What is the no-arbitrage dollar price

Assignment Help Financial Management
Reference no: EM131510811

On the Tokyo Stock Exchange, Honda Motor company stock closed at ¥ 3, 945 per share on Thursday, April 11, 2013. Honda trades as an ADR on the NYSE. One underlying Honda share equals on ADR. On April 11, 2013, the ¥/$ exchange rate was ¥99.8270/$1.00.

a) At this exchange rate, what is the no-arbitrage U.S dollar price of one ADR?

By comparison, Honda ADRs traded at $39.97. Do you think an arbitrage opportunity exists?

Reference no: EM131510811

Questions Cloud

Bond with lower coupon rate has higher volatility in market : How come a bond with lower coupon rate has higher volatility in the market?
Use to compute the value of his future inheritance : Which time value of money concept would you use to compute the value of his future inheritance?
What is ccorps current stock price : C Corps last dividend was $2.00 per share. CCorps required rate of return is 11%. What is CCorps current stock price?
Find the bonds value if the yield for similar bonds decrease : Verbrugge Company has a level-coupon bond outstanding that pays coupon interest of $120 per year. Find the bonds value if the yield for similar bonds decrease
What is the no-arbitrage dollar price : At this exchange rate, what is the no-arbitrage U.S dollar price of one ADR?
The federal reserve raised the federal funds rate : The dollar is weaker and the 10-year Interest rates are now lower than last week when the Federal Reserve raised the federal funds rate.
Make short-term loans if you expect interest rates : As a banker, you would make short-term loans if you expect interest rates to go down in the future.
Issued perpetual preferred stock a few years ago : Courtesy Bancorp issued perpetual preferred stock a few years ago.
What will be the yield on your investment : What will be the yield on your investment if you invest in euros?

Reviews

Write a Review

Financial Management Questions & Answers

  Compute the expected net cash flows for year 7

Compute the expected net cash flows for year 7. Include in your year 7 calculations the proceeds from the salvage value of the masher and recovery of net working capital at the beginning of year 8.

  How many days would the cash conversion cycle be changed

Cyree Inc. has annual sales of $80,000,000; its average inventory is $20,000,000; and its average accounts receivable is $16,000,000. The firm buys all raw materials on terms of next 35 days, and it pays on time. The firm is searching for ways to sho..

  Preferred stock that has stated liquidating value

J&J Foods wants to issue some 6.5 percent preferred stock that has a stated liquidating value of $100 a share (the annual dividend is 6.5% of the stated liquidating value). The company has determined that stocks with similar characteristics provide a..

  Online global financial markets course

Celestila Moonn, an Global Affairs major student registered for the online Global Financial Markets course. After completing the reading of “An overview of the Global Financial Markets” Moonn stated the following regarding the trends in the growth of..

  Inheritance in a portfolio of stocks and bonds yielded

You have inherited $25,000. You plan to invest the inheritance in a portfolio of stocks and bonds yielded 9%. Your goal is to have this investment fund your retirement, which you estimate will require $3,200,000. Using the Rule of 72, how long will i..

  Make the system profitable for cow chips

How many customers each day, on average, are needed to make the system profitable for Cow Chips?

  What was the amount of the costs incurred by the firm

ACE, Inc. incurred depreciation expenses of $21,900 last year. The sales were $811,400 and the addition to retained earnings was $14,680. The firm paid interest of $9,700 and dividends of $10,100. The tax rate was 40 percent. What was the amount of t..

  Is good general rule to be applied to these situations

Tara has a mortgage at 6.00% with an outstanding balance of $200,000 and 24 years remaining. Is there a good general rule to be applied to these situations?

  What was the previous day asked price in dollars

Locate the Treasury issue in Figure 6.3 maturing in November 2044. Assume a par value of $1,000. What is its coupon rate? What is its bid price in dollars? What was the previous day’s asked price in dollars?

  Planning your retirement and you come to the conclusion

You are planning your retirement and you come to the conclusion that you need to have saved $1,250,000 in 30 years. You can invest into an retirement account that guarantees you a 5% annual return. How much do you have to put into your account at the..

  Company weighted average cost of capital

Given the following information, Big BrothersInc capital structure computes the company's weighted average cost of capital (WACC).

  Compute the projected after tax operating cash flow

Current liabilities are expected to increase to $17 million. Compute the projected after-tax operating cash flow for Steber during the coming year.

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