Reference no: EM131321462
While you were visiting London, you purchased a Jaguar for £60,000, payable in three months. You have enough cash at your bank in New York City, which pays 0.35% interest per month, compounding monthly, to pay for the car. Currently, the spot exchange rate is $1.45/£ and the three-month forward exchange rate is $1.40/£. In London, the money market interest rate is 5.0% for a three-month investment (periodic rate). There are two alternative ways of paying for your Jaguar.
(a) Keep the funds at your bank in the U.S. and buy £60,000 forward.
(b) Buy a certain pound amount spot today and invest the amount in the U.K. for three months so that the maturity value becomes equal to £60,000.
Evaluate each payment method. Which method would you prefer? Why?
1. Keep your money in the US and use a forward contract to convert into Pounds.
Cost of this strategy is $83124
2. Convert your money into pounds and invest at the british pound rate of 5% for 2 months.
Cost of this strategy is $82857
3. Keep your money in the US and use a forward contract to convert into pounds.
Cost of this strategy is $81145
4. Convert into BP today and invest at the BP rate of 5% quarterly. Cost is 80,064
Discuss the future of virtualization as a business model
: Compare and contrast the security concerns in a virtual network infrastructure and a physical network infrastructure.
|
Identify one or two main points from each selected article
: Your report should also include answers to the following: Identify one or two main points from each selected article. Explain in detail the issues presented in the articles and their impact on the recipients of Medicare
|
What is the cost of equity at the conclusion of transaction
: Spectronix Inc. operates in a world of perfect capital markets, has no debt, and has a required 6. rate of return on equity of 10%. Assume the firm issues new debt with a required return of of 5% to repurchase 30% of the outstanding stock. What is th..
|
What was the initial speed of the javelin
: The longest javelin throw at the Olympics covered a horizontal distance of 104.8 m. The athlete threw the javelin at an angle of J3CK00 above the horizontal from an initial height of 1.50 m above the ground. Ignore air resistance.
|
Use forward contract to convert into pounds
: While you were visiting London, you purchased a Jaguar for £60,000, payable in three months. You have enough cash at your bank in New York City, which pays 0.35% interest per month, compounding monthly, to pay for the car. Keep your money in the US a..
|
Changes made to the original string
: 1. The string's tension is doubled. 2. The string's mass is quadrupled (but its length is unchanged). 3. The string's length is quadrupled (but its mass is unchanged). 4. The string's mass and length are both quadrupled.
|
Discuss the software models predating cloud computing
: What are the bene fits of cloud computing over software as a service (SaaS)?
|
Why is the software necessary for the career that you chose
: Research relevant software for a career of your choice. Share the software and the system requirements for it. Why is the software necessary for the career that you chose?
|
Find the present value of the dividend stream
: Your broker offers to seel you some shares of Bahnsen & Co. common stock that paid a dividend of $2.00 yesterday. Bahnsen's dividend is expected to grow at 5% per year for the next 3 years. Given that the first dividend payment will occur 1 year from..
|