Calculate the rate of return, Financial Management

Assignment Help:

A Life Insurance Company invested $10,000,000 in pure-discount U.S. bonds in May 1995 while the exchange rate was 80 yen per dollar. The insurance company liquidated the investment one year later for $10,650,000. The exchange rate turned out to be 110 yen per dollar at the time of liquidation. Calculate the rate of return did Life realize on this investment in yen terms?

Solution: Life Insurance Company spent ¥800,000,000 to buy $10,000,000 which was invested in U.S. bonds. The liquidation value of this investment is ¥1,171,500,000 that is acquired from multiplying $10,650,000 by ¥110/$. The rate of return in terms of yen is:

   [(¥1,171,500,000 - ¥800,000,000)/ ¥800,000,000]x100 = 46.44%.


Related Discussions:- Calculate the rate of return

Mushrooming of public private partnerships, Question 1: i) Activity Bas...

Question 1: i) Activity Based Costing is better than the Traditional Product Costing. Discuss, by making use of empirical evidence ii) The replacement of cash-based accounti

Determine the strategy of market development, Market development A stra...

Market development A strategy which seeks to sell existing products in new geographical markets or new market segments. A strategy to find new uses for existing products or ser

Illustrate about foreign exchange earnings, Q. Illustrate about foreign exc...

Q. Illustrate about foreign exchange earnings? In theory foreign exchange earnings must not be hedged as the chances of an adverse movement are equivalent to those of a favoura

What are the functions of financial management, Functions of Financial Mana...

Functions of Financial Management Traditional function of financial management has been limiting the role of finance toraising and administrating of funds required by the compa

Ratio analysis, define ratio analysis. explain the advantages of ratio anal...

define ratio analysis. explain the advantages of ratio analysis

Differences between indirect costs and direct costs, a) Variable costs: Rem...

a) Variable costs: Remuneration of flight attendants, Meals and drinks onboard, Fuel. Fixed costs: promotions and Advertising, Remuneration of administrative staff and Airport c

Identify an analytic theme for fictitious business, 1. identify an analytic...

1. identify an analytic theme or goal for a fictitious business or something that you are working on (e.g. Maximize revenue in a car dealership) 2. Build an Enterprise Bus Matri

Case study - volatility trading, Case Study: Volatility Trading (a) The...

Case Study: Volatility Trading (a) The understanding in this case study deal with Convertible as well as Reverse-Convertible bonds. These are interesting instruments by themsel

Hedge fund, Definition of 'Hedge Fund': An aggressively managed portfo...

Definition of 'Hedge Fund': An aggressively managed portfolio of investments that uses advanced investment strategies define as leveraged, short, long and derivative positions

Five cs of obtaining credit, Five Cs of Obtaining Credit The five ...

Five Cs of Obtaining Credit The five crucial parts lenders examine previously issuing credit include: 1. Character.    This is a calculation of the borrower's integrit

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