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1. The current US $-Canadian dollar(C$) exchange rate is $0.75/C$. The yield on a one-year US Treasury security is 1%, and the yield on the one-year Canadian Treasury security is 1.5%. The one-year forward rate (F_s/c$) is $0.80/C$. Based on these quotes, does interest-rate parity hold? Show your work.
2. Based on your answer above, if interest rate parity does not hold, how can you take advantage of the discrepancy to make a risk-free profit? Assume that you will borrow/invest the equivalent of US$1, 000. (Be specific in your answer: state in which currency you will borrow and invest; the total cost of borrowing; the proceeds from your investment, and the net profits from your strategy.
Which of the following investment strategies is appropriate for you? If you think your company’s stock is now substantially overvalued by the market,
Michael's, Inc. just paid $2.60 to its shareholders as the annual dividend. Simultaneously, the company announced that future dividends will be increasing by 5.60 percent. If you require a rate of return of 9.8 percent, how much are you willing to pa..
Jaime has the following information about Apple Inc. Net income for the most recent fiscal year.
What is internal growth rate for 2015?? Balance Sheet 2015 2014 2015 2014 Cash $ 32,300.00 $ 46,900.00 AP $ 58,900.00 $ 61,200.00 AR $ 50,700.00 $ 58,300.00 Notes Payable $ 20,000.00 $ 30,000.00 Inventory $ 70,500.00 $ 75,800.00 Long-Term Debt $ 134,..
A project's net present value (NPV) is computed by discounting the cash inflows from the project and subtracting the investment (if conventional).
Suppose the company is facing a fast growth of 22% per yaer for the next 4 years. After that the growth becomes constant 0%. Company's beta is 1.2; market risk premium is 5.5% and risk-free rate is 3% Last dividend (Do) is $1.25 per share. Find Horiz..
U.S. Telephone Cellular sells phones for $100. The unit variable cost per phone is $50 plus a selling commission of 10% (based on the unit sales price per phone). Fixed manufacturing costs total $1,030 per month, while fixed selling and administrativ..
What must the six-month forward rate be to prevent arbitrage?
If their yields to maturity next year are still 7.0%, what is the rate of return on each bond?
Based on the data provided here, how would an appraiser establish an estimate of value?- What other information would be desirable in reaching a conclusion about the probable value for the property?
The Bone Company has been factoring its accounts receivable for the past 5 years. The factor charges a fee of 2 percent and will lend up to 80 percent of the volume of receivables purchased for an additional 1.5 percent per month. $2, 000 per month t..
The expected return on the market is 10 percent, and the risk-free rate is 3 percent. What must the expected return on this stock be?
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