Calculate currency exchange rate, Microeconomics

Question-1 :

This question is designed to show your understanding of stock market terminology and also the impact of currency exchange rate. You are a Swiss Franc (CHF) based investor.

Part 1.

You invest in a stock denominated in EUR in an amount of EUR 20,000 (twenty thousand euros). You hold the stock for one year.At the end this time you receive dividend; the dividend yield based on the purchase price is 4%.In addition the price earnings ratio increases from 12 to 15, while the EPS improve by 5%.You decide to take profits after one year. What price do you receive in euros ? (Ignore transaction costs like brokerage fees.)

What annual return have you received in EUR?

Part 2.

When you bought the stock there were CHF 1.50 to EUR 1.

When you sell, however, the EUR has fallen to CHF 1.30

Now what is your return in CHF ?

Part 3.

You were aware if the risk of the EUR falling against CHF.

When you bought the stock you also bought a put option on EUR

With a strike price of CHF 1.4 to the EUR.

The option cost you CHF 1,000.

What is now your return in CHF ?

Posted Date: 2/22/2013 7:15:47 AM | Location : United States







Related Discussions:- Calculate currency exchange rate, Assignment Help, Ask Question on Calculate currency exchange rate, Get Answer, Expert's Help, Calculate currency exchange rate Discussions

Write discussion on Calculate currency exchange rate
Your posts are moderated
Related Questions

I have an assignment need to be done

what is price elasticity of demand ? write briefly with explaining it''s type.

criticism of cournot model

Sources of monopoly power: The main sources of monopoly power include the following: (i) Control of the entire supply of a basic input . It only one firm has access to or co

Question: There is widespread belief that the process of globalization has largely bypassed Sub-Saharan Africa, leaving the sub-continent in a state of marginalization in the w

Q. What is Climate Change? Climate Change:As a consequence of cumulative emission of carbon dioxide (a by-product of fossil fuel use) and other chemicals over past two centurie

what is oxidizing agent

What is International Trade Economics, Explain study area of international trade economics.

Exercise on Demand, supply and market equilibrium Given the following determinants of demand and supply, briefly explain, using appropriate diagram, the nature of relationships be