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

Present value .., what is the value in 10 years of 1 million dollars if int...

what is the value in 10 years of 1 million dollars if interes rates are 4%?

Market income and socialism, Q. Market Income and Socialism? Market Inc...

Q. Market Income and Socialism? Market Income: A household's total pre-tax income obtained from its activities in formal economy, including salaries andwages, investment income

The concept of consumer surplus, consumer surplus and elasticity of demand ...

consumer surplus and elasticity of demand assumption of consumer surplus criticisms of consumer surplus consumer surplus in terms of indifference curves importance of the concept o

Global business etiquette, Your company has a product that it is interested...

Your company has a product that it is interested in marketing in a foreign country. Using one of the following Websites, click on a country of your choice to learn about Etiquette,

What is my expected benefit?, I am risk averse, and trying to maximize my e...

I am risk averse, and trying to maximize my expected value of c0, 5, where c is my fortune. I have 50.000 in cash, and also art with a value of 200.000 which I keep in my basement.

Public good , Graphically illustrate how society decides on the number of p...

Graphically illustrate how society decides on the number of police officers to hire

Strategies and policies for administrative reforms, STRATEGIES AND POLICIES...

STRATEGIES AND POLICIES FOR ADMINISTRATIVE REFORMS: As stated in a United Nation's Publication, following strategies and policies are necessary to bring about administrative i

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