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Forward Premium (discount and Interest Rates DifferentialYen Pound S/peseta1-Month Forward 5.4(5.7) -1.9(-1.9) 1.2(1.2)3-Months Froward 4.8(5.3) -1.9(-1.8) 1.2(1.2)1-year Forward 4.5(5) -1.8(-1.6) 1.6(1.5)The first number is U.S. interest rate -Foreign interest rate. For example for 1-year forward Yen of 4.5%, it is the U.S 1-year rate less Japanese 1-year rate. The number in the parenthesis is 5 for 1-year forward yen. This number is the forward premium in yen as it is positive.Question: Suppose you can borrow $10 million or its yen equivalent, what actions would you take in 1-year yen forward market in order to make arbitrage profit? How much arbitrage profit you are likely to make?Forward Premium (discount and Interest Rates DifferentialYen Pound S/peseta1-Month Forward 5.4(5.7) -1.9(-1.9) 1.2(1.2)3-Months Froward 4.8(5.3) -1.9(-1.8) 1.2(1.2)1-year Forward 4.5(5) -1.8(-1.6) 1.6(1.5)The first number is U.S. interest rate -Foreign interest rate. For example for 1-year forward Yen of 4.5%, it is the U.S 1-year rate less Japanese 1-year rate. The number in the parenthesis is 5 for 1-year forward yen. This number is the forward premium in yen as it is positive.Question: Suppose you can borrow $10 million or its yen equivalent, what actions would you take in 1-year yen forward market in order to make arbitrage profit? How much arbitrage profit you are likely to make?
An investment offers to pay you $10,000 a year for five years. If it costs $33,520, what will be your rate of return on the investment?
Under the gold standard, if Britain became more productive relative to the United States, what would happen to the money supply in the two countries?
Suppose you purchase a 3-year, 5-percent coupon bond at par and held it for two years. During that time, the interest rate falls to 4%. Calculate your annual holding period return.
what is the default risk premium on the corporate bonds? Round your answer to two decimal places.
Over the last five years, the dividends of the Gamma Corporation have grown from $0.70 per share to the current level of $1.30 each share. This growth rate is expected to continue for the foreseeable future.
A bonds have the same risk, maturity, nominal interest rate,and par value, but these bonds pay interest annually. Neither bond is callable. At what price should the annual payment bond sell?
Another company, Bohenick Classis Automobiles restores and rebuilds old classic cars. This company purchase and restored a classic 1957 Thunderbird convertible 7 years ago for $9,300.00. Today at auction, the car sold for $102,300.00.
What level of sales could Walter Industries have obtained if it had been operating at full capacity?
A business can be liquidated for $700,000, or it can be reorganized. Reorganization would need an investment of $400,000.
Suppose that Wal-Mart changes its capital structure so that its market value weight of debt to capital increases to 20 percent, and its after-tax interest rate on debt at this new leverage level is 4 percent.
What does investment grade mean in the context of corporate bond issues? How do these bonds differ from junk bonds, and why have the latter proven so popular with investors?
Seattle health plans currently uses zero debt financing. It's operating income(ebit) is $1 million and it pays taxes at a 40 percent rate. it has $5 million in assests and because is it all equity financed, $5 million in equity.
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