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Ferd Rumpledink at UBS now observes the data below for the USD and the CHF. He still has 10,000,000 USD or the CHF equivalent (at the current spot rate) to invest for 180 days. Can Ferd make an arbitrage profit on this situation? How much and in which currency? Should he invest CHF or USD? Show your work on a block diagram like the ones we used in class for covered interest arbitrage. Spot rate (CHF/USD) 1.1861 180-day forward rate (CHF/USD) (not annualized) 1.1760 180-day U.S. dollar interest rate (annualized) 4.900% 180-day Swiss Franc interest rate (annualized) 5.100%
Assume that the risk-free rate is 3.5% and the expected return on the market is 8%. What is the required rate of return on a stock with a beta of 1.2?
A firm will sell an asset for $75,000 in three years and the cost of producing the asset today is $36,000. If the interest rate is 12 % per year, will the firm make a profit? What is the breakeven interest rate?
Your older brother turned 35 today, and he is planning to save $30,000 per year for retirement, with the first deposit to be made one year from today. He will invest in a mutual fund that's expected to provide a return of 7.5% per year. He plans to r..
Consider the following data: fixed costs = $10 million, variable cost per unit = $400, and revenue per unit = $1,200. For this organization, which of the following statements is most correct?
Your company has been approached to bid on a contract to sell 3,900 voice recognition (VR) computer keyboards a year for four years. Due to technological improvements, beyond that time they will be outdated and no sales will be possible. Additionally..
For the best terms on a loan or credit card, you need a credit score above 700. To achieve this, start establishing credit now. Pay all of your bills on time. What is her monthly payment by formula? (Round your answer to the nearest cent.)
For both the premises lease and the printing press leases, explain how the leases will be classified for accounting purposes, and why. Show the journal entries required at the initiation of the lease. Show how the premises and printing press leases w..
Cirrus Radio is a multi-format, group radio station owner with operations in the top 100 US markets. The company is traded on the NASDAQ stock exchange. Donna Pringle has estimated the normalized FCFE for Cirrus Radio to be $5.25 per share for the ye..
Beach & Company reported net income of $40 million for last year. Depreciation expense totaled $18 million and capital expenditures came to $8 million. Free cash flow is expected to grow at a rate of 5% for the foreseeable future. What is the current..
Compute the gross profit margin ratio, the return on equity and the return on assets, rounding calculations to two decimal places and does the firm have positive or negative financial leverage? Briefly explain.
You are considering buying stock in Biqing, Inc., a West Texas company that provides PPO medical services. The dividend just paid (i.e., D0) was $1.00 and is expected to increase by 20% per year for two years. Growth will then slow to 10% per year fo..
The risk-free rate is 3.6% and the required return on the market portfolio is 11.8%. A company that has just paid $1.80 per share in annual dividends has a beta of 0.9 and long-term growth rate of 5.2%. The dollar value of this stock is
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