Calculate the rate of return, Financial Management

Assignment Help:

A Life Insurance Company invested $10,000,000 in pure-discount U.S. bonds in May 1995 while the exchange rate was 80 yen per dollar. The insurance company liquidated the investment one year later for $10,650,000. The exchange rate turned out to be 110 yen per dollar at the time of liquidation. Calculate the rate of return did Life realize on this investment in yen terms?

Solution: Life Insurance Company spent ¥800,000,000 to buy $10,000,000 which was invested in U.S. bonds. The liquidation value of this investment is ¥1,171,500,000 that is acquired from multiplying $10,650,000 by ¥110/$. The rate of return in terms of yen is:

   [(¥1,171,500,000 - ¥800,000,000)/ ¥800,000,000]x100 = 46.44%.


Related Discussions:- Calculate the rate of return

Merits of wealth maximization approach, Q. Merits of Wealth Maximization Ap...

Q. Merits of Wealth Maximization Approach? Merits of Wealth Maximization Approach:- The wealth maximization schema is superior to the profit maximization approach because:

Just-in-time inventory management processes, Q. Just-in-time inventory mana...

Q. Just-in-time inventory management processes? Just-in-time (JIT) inventory management processes seek to eliminate any waste that arises in the manufacturing process as a resu

How to measure the firm risk of a capital budgeting project, Explain how to...

Explain how to measure the firm risk of a capital budgeting project. The firm risk of a capital budgeting project measures the force of adding a new project to the existing pro

Explain sunk cost and opportunity cost in npv, In the NPV analysis, sunk co...

In the NPV analysis, sunk cost is not relevant whereas opportunity cost is for project evaluation. Requirements: Explain and justify the above statement about sunk cost and

Case, Which type of financing is appropriate to each firm?

Which type of financing is appropriate to each firm?

Define the meaning of procurement, Define the meaning of procurement T...

Define the meaning of procurement Term procurement was used in a broad sense so as to include the whole gamut of raising funds externally.

Role of financial intermediaries in the financial system, Role of Financial...

Role of Financial Intermediaries in the financial system: Having designed the instrument, the issuer should then ensure that these financial assets reach the ultimate investor

Strategic investment and decision-making, Carr, C., Kolehmainen, K. and Mit...

Carr, C., Kolehmainen, K. and Mitchell, F. (2010) ‘Strategic investment decision-making practices: a contextual approach', Management Accounting Research, 21, 167-84. (a) What a

Cash vs. accrual accounting, Cash vs. Accrual Accounting: While it is b...

Cash vs. Accrual Accounting: While it is beyond the scope of this module to assess accounting systems against all types of accounting styles, it is important that managers unde

Compute the market price of walters model, The earnings per share of a comp...

The earnings per share of a company is Rs 8 and the rate of capitalization applicable is 10%. The company has before it, an option of adopting i) 50,ii) 75 iii) 100 per cent div

Write Your Message!

Captcha
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