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Suppose the annual interest rate is 2.5% in U.S. and 1.5% in Japan., and that the spot exchange rate is S(¥/$) = 102 and the forward exchange rate with 12-month maturity is F12(¥/$) = 102.35 Assume you are a U.S. trader and can borrow up to $1,000,000 or ¥102,000,000. Answer the following questions.
(a) Is there an arbitrage opportunity according to the Interest Rate Parity based on the above information?
(b) Show the strategy to capture the arbitrage profit by setting up the transactions required at t=0 (i.e., today) and cash flows at t=0 and t=1 (i.e., today and 1-year from today) in a transaction table format. (Your arbitrage profit should be in U.S. dollar.)
The Steiben Company has a ROE of 8.5% and a payout ratio of 35%. Determine the company's sustainable growth rate.
a firm buys on terms of 315 net 45. it does not take the discount and it generally pays after 60 days. what is the
What is the WACC for the company that you selected to study during the class? Make sure that the analysis carefully explains the cost of each of the components of the capital structure.
How many of the old shares must be given up for one new share to achieve the $25 price, assuming this transaction has no effect on total market value?
Since East Coast Yachts is producing at full capacity
What impact did the tank have on the effectiveness of ground forces?
Sutton Trucking made 2 equal payments, on June 25 and July 15, on an invoice dated June 15 with terms 3/10, 1/30, n/60. The payments reduced the balance owed on the invoice to 1043.33. What was the amount of each payment ?
Based on historical data, you determine that your summer classes for the next seven years will generate an average annual revenue of $93,850. If you discount these cash flows at an annual rate of 8.30%, what is the present value of the expected ca..
axle supply co. expects sales next year to be 300000. inventory and accounts receivable will increase by 60000 to
The operating cash flow is $58,000 in this case. Ignore the effect of taxes. What will be the new degree of operating leverage for output levels of 16,400 units and 14,400 units? Please show steps.
Using Costco wholesale company, incorporate the effect of the Employee Stock Option consider into the common equity valuation. Be sure to plan both the forecasted ESO grants and outstanding ESOs.
complete the following exercise. submit journal entries in an excel file and written segments in an ms word document.
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