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On January 10, Volkswagen agrees to import auto parts worth $7 million from the United States. The parts will be delivered on March 4 and are payable immediately in dollars. VW decides to hedge its dollar position by entering into IMM futures contracts. The spot rate is $0.8947/€ and the March futures price is $0.9002/€. On March 4, the spot rate turns out to be $0.8952/€, while the March spot price is $0.8968/€. Calculate VW's net euro gain or loss on its futures position. Compare this figure with VW's gain or loss on its unhedged position.
The differential between the nominal interest rate of a long-term fixed rate debt instrument and the real rate is. Assuming nominal interest rates to be the same and the subject loan has a thirty-year maturity, under which of the following scenarios ..
An increase in fixed operating costs will result in
In the Netherlands the corporate tax rate is 25.5%. Suppose each and every year the EBIT of a firm is X million (X>0) and the constant annual interest-payments equal μ*X million, where 0
A work-at-home opportunity is available in which you will receive 2 percent of the sales for customers you refer to the company. The cost of your “franchise fee” is $790. How much would your customers have to buy to cover the cost of this fee?
A Eurodollar futures quote for the period between 5.1 and 5.35 years in the future is 97.1. The standard deviation of the change in the short-term interest rate in one year is 1.4%. - Estimate the forward interest rate in an FRA.
Banana Box Corporation has sales of $4, 463, 310; income tax of $445, 927; the selling, general and administrative expenses of $278, 222; depreciation of $398, 182; cost of goods sold of $2, 724, 730; and interest expense of $152, 910 Calculate the a..
Beta company is considering buying a widget fogger, It will cost $25000 to purchase and $5000 to install. It will be depreciated SACRS ( 20 % 40 % 15 % 15 % 10 % ) and will last four years before being sold as scrap for $3000. Beta s tax rate is 20 %..
What are the monthly payments (principal and interest) on a 15-year home mortgage for an $180,000 loan when interest rates are fixed at 8 percent?
Suppose you want to hedge a $510 million bond portfolio with a duration of 3.5 years using 10-year Treasury note futures with a duration of 5 years, a futures price of 106, and 6 months to expiration. The multiplier on Treasury note futures is $100,0..
Assume that stock market returns do not resemble a single-index structure. (a) Assume that stock market returns do not resemble a single-index structure. An investment fund analyzes 2,000 stocks in order to construct a mean-variance efficient portfol..
When they underwrite new stock for companies that are already public, the typical markup is 3 percent. What explains this difference?
[Extra Credit] The difference between an entity's Assets and Liabilities is its ____. [Extra Credit] The regional Federal Reserve banks influence the conduct of monetary policy by _____.
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