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As a manager of an Italian clothing manufacturer, you are interested in buying a new high-speed production machine. There are two different companies – both based in the US – that sell this (identical) machine. Company A sells it for $10,900, payable in three months. Company B leaves it up to you if you want to pay in $ or in €. Their price is either $10,800 or €10,000, payable in three months.
a) Suppose you buy the machine from Company B. Characterize the foreign exchange exposure that Company B has acquired through this deal.
b) If you have decided to buy from Company B, and the spot exchange rate in three months turns out to be $1.1/€, which currency would you choose for the payment?
c) Suppose that the current rate of a three-month forward is $1.095/€. Does this information help you to decide whether to buy from A or from B? If yes, what is your decision? If no, what type of (publicly available) information would help you to make a decision?
Which of the following does not need to be known in order to compute the p-value? a. knowledge of whether the test is one-tailed or two-tailed b. the value of the test statistic c. the level of significance d. All of these are needed.
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Moraine, Inc., has an issue of preferred stock outstanding that pays a $6.55 dividend every year in perpetuity. If this issue currently sells for $91 per share, what is the required return?
Ace Hardware paid an annual dividend of $1.25 per share last month. Today, the company announced that future dividends will be increasing by 2.5% annually. If you require a 11% annual rate of return, how much are you willing to pay to purchase one sh..
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Under the gold exchange standard or the Bretton Woods system, the primary source of increased global liquidity or reserves was
In real-life companies do not change their capital structure as often as you might think after reading all the capital structure theories. Explain one reason why a firm might not move towards its optimal capital structure even if it knows what that o..
Suppose a firm finds itself as the target of a possible hostile takeover. An outside investor has acquired a major stake of shares and is threatening to exert influence on the broad. If you were to look at a firm's distribution of cash to investors o..
you have taken a loan of 320000 from a bank for the 5 years at the prevailing rate of 3.75% , Calculate the annual instalment you are liable to pay to the bank and create a loan amortization table for a quick access to the principle and interest paid..
in november 2011 the us immigration and customs enforcement agency seized 150 web sites accused of selling counterfeit
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