The exchange rate was 95 yen per dollar at the time mr

Assignment Help Finance Basics
Reference no: EM13568438

At the start of 1996, the annual interest rate was 6 percent in the United States and 2.8 percent in Japan. The exchange rate was 95 yen per dollar at the time. Mr. Jorus, who is the manager of a Bermudabased hedge fund, thought that the substantial interest advantage associated with investing in the United States relative to investing in Japan was not likely to be offset by the decline of the dollar against the yen.

He thus concluded that it might be a good idea to borrow in Japan and invest in the United States. At the start of 1996, in fact, he borrowed ¥1,000 million for one year and invested in the United States. At the end of 1996, the exchange rate became 105 yen per dollar. How much profit did Mr. Jorus make in dollar terms?

Reference no: EM13568438


Write a Review


Finance Basics Questions & Answers

  What is stock valuation under equilibrium situation

What is Stock valuation under equilibrium situation and Assuming the stock market is efficient and the stocks are in equilibrium

  Find the value of the decedents gross estate

Assume decedent dies in 2006 and has interests in the following assets: $400,000 residence owned jointly with right of survivorship with her husband;

  What will be the system money supply

Assume a financial system has a monetary base of $25 million. The required reserves ratio is 10%, and there are no leakages in the system.

  What are the basic types of financial ratios

What are the basic types of financial ratios and how can they be used during the life cycle of a business? For small business firms, who are the likely users of these ratios and what are their concerns or interests?

  What is the value of its forgone revenue

Assuming the spot rate equals $1.298 three months from today, would entering into the forward contract have been a good idea in this case? Explain your answer.

  Comment on your findings b what would have been the amount

the robinson company had a cost of goods sold of 1000000 in 2011 and 1200000 in 2012. a calculate the inventory

  Compute the bank discount rate

Compute the bank discount rate (DR) attached to a 60-day, $1 million CD selling in the secondary market for $990,000.

  A share repurchase will do which of the following

As compared to a cash dividend, a share repurchase will do which of the following?

  What is the value of lsi equity using the flow

LSI recently issued $195,000 of perpetual 9% debt and used the cash to do a stock repurchase. Earnings for LSI are anticipated to be $83,000 annually before interest and taxes.

  Find the break-even point in units

You are employed as a financial analyst for a single-product manufacturing company. Your supervisor has made the following cost structure data available to you, all of which pertains to an output level of 1,700,000 units.

  What is the inventory forecast for next year

The company expects sales of 300 million during the currrent year, and it expects sales to grow by 32% next year. What is the inventory forecast for next year? All dollars are in millions.

  Benefits of international capital markets

What are some benefits of international capital markets? does borrowing the portfolio of currencies offer any possible advantages over borrowing of single foreign currency?

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