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd