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

What is extracellular digestion, Extracellular digestion is that in which f...

Extracellular digestion is that in which food breaking into utile molecules that can be internalized by the cell is completed in the extracellular space, i.e., outside the cell. In

Development administration, Development Administration: Since the Gove...

Development Administration: Since the Government has been entrusted to manage economic and business activities, it was found difficult to manage the economic policy with the t

Inflation-unemployment trade-off under rational expectations, Inflation-Une...

Inflation-Unemployment Trade-off under Rational Expectations : Robert Lucas (1972) pointed out another implication of the above hypothesis of adaptive expectations. Suppose in

Microeconomics., In a perfectly competitive market the price of the product...

In a perfectly competitive market the price of the product is?

Combined finances of union and states, COMBINED FINANCES OF UNION AND STAT...

COMBINED FINANCES OF UNION AND STATES: Taxes on goods and services are levied in India in various forms and at different levels of Government, Centre, states, and local bodies

Richrdian model, my assignment is about richardian model and wanna ask you ...

my assignment is about richardian model and wanna ask you about few questions

Microeconomics, I need help on MCQs on international trade and imperfect co...

I need help on MCQs on international trade and imperfect competetion

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