Calculate the amount of profit

Assignment Help Finance Basics
Reference no: EM13747117

A leader in your firm has been studying the foreign exchange market for a number of years and believes that she can predict several of the foreign currency exchange rates relative to the U.S. dollar. The firm has $500,000 to invest in the spot, forward, or options markets.

Assume that the spot rate is $1.3435 to the euro and that the forward rate for 12 months is $1.3705 to the euro. However, this leader is sure that the exchange rate in 12 months will be $1.41 to the euro.

In a Word document, include the following:

• Explain how this leader in your firm can speculate on the belief that the euro will be $1.41 in 12 months.

• Calculate the amount of profit (ignoring exchange rate fees) that can be earned and the percentage return achieved.

• Recommend whether this speculative investment or another investment with similar or higher returns at lower risk should be selected.

Reference no: EM13747117

Questions Cloud

What concepts are not used to build effective supply chains : Which of the following concepts/tools are not used to build effective supply chains, The largest cost component of total US supply chain costs is
Research from this weeks learning activity : What is the purpose of a professional association such as the National Association of College and University Business Officers? What type of information is provided about college and university accounting?
Load balanced environment, a client is reporting problems : Please check off all applications or tools you would use in your investigation based on your reply? Cluster Administrator ? PerfMon? Computer Management ? SQL Execution Plans? Debug Diagnostics ? SQL Server Configuration Manager? Directory Properties
Breaking costs into their fixed and variable components : All costs can be categorized as fixed and variable, as illustrated by the Cost Estimating Equation, TC = FC + V (X), where V is the linear variable cost per unit of activity, X.
Calculate the amount of profit : A leader in your firm has been studying the foreign exchange market for a number of years and believes that she can predict several of the foreign currency exchange rates relative to the U.S. dollar. Calculate the amount of profit (ignoring exchang..
Maximum dpad tax savings for this c corporation : Katrina owns 100% of Money Corporation's stock.  Katrina's basis in the stock is $8,000.  Money Corporation has E&P of $40,000.  If Money Corporation redeems 60% of Katrina's stock for $50,000, Katrina must report dividend income of. Dodge Inc., has ..
Write an essay on history of economics : Write an essay on History of Economics about 11-12 pages essay.
Identify and then discuss unique safety issues : Identify and then discuss unique safety (not security) issues you see related to each of the five modes of transportation
Consider the orthogonality relation R on the set b : Consider the orthogonality relation R on the set B^2 = {(0,0), (1,0), (0,1), (1,1)}, given by (x1, x2) R (y1, y2) ⇔ (x1·y1 + x2·y2) mod 2 = 0, for all (x1, x2), (y1, y2) ∈ B^2.

Reviews

Write a Review

Finance Basics Questions & Answers

  Capm and valuation

Suppose you are a consultant to a company evaluating an expansion business. The cash-flow forecasts in millions of dollars for the project are:

  In an internet retailer you will find a wide range of job

in an internet retailer you will find a wide range of job functions. leaders frequently need to adjust their own

  What is the coupon rate

Kaiser Industries has bonds on the market making annual payments, with 14 years to maturity, and selling for $1,382.01. At this price, the bonds yield 7.5 percent. What is the coupon rate?

  Calculating profitability index what is the profitability

calculating profitability index what is the profitability index for the following set of cash flows if the relevant

  Compare and contrast the two methods that may be used

Compare and contrast the two methods that may be used to present operating cash flows in the statement of cash flows.  Which method is preferred by firms and by outsiders?

  Prepare journal entries to record the following interfund

interfund transactions are reciprocal or nonreciprocal. prepare journal entries to record the following interfund

  Calculate the cost of each capital component

Calculate the cost of each capital component, after tax cost of debt, cost of preferred and cost of equity with the DCF Method and the CAPM Method for Harley Davidson.  Provide an overview/summary of financial condition.

  A share of common stock just paid a dividend of 100 if the

a share of common stock just paid a dividend of 1.00. if the expected long-run growth rate for this stock is 5.4 and if

  Explain why you would change your nominal required rate

Explain why you would change your nominal required rate of return if you expected the rate of inflation to go from 0 (no inflation) to 4 percent. Give example of what would happen if you did not change your required rate of return under these cond..

  What is the relationship between your companies and their

part two final project week 5 relationships and financial performance company investment analysis final report and

  By how much did the dollar depreciate against the yen

During 1995, the yen went from $0.0095 to $0.0125. By how much did the dollar depreciate against the yen?

  In 2005 ibm had a return on equity of 267 percent whereas

in 2005 ibm had a return on equity of 26.7 percent whereas hewlett-packards return was only 6.4 percent. use the

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd