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Speculation in the Forward Market.
The current spot exchange rate is $1.95/£ and the three-month forward rate is $1.90/£. Based on your analysis of the exchange rate, you are pretty confident that the spot exchange rate will be $1.92/£ in three months. Assume that you would like to buy or sell £1,000,000.
a. What actions do you need to take to speculate in the forward market? What is the expected dollar profit from speculation?
b. What would be your speculative profit in dollar terms if the spot exchange rate actually turns out to be $1.86/£.
Find the market value of the bonds using semiannual analysis. Do you think the bonds will sell for the price you arrived at in part a?
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Green Company finished consultation services and accepted in exchange a promissory note with a face value of $600,000, a due date of December 31, 2017,
Will Co. is expected to pay a dividend of $2 per share at the end of year -1(D1) and the dividends are expected to grow at a constant rate of 4% forever. If the current price of the stock is $20 per share calculate the expected return or the cost of ..
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You are a financial analyst for Monument Properties and are asked by your boss to analyze two proposed capital investments with the same initial investment of 100K, Projects X and Y. Project X is somewhat boring having regular cash flow of 49K for ea..
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In working on a bid project you have determined that $318,000 of fixed assets will be required and that they will be depreciated straight-line to zero over the 6-year life of the project. In addition, the annual cash costs will be $198,200. After con..
What is the maturity risk premium for the 2-year security?
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