Calculate currency exchange rate, Microeconomics

Assignment Help:

Question-1 :

This question is designed to show your understanding of stock market terminology and also the impact of currency exchange rate. You are a Swiss Franc (CHF) based investor.

Part 1.

You invest in a stock denominated in EUR in an amount of EUR 20,000 (twenty thousand euros). You hold the stock for one year.At the end this time you receive dividend; the dividend yield based on the purchase price is 4%.In addition the price earnings ratio increases from 12 to 15, while the EPS improve by 5%.You decide to take profits after one year. What price do you receive in euros ? (Ignore transaction costs like brokerage fees.)

What annual return have you received in EUR?

Part 2.

When you bought the stock there were CHF 1.50 to EUR 1.

When you sell, however, the EUR has fallen to CHF 1.30

Now what is your return in CHF ?

Part 3.

You were aware if the risk of the EUR falling against CHF.

When you bought the stock you also bought a put option on EUR

With a strike price of CHF 1.4 to the EUR.

The option cost you CHF 1,000.

What is now your return in CHF ?


Related Discussions:- Calculate currency exchange rate

Determinants of social demand for education - externalities, Determinants o...

Determinants of Social Demand for Education - Externalities The state has several objectives of which welfare and development of the people are most important. Promotion of cu

Describe what is meant by cross elasticity of demand, Question: (a) Wit...

Question: (a) With the help of diagrams, explain how the price and quantity demanded or supplied of fuel will change under the different scenarios: (i) Consumers expect a fu

Oxidation, what is oxidizing agent

what is oxidizing agent

Assignment, Illustrate and discuss the impliction of various market structu...

Illustrate and discuss the impliction of various market structures(competitive and non-competitive)

Consumer Behavior, Ask questioThe difference between the present value of c...

Ask questioThe difference between the present value of cash inflows and the present value of cash outflows over a period of time is termed as Net Present Value. This is used for th

Three factors by america palce at world economy leading edge, 3 factors by ...

3 factors by america palce at world economy leading edge 3 factors have taken pride of place in explanations of America's place at the world economy's leading edge in its level

Durability of the commodity, Durability of the Commodity: With some comm...

Durability of the Commodity: With some commodities, we require one at a time and they are used for a very long time before they get spoilt. Examples of such goods are cars, tele

Cost sharing in higher education - student loans, Cost Sharing in Higher Ed...

Cost Sharing in Higher Education - Student Loans The method is popular as it directly targets only those who are the recipients of the benefits of higher education.The method

#theory of consumer., Ask question #what is an indifference curveMinimum 10...

Ask question #what is an indifference curveMinimum 100 words accepted#

Labour supply, Discuss how the opportunity cost principle influence a suppl...

Discuss how the opportunity cost principle influence a supplier''s decision to supply labour

Write Your Message!

Captcha
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