User Account

All Pages

If the exchange rate does not also change, what will happen

Assignment Help Finance Basics
Reference no: EM131010491

Assume that the Rome Electricity Company (REC) wishes to create a sponsored ADR program worth $300 million to trade its shares on the New York Stock Exchange. Also assume that REC is currently selling on the Borsa Italiana (the Italian Stock Exchange, in Milan) for €29 per share and that the current dollar/euro exchange rate is $1.23/€. American Bank and Trust (ABT) is handling the ADR issue for REC and has advised REC that the ideal trading price for utility company shares on the NYSE is about $71.34 per share (or per ADR).

a.) Assume that REC's stock price rises from €29 to €35 per share. If the exchange rate does not also change, what will happen to REC's ADR price?

= $________ /ADR

b.) If the euro appreciates from $1.23/€ to $1.31/€ but the price of REC's shares remains unchanged in euros, what will happen to REC's ADR price?

= $_________/ ADR

Reference no: EM131010491

Questions Cloud

Is investment good one based on these cash flow estimates : The CT Computers Corporation is considering whether to begin offering customers the option to have their old personal computers (PCs) recycled when they purchase new systems. What are the project cash flows? You can assume that the recycled PCs cost ..
What is the npv of investing in the new technology : Silver Bear Golf (SBG) is a manufacturer of top quality golf clubs with a specialty of putters. Currently, each putter they sell brings in $240 of revenue at a cost of $160. This past year, they sold 1,300 putters and they expect this number to grow ..
Architecture for real-time systems : Architecture for Real-time systems - A discussion of design issues in real-time systems using multicore architectures
Expected marginal tax rate at time of first distribution : James wants to convert $30,000 balance in his traditional IRA account into a Roth IRA. What is the account value in 35 years assuming expected growth of 5.7% and current tax rate of 25% and expected marginal tax rate at time of first distribution of ..
If the exchange rate does not also change, what will happen : Assume that REC's stock price rises from €29 to €35 per share. If the exchange rate does not also change, what will happen to REC's ADR price. If the euro appreciates from $1.23/€ to $1.31/€ but the price of REC's shares remains unchanged in euros, w..
Considering test marketing for your new product : You are considering test marketing for your new product. There is a 30 percent chance that the results of the test marketing will be positive, in which case the expected NPV of the project be $50 million; but there is also a 70 percent chance that th..
Determine whether high or low reserves are present : You are given a 50 percent probability that oil reserves (discounted revenues) are 80 million dollars and a 50 percent probability that oil reserves are 60 million dollars. It costs 50 million dollars to drill. Once a well is drilled, all drilling co..
Parties holds the risk of loss for the damage caused to car : Timmy purchased a car from his local dealership, SparklerCars. However, since the car was not available in the color that Timmy favored, the sales contract stipulated that Timmy could immediately pick up the car from a nearby warehouse it was housed ..
Use Goal Seek in order to find this rate of return : Assume “Jane” saves $10,000 per year for 10 years starting at age 25. At age 35 she no longer is able to save but leaves her accumulated savings invested until age 65 when she retires.  At what assumed rate of return are John and Jane’s wealth at age..

Reviews

Write a Review

Finance Basics Questions & Answers

  Months between occurrences of safety violations

The table below shows the time in months between occurrences of safety violations for three operators, "A," "B," and "C," working in a toll manufacturing facility.

  Calculate discounted payback using cashflows

Calculating discounted payback. An investment project has annual cash inflows of $6,500, $7,000, $7,500, and $8,000, and a discount rate of 14%.

  The following information applies to barnhart company

the following information applies to barnhart companyadditional informationnet credit sales 220000 beginning accounts

  What is cjs company cost of equity

CJ"s stock has a beta pf 0.9 the current risk free rate is 5.6 and the expected return or the market value is 13% . What is CJ's company cost of equity?

  Eastgate electronics is considering a new product line that

eastgate electronics is considering a new product line that would require an investment of 140000 in equipment and

  An outside published material via a link to their writing

Discuss the following two issues. Please note: Make sure you have read and understood the related assigned reading before attempting a response. Some do even more, and learn even more, by introducing an outside published material via a link to their ..

  Use 2 transactions in recent financial news to illustrate

use 2 transactions in recent financial news to illustrate and explain the roles of financial intermediaries and banks

  Determine risks of nondomestic bonds

To determine risks of nondomestic bonds, a multinational corporation must consider all but which one of the following risks?

  What is the instrinic value and time value

If an investor buys 1ABC Mar 50 put at 4 when the market is 70. What's the instrinic value and time value associated with this contract?

  What is the discount rate future bookstore

The retail price when the book is published will be $21. What is the discount rate Future Bookstore is offering its customers for this book?

  What is the tie ratio

The H.R. picket corp has 500,000 of debt outstanding, and it pays an annual interest rate of 10%. Its annual sales are 2 million, its average tax rate is 30% and its profit margin is 5%. what is the TIE ratio?

  Suppose that another portfolio portfolio e is well

consider the following data for a one-factor economy. all portfolios are well

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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