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1. USNet, Inc., an American networking equipment firm, sells CAD12.5 million worth of networking gear to a Canadian telecom company. The term of the transaction calls for a payment of CAD 12.5 million to be paid immediately. Canadian interest rate is 5% per year, and the US interest rate is 2%. How much is USNet’s transaction exposure?
A. CAD 12.75 million
B. CAD 13.125 million
C. CAD 12.5 million
D. CAD 0
2. A U.S. firm sells merchandise today to a British company for GBP100,000. The current exchange rate is USD2.03/GBP, the account is payable in three months, and the firm chooses to avoid any hedging techniques designed to reduce or eliminate the risk of changes in the exchange rate. If the exchange rate changes to USD2.05/GBP the U.S. firm will realize a ________ of ________.
A. loss; USD 2000
B. gain; GBP 2000
C. loss; GBP 2000
D. gain; USD 2000
A diagonal spread is created by buying a call with strike price K2 and exercise date T2 and selling a call with strike price K1 and exercise date T1, where T2 > T1. Draw a diagram showing the profit when (a) K2 > K1 and (b) K2 1.
The Company is planning to finance an expansion with convertible preferred stock. Each share will pay a dividend of $1.50 per share.
Is this a reasonable approach to a successful organization?
ABC Co. and XYZ Co. are identical firms in all respects except for their capital structure. Calculate his total cash flow and rate of return.
Construct a list of steps for making a cash withdrawal from an automated teller machine (ATM). Assume that the process begins at the ATM with your bank card in hand. Then identify the potential failure points (ie., where problems might arise in the p..
Six-month T-bills have a nominal rate of 4%, while default-free Japanese bonds that mature in 6 months have a nominal rate of 2%. In the spot exchange market, 1 yen equals $0.0059. If interest rate parity holds, what is the 6-month forward exchange r..
Humana Inc. is a for-profit American health insurance company based in Louisville, Kentucky. The bonds with 10 years to maturity?
The stock of Nogro Corporation is currently selling for $30 per share. Earnings per share in the coming year are expected to be $6. The company has a policy of paying out 50% of its earnings each year in dividends. By how much does its value exceed w..
An asset allocation mutual fund only considers putting its assets in stocks and money market instrument.
A Ford Motor Co. coupon bond has a coupon rate of3.1?%,a face value of $1,000?,and pays annual coupons. The bond will mature in 4 years. The? bond's yield-to-maturity is5.9?%. Find the coupon amounts and draw the cash flow timeline.
what is the market-to-book ratio for Chisel Corporation?
What can be done to get a competitive advantage?
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