Reference no: EM131163402
Homework 1
Foreign Exchange Risk and Hedging
1. Assume that GE wants to raise the equivalent of $100 million by selling 6-month (or 3-month) Euro-commercial paper in Switzerland. Collect the U.S. $- Swiss franc exchange rate from a recent WSJ and compute the amount of commercial paper to sell in Swiss francs (SF) to bring home $100 million.
2. Collect the yield/rate on the 6-month (or 3-month) Euro-commercial paper. Keeping in mind that commercial papers do not offer any coupon interest and are sold at a discount, will the amount of commercial paper (in SF) in #1 be enough to raise $100 million? If not, compute how much commercial paper to sell to raise needed funds.
3. After six (or three) months, GE will have to pay the face value on the commercial papers. It does not want to take the risk due to exchange rate fluctuations. How can it hedge this risk?
4. Collect the 6-month (or 3-month) forward rate between $-SF. How many SF would GE have to buy to cover its payment for the commercial paper in Switzerland?
Homework 2
From a recent Wall Street Journal, pick up a quotation of each of the following securities and answer the questions that follow. Report each quotation in full with the date of the Journal at the top of every question. Everyone is expected to work individually with different quotations. Copying or multiple submissions will be severely penalized.
1. Commodity futures (choose any commodity)
(a) Name the primary commodity or asset for the contract
(b) Name the exchange (in full) on which the contract is traded
(c) What is the size of the contract?
(d) For any given delivery date, state the settlement price of the contract.
(e) Assuming 10% initial margin, how much money do you need to buy 10 contracts?
(f) What does the "open interest" number mean?
2. Interest rate Futures (Choose bonds or notes)
(a) Name the primary commodity or asset for the contract
(b) Name the exchange (in full) on which the contract is traded
(c) What is the size of the contract?
(d) For any given delivery date, compute the settlement price of the contract.
(e) Assuming 15% initial margin, how much money do you need to buy 10 contracts?
Tasked with regulating single monopoly firm
: Suppose you have been tasked with regulating a single monopoly firm that sells 50-pound bags of concrete. The firm has fixed costs of $10 million per year and a variable cost of $4 per bag no matter how many bags are produced. You find out that if yo..
|
Describe various forms of alternative dispute resolution
: Differentiate the federal court structure with your state's court structure. - NEW JERSEY , Discuss the concept of judicial review. Explain how laws or regulations affect your present job or industry.
|
Give your views on given statement
: Young people with little wealth should not invest money in risky assets such as the stock market, because they can't afford to lose what little money they have." - Do you agree or disagree with this statement? Why?
|
Analyze how might limit your liability exposure as an owner
: Describe a business that you may own some day or that you currently own. (Even if you never plan to own a business, pretend as if you will do so for the purposes of this assignment.) Examine the best business organizational form for the business t..
|
Compute the settlement price of the contract
: What is the size of the contract? For any given delivery date, compute the settlement price of the contract. Assuming 15% initial margin, how much money do you need to buy 10 contracts?
|
List the internal and external stakeholders for a project
: List the internal and external stakeholders for a project which would construct a new grocery store on the outskirts of a residential area
|
What are the sales for the most recent three years
: What are the Sales for the most recent three years? - What are the Net Incomes for the most recent three years?
|
Why is it important to track inventory
: What activities should you perform to correctly account for your inventory at year-end? Why is it important to track inventory? What does this information tell you about your business
|
What interest groups would be involved
: Consider the possible stakeholders for your research project. Who are they? What social, political, or personal factors might influence the direction of your research? What interest groups would be involved? What patterns might influence the directio..
|