Estimate company maximum expected loss

Assignment Help Finance Basics
Reference no: EM133072255

You work for a U.S.-based company that conducts most of its international business in India and estimate net cash flows next month from India will be $1,000,000USD (assuming that you convert from Indian rupees to USD at the current spot rate). You estimate that the standard deviation of monthly percentage changes of the Indian rupees (INR) is 3% and that the INR will depreciate by 2% against the U.S. dollar over the next month. Use the value at risk (VaR) method based on a 95% confidence interval to estimate your company's maximum expected loss due to its transaction exposure to the INR over the next month both in percentage terms and in dollar terms.

Reference no: EM133072255

Questions Cloud

Find out the dependent and independent variables : 1) Choose an article in a journal related to your major (Journal of Marketing, Journal of Finance, etc.) that uses linear regression. Please indicate the articl
Calculate the nominal annual rate convertible monthly : Calculate the nominal annual rate convertible monthly. Calculate the time in years. Calculate the interest you will pay.
Annualized forward premium or discount of the zar : What is the annualized forward premium or discount of the ZAR? Express your answer in percentage terms to one decimal place (e.g., 5.5%).
Find the NPV of the amusement park project : Note that 'k' is an abbreviation for kilo. So $1k is $1,000. The unit sales is measured in tickets sold. Find the NPV of the amusement park project
Estimate company maximum expected loss : You work for a U.S.-based company that conducts most of its international business in India and estimate net cash flows next month from India will be $1,000,000
Identify digital tactics and strategies : Critical evaluation on the challenges and opportunities of these contemporary digital issues and Identify digital tactics and strategies undertaken by business
What is the net amount still due : 1. if the slope of a line and a point on the line are known, the equation of the line can be found using the slope intercept form y=mx+b, to do so, substitute t
What is the price-earnings ratio : 1. A stock has a price of $40.4 and earnings per share of $3.11. What is the price-earnings ratio?
Compute the total payroll tax expense Aspen Ski Resorts : Compute the total payroll tax expense Aspen Ski Resorts will pay for the first week of January in addition to the total salary expense and employee withholdings

Reviews

Write a Review

Finance Basics Questions & Answers

  What drives the actions of local first responders

How is the National Guard deployed to assist in response to a disaster?- What is the role of first responders when a routine " minor disaster " occurs in a local community?

  How much could the company afford to pay for a pipeline

An oil well is located 40 miles from a refinery. The well produces a continuous 95 BBL/hr. The entire production from the well is to be transported.

  What are the effects of buybacks on asset managers

What are the effects of buybacks on asset managers? Asset managers refers to the fund management companies who own the shares which are being bought back.

  What was the average real return on the stock

Calculating Real Returns and Risk Premiums. For Problem, suppose the average inflation rate over this period was 3.2 percent and the average T-bill rate.

  Compute the conservatism ratios for both companies

Compute the conservatism ratios for both companies and comment on the differences. Which company is more conservative, and why?

  What is meant by the term cash flow process

Identify the principal motives for holding cash and near-cash assets. Explain the purpose of each motive.

  What is the price of a 2-month put option

-Using the replicating portfolio approach, calculate the price of a 2-month call option with a strike price of $100.

  Funds at the risk-free interest rate

What is the portfolio beta with 125% of your funds invested in the market portfolio via borrowing 25% of the funds at the risk-free interest rate?

  Amount of the firm ebit

Advantage First Corporation has sales of $4665646; income tax of $397167; selling, general, and administrative expenses of $249931; depreciation of $371411; cost of goods sold of $2522468; and interest expense of $193029. What is the amount of the ..

  What is the value of the stock if the appropriate discount

Todd Co. just paid dividends of $2.00 (D0) per share. These dividends are expected to grow at an 18% rate for the next three years and at a 6% rate thereafter

  Proposals that constituted an alternative merger proposal

Kissinger Inc., has just agreed to acquire Mashly Inc., in an all-cash offer of $25/share. According to the merger agreement, Mashly could not solicit

  Compute the price of bonds based on semiannual analysis

Compute the price of the bonds based on semiannual analysis. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

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