Business, 26.05.2020 22:00 yasarhan2

You believe that IRP presently exists. The nominal annual interest rate in Mexico is 14%. The nominal annual interest rate in the U. S. is 3%. You expect that annual inflation will be about 4% in Mexico and 5% in the U. S. The spot rate of the Mexican peso is $.10. Put options on pesos are available with a one-year expiration date, an exercise price of $.108, and a premium of $0.01 per unit. You will receive 12 million pesos in one year. a). Determine the amount of dollars that you will receive if you use a forward hedge. b). Determine the expected amount of dollars that you will receive if you do not hedge and believe in purchasing power parity (PPP). c). Determine the amount of dollars that you will expect to receive if you use a currency put option hedge. Account for the premium you would pay on the put option.

Answers: 3

Show answers

Another question on Business

Business, 21.06.2019 20:20

If the demand for a pair of shoes is given by 2p + 5q = 200 and the supply function for it is p − 2q = 10, compare the quantity demanded and the quantity supplied when the price is $90. quantity demanded pairs of shoes quantity supplied pairs of shoes will there be a surplus or shortfall at this price? there will be a surplus. there will be a shortfall.

Answers: 3

Answer

Business, 22.06.2019 01:30

If a firm plans to issue new stock, flotation costs (investment bankers' fees) should not be ignored. there are two approaches to use to account for flotation costs. the first approach is to add the sum of flotation costs for the debt, preferred, and common stock and add them to the initial investment cost. because the investment cost is increased, the project's expected return is reduced so it may not meet the firm's hurdle rate for acceptance of the project. the second approach involves adjusting the cost of common equity as follows: . the difference between the flotation-adjusted cost of equity and the cost of equity calculated without the flotation adjustment represents the flotation cost adjustment. quantitative problem: barton industries expects next year's annual dividend, d1, to be $1.90 and it expects dividends to grow at a constant rate g = 4.3%. the firm's current common stock price, p0, is $22.00. if it needs to issue new common stock, the firm will encounter a 6% flotation cost, f. assume that the cost of equity calculated without the flotation adjustment is 12% and the cost of old common equity is 11.5%. what is the flotation cost adjustment that must be added to its cost of retaine

Answers: 1

Answer

Business, 22.06.2019 19:00

It is estimated that over 100,000 students will apply to the top 30 m.b.a. programs in the united states this year. a. using the concept of net present value and opportunity cost, when is it rational for an individual to pursue an m.b.a. degree. b. what would you expect to happen to the number of applicants if the starting salaries of managers with m.b.a. degrees remained constant but salaries of managers without such degrees decreased by 20 percent

Answers: 3

Answer

Business, 22.06.2019 19:30

Adisadvantage of corporations is that shareholders have to pay on profits.

Answers: 1

Answer

You know the right answer?

You believe that IRP presently exists. The nominal annual interest rate in Mexico is 14%. The nomina...

Questions