Relationship between interest rate parity theorem

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1) There has been a lot of discussion about adding international securities to a portfolio. Please discuss the positive and negative aspects of including international securities in your portfolio?

2) In attempting to model exchange rates, there is a lot of discussion about what factors should be included.  Please discuss how the theory of purchasing power theorem (PPT) comes into play when modeling exchange rates.

3) Assuming a face value of $1,000 determine the yield on a 10 year zero coupon bond if the price is $695.  Why were U.S. firms so interested in issuing zero coupon bonds in Japan?

4) What is the relationship between interest rate parity theorem (IRPT) and covered interest rate arbitrage?

5) What is the advantage of the adjusted net present value (ANPV) over the conventional net present value model?  What is meant by the separation theorem and how does the ANPV violate this theorem?

6) What is meant by home bias when it comes to investing in international securities?

7) What happens to the cost of capital of capital if you start to issue securities internationally?

8) Please write a paragraph each about JP Morgan, Bank of America, NYSE - Euronext, Chubb, York Capital Management, and the Bank of England. Please try to stress their European operations.

Reference no: EM13199202

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