More liquidity risk than non-financial entities

Assignment Help Financial Management

Reference no: EM132017251

1. Do financial institutions have more liquidity risk than non-financial entities? Give reasons for your answer and an example that supports your opinion.

2. Google has an AR of 6,250,000 British pounds in 90 days. The current 90 day forward rate is 1.45 $/pound. Google decides to hedge the AR with a put option that has a strike price of 1.40 $/pound and a premium of .05 $/pound. Including hedging costs, what dollar value will Google realize using this hedging strategy if the exchange rate ends up at 1.20 $/pound? (CALCULATION REQUIRED)

A. $ 7,187,500.

B. $ 7,500,000.

C. $ 8,437,500.

D. $ 8,750,000.

Reference no: EM132017251

Questions Cloud

Annual total rate of return on holding the bond : what would have been your annual total rate of return on holding the bond for that year?

True about net listing in tennessee : Which of the following is true about a net listing in Tennessee?

What is the equivalent annual cost of buying and maintaining : What is the equivalent annual cost of buying and maintaining the truck if the discount rate is 10%?

Marginal tax rate and average tax rate for gordon geist : Calculate the 2017 taxable income, federal income tax, marginal tax rate and average tax rate for Gordon Geist,

More liquidity risk than non-financial entities : Do financial institutions have more liquidity risk than non-financial entities?

Equivalent annual savings derived from the furnace : What is the net present value of the investment in the furnace? What is the equivalent annual savings derived from the furnace?

Potential loss does not exceed the desired level : What is the minimum number of units the firm should pre-sell to ensure it’s potential loss does not exceed the desired level?

Maximum price that you should be willing to pay for bond : If you require a 8.91% rate of return on this investment (YTM), what is the maximum price that you should be willing to pay for this bond?

Federal income tax and marginal tax rate : Calculate the 2017 taxable income, federal income tax, marginal tax rate and average tax rate for Bea and Barney Mayberry,

User Account

All Pages