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

., wHEN WAGE IS $6.05, HOW MANY HOURS ARE WORKED A WEEK?

wHEN WAGE IS $6.05, HOW MANY HOURS ARE WORKED A WEEK?

Capacity utilization, discuss ho capacity utilization and product different...

discuss ho capacity utilization and product differentiation affect internal rivalry and entry barriers with the analytical framework of the porter five forces model. use the econom

Gdp, current rate of gdp

current rate of gdp

EM13106443, May I get a quote on title EM13106443. Thanks

May I get a quote on title EM13106443. Thanks

Implications for the role of economic theory, Implications for the Role of ...

Implications for the Role of Economic Theory : Like the schedule for the marginal efficiency of capital, expectations about the future market rate of interest underlie the li

Population, Is Nigeria''s census accurate?

Is Nigeria''s census accurate?

Willingness to pay, Suppose one were asked to recommend a price for the out...

Suppose one were asked to recommend a price for the output of a proposed downtown parking garage, so that the project would have as large a Net Present Value as possible.  In this

Differentiate between economic development and growth, Problem: i) Diff...

Problem: i) Differentiate between economic development and economic growth. ii) Describe carefully how, using the expenditure approach, national income is calculated. ii

Define about mutual fund, Q. Define about Mutual Fund? Mutual Fund: A f...

Q. Define about Mutual Fund? Mutual Fund: A financial vehicle that involves pooling investments in the shares of many different joint stock (or publicly traded) companies, in o

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