Citibank Gives You The Following Information: Spot Exchange Rate (AUD/EUR) = 1.42 One-month Forward
Citibank gives you the following information: Spot exchange rate (AUD/EUR) = 1.42 One-month forward exchange rate (AUD/EUR) = 1.45 One-month domestic interest rate (in Australia) = 6.5% p.a. One-month foreign interest rate (in Germany) = 4.5% p.a. (a) Is there any violation of the CIP? Why or why not? (b) Is the AUD selling at a premium or discount against the EUR? By how much? (c) Suggest a value for the forward rate which is consistent with CIP. (d) Based on the given information, due to expect the EUR to appreciate or depreciate against the AUD over the next month? Why? 2. ANZ bank is quoting the following exchange rates against the New Zealand dollar (NZD) for the Danish Krone (DKK) and the South African Rand (ZAR): DKK/NZD = 4.23 – 42 ZAR/NZD = 9.60 – 95 A South African firm asks the ANZ bank for a ZAR/DKK quote. What rates (bid and ask) would the bank quote? Explain how you arrive at your answer. 3. Suppose that the Reserve Bank of India suddenly increases the domestic money supply. This policy change is expected to be permanent by the market. Assume the Indian rupee (INR) to be the home currency and the USD to be the foreign currency. (a) Explain with the help of the money market and FOREX market diagrams, what happens to the interest rate and exchange rate in the short-run? In your graphs, clearly label the axes, curves and equilibrium points. (b) Explain what happens to the interest rate and exchange rate in the long-run. In your graphs, clearly label the axes, curves and equilibrium points. (c) Explain how the economy transitions from the short-run equilibrium to the long-run equilibrium. 4. As of November 1, 2017, the nominal exchange rate between the Brazilian real and the U.S. dollar is BRL1.95/USD. The consensus forecast for the U.S. and Brazil inflation rates for the next 1-year period is 2.6% and 20.0%, respectively. Assume UIP and relative PPP holds. (a) What would you forecast the nominal exchange rate to be at around November 1, 2018? (b) If the U.S. interest rate on bonds with one-year to maturity is 4%, what would you expect the interest rate for a Brazilian bond with one-year to maturity to be?
HepTones, Inc., Is A U.S. Based Firm That Designs And Manufactures High-end Stereo Speakers.
HepTones, Inc., is a U.S. based firm that designs and manufactures high-end stereo speakers. They have been successfully manufacturing and selling their speakers in the U.S. for the last five years. Although they are still somewhat small, their U.S. sales have been growing at a rate of 20% annually and HepTones has achieved an excellent reputation for providing high-quality products at reasonable prices. Based on their success in the U.S., HepTones would like to expand their production and sales to Asia. Since their speakers are heavy, bulky, and somewhat delicate, exporting U.S.-made speakers to Europe appears to be too expensive and risky. HepTones’ Chief Financial Officer, Brenda Mendez, and her staff have been evaluating several potential production locations in Asia. Based on Ms. Mendez’ staff’s initial assessments, Ms. Mendez has narrowed the decision to one potential location—Delhi, India. Her decision was based on several criteria. First, average income in India has been growing rapidly in recent decades, and a viable market for HepTones’ products is emerging. Second, although there have been ups and downs, India has progressively implemented western-style economic, political, and business principles. Third, India’s labor force is well-educated and still relatively inexpensive compared to other Asian countries. Finally, transportation links between India and other Asian countries are also expanding rapidly, which bodes well for future exports to other Asian countries. Ms. Mendez has tasked you, as a financial analyst for HepTones, with preparing a more-extensive capital budgeting forecast for establishing a subsidiary in the Delhi location. She would like your recommendation as to whether the location is financially feasible and whether the locational decision is sensitive to any particular factors. She has asked you to use a 10-year forecasting horizon. Several departments at HepTones have provided you with the following information for your analysis: The building and equipment needed for production in Delhi can be acquired at a a cost of 600 million rupee. The equipment is valued at 300 million rupee and will be depreciated using straight-line depreciation, which implies 30 million of depreciation per year for 10 years. Estimated sales in the first year are 30,000 pairs of speakers at a per-unit price of 45,000 rupee. Unit sales are projected to increase at 20 percent per year in following years. The variable costs needed manufacture the speakers are estimated to be 40,000 per pair in the first year of production. Fixed operating expenses, such as administrative salaries will be 25 million rupee in the first year of operations. The Indian government will impose a 25 percent tax on income, and a 10 percent withholding tax on any funds remitted to the U.S. Any earnings remitted to the U.S. will not be taxed further. The Indian government has agreed to buy HepTones’ Indian subsidiary after 10 years for about 700 million rupee, after considering any capital gains. The current exchange rate for the Indian rupee is $0.015. The rupee is expected to depreciate by an average of 2 percent per year for the next 10 years. Average annual inflation in India is expected to be 10 percent. Revenues, variable costs, and fixed costs are expected to change by the same rate as annual inflation. HepTones’ currently uses a 20 percent rate of return to evaluate potential investment projects in the U.S. It has decided to use a 25 percent rate of return to evaluate the Indian project. All excess funds generated by the Indian subsidiary will be remitted back to the U.S. Do your analysis in the tab called Baseline Scenario. After you have completed your analysis answer to the following question: Based on the information provided in the case, should HepTones proceed with the project? Why or why not? Please record your answer in the appropriate box in the tab called Questions. Ms. Mendez is somewhat concerned about the project made by the marketing department that unit sales will increase at a 20 percent annual rate. She is interested in knowing what annual rate of increase in sales would make the net present value (NPV) equal to zero. Anything less than this “break-even” rate of increase would mean the project is not financially feasible.To answer her question, make a copy of the Baseline Scenario worksheet. Rename it Sensitivity Analysis. Vary the sales rate increase until the NPV is approximately zero, and then answer this question: What annual rate of increase in sales will yield an NPV of zero? Please record your answer in the appropriate box in the tab called Questions.
2. The XXY Club Company Has Experienced A 100 Percent Increase In Over The
2. The XXY Club Company has experienced a 100 percent increase in over the last five years. The company president, Ms. Tee has become increasingly alarmed by the firm’s rising debt level even in the face of continued profitability. For each of the five years of data provided, calculate the following: a) return on common equity b) dividend payout ratio c) retention ratio Calculate the sustainable rates of growth for The XXY Club company for each of the last five years.
Consider Two Foreign Exchange Quotations Between U.S Dollar (USD) And Euro (EUR): USD
consider two foreign exchange quotations between U.S dollar (USD) and euro (EUR): USD 1.25/EUR and EUR0.8/USD calculate the price of USD in EUR?
At The Moscow Airport In Russia, There Are Two Quotations Between Russian Ruble (RUB)
At the Moscow airport in Russia, there are two quotations between Russian Ruble (RUB) and USD: RUB31/USD and RUB32/USD. Calculate the RUB amount Tom would get. please show your work. 2) Judy isabout to leave Russia. She wants to convert RUB 5,000 into USD. Calculste the USD amount Judy would get.
Bambi Enterprises Projects Its Sales Next Year To Be $12,000,000.00 And Expects To
Bambi Enterprises projects its sales next year to be $12,000,000.00 and expects to earn 20% of that amount after taxes. The firm is currently in the process of projecting its financing needs and has made the following assumptions/projections: 1) Current assets will equal 25% of sales, and fixed assets will remain at their current level of $6,000,000.00. 2) Common equity is currently $4,000,000.00, and the firm pays out half of its after-tax earnings in dividends. 3) The firm has short-term payables and trade credit that normally equal 20% of sales, and it has no long-term debt outstanding. What is Bambi Enterprises’ discretionary financing need for the coming year?
Determine The Interest Rate J12 At Which Deposits Of $100 At The End Of
Determine the interest rate j12 at which deposits of $100 at the end of each month will accumulate to $4000 in 3 years.
The Follosing Exchange Rates Are Quoted For Japanese Yen (JPY), USD And Swiss Franc
The follosing exchange rates are quoted for Japanese Yen (JPY), USD and Swiss Franc (CHF). Citibank JPY 75.00/USD Dresdner Bank JPY 80.00/CHF 1. Calculate the price of the USD in terms of CHF. 2. Calculate the price of CHF in terms of USD.
Baylor Bank Believes The Nee Zealand Dollar (NZD) Will Appreciate Over The Next
Baylor Bank believes the Nee Zealand dollar (NZD) will appreciate over the next one year from USD .50/NZD to USD .80/NZD. The following annual interest rates apply: currency USD lending rate 4.00% borrowing rate 5.00% MZD lending rate 4.50% borrowing rate 5.50%. Baylor Bank has the capacity to borrow eith NZD 10 million or USD 5 million. If Baylor Bank’s forecast is correct, what will USD profit be from speculation over the one period. ( assuming it does not use any of its existing customer deposits to capitalize on its expectations? Caluclate for the times befow Time =O Time =1 Calculate the proft/loss in USD
Stora Enso Is A Finnish Pulp And Paper Manufacturing Company. It Discloses In Its
Stora Enso is a Finnish pulp and paper manufacturing company. It discloses in its 1999 consolidated Annual Report, the following items: Excerpted from the Consolidated balance sheet Assets € mill. 1999 1998 (…) Shares, associated companies 165.5 334.1 Shares, other companies 280.4 128.8 In the notes to its financial statements, the Stora Enso provides explanations relating to these two items: Excerpts from the notes Note 12 Associated companies € mill. 1999 1998 Historical cost Jan. 1 289.9 273.1 Translation difference 1.8 -14.8 Additions 20.2 42.3 Disposals -36.8 -1.2 Transfers to other companies -141.9 -9.4 Historical cost Dec. 31 133.2 290.0 Equity adjustments to investments in associated companies Jan. 1 44.2 44.8 Equity earnings in associated companies 9.7 10.0 Translation difference -27.3 -0.1 Dividends received during the year -3.1 -7.2 Taxes -2.4 -2.6 Disposals and other changes 11.2 -0.7 Equity adjustments Dec. 31 32.3 44.2 Carrying value of investments in associated companies on Dec. 31 165.5 334.2 Note 14 Shares in other companies € mill. 1999 1998 Acquisition cost Jan. 1 128.8 57 Translation differences 0.5 -1.1 Additions 13.4 68.8 Disposals -7.1 -4.8 Write-downs 3 -0.5 Transfers from associated companies 141.9 9.4 Carrying amount Dec. 31 280.4 128.8 In addition, the company explains in the notes that “associated companies (voting rights between 20% and 50%) are consolidated using the equity method” and “the income statements of foreign subsidiaries are translated into Euros using the average rate for the accounting period. The balance sheets of foreign subsidiaries are translated using the rate prevailing on the balance sheet day.” Pechiney, a French group operating worldwide in aluminum and packaging materials, discloses in its 1999 Annual Report the following note: Note 7 – Investments in Equity Affiliates (in millions of €) 1999 1998 1997 Beginning of period 334 337 354 Changes: – Equity in net income of Quensland Alumina Limited, Pechiney Reynolds Québec Inc. and in partnerships 7 7 10 – Equity in net income of other affiliates 41 10 20 – Dividends received from equity affiliates (12) (12) (20) – New investments or share capital increases – – 42 – Divestments and reduction in ownership percentage (73) – (71) – Change from equity method to consolidation – – (9) – Change from consolidation to equity method 457 – 7 – Translation adjustment 22 (10) 5 – Other 1 2 (1) End of period 777 334 337 Required A) Using the Stora Enso data Associated companies: explain the computation of the historical cost at year-end and the meaning of each component of this computation. Where will be found, other than in the notes, the carrying value of associated companies at year-end? Other companies: explain the computation of carrying amount at year-end and the meaning of each component of this computation. Double-check the carrying value of other companies at year-end. What is the usefulness to an investor or shareholder of the 1999 figure of €280.4 millions shown both in the balance sheet and in the notes? B) Comparison: notes 12 and 14 in Stora Enso’s annual report and note 7 in Pechiney’s annual report have the same purpose. Compare and contrast the computations and reporting choices made by each company.
Good Day Could You Please Assist In Financial Institution Management: A Risk Management Approach
Good Day Could you please assist in Financial Institution Management: A Risk Management Approach (9th Edition). Chapter 13 Question 10. Its about foreign currency. Thank You
Explain Relationship Between Credit Risk And Interest Risk Of Corporate Bonds( Discuss In Detail)
explain relationship between credit risk and interest risk of corporate bonds( discuss in detail)
Using Weekly Price Data Of The 30 Dow Jones Industrial Average (DJIA) Stocks For
Using weekly price data of the 30 Dow Jones Industrial Average (DJIA) stocks for the past three years, construct the portfolios listed below. Portfolios Structure: 6 portfolios of 5 stocks, 3 portfolios of 10 stocks, 2 portfolios of 15 stocks, and 1 portfolio of 30 stocks For the portfolios, compute the returns, standard deviations and coefficient of risk variation. Analyze the risk and return patterns and diversification benefits. Based on the risk/return analysis, which portfolio selections are the most profitable? How do the portfolios’ performances compare to the S
Your Firm Recently Divested Some Non-core Assets And Now Has A Significant Amount Of
Your firm recently divested some non-core assets and now has a significant amount of excess cash. Branda Sim, the CEO, is considering investing in either Singapore Technologies Engineering Limited (“STE”) shares or 10-year Singapore Government Securities (“SGS”) or a combination of both. She knows that you are studying a Finance course, and she is seeking your advice. Based on your research, the following market data was obtained: Question: Discuss two (2) reasons why the expected return is different from the historical arithmetic average return.
A Bond With Exactly Five Years Until Maturity Paying 3% P.a. Coupons Semi-annually And
A bond with exactly five years until maturity paying 3% p.a. coupons semi-annually and with a face value of $100 was purchased at a yield of 3.5% p.a. The bond was sold exactly two years later for a yield of 2% p.a. All coupons were reinvested at 3% p.a. Calculate the realised yield-to-maturity on this bond.
A . Calculate The Expected Return And Standard Deviation For The Returns Of Each
A . Calculate the expected return and standard deviation for the returns of each asset
5.Calculate The WAAC With The Following Information: Equity InformationDebt Information 10,000 Shares$200,000 In
5.Calculate the WAAC with the following information: Equity InformationDebt Information 10,000 shares$200,000 in outstanding debt (face value) $60 per share Beta = 1.2Current quote = 100 Market risk premium = 12%Annual coupon rate = 10% Risk-free rate = 5%Tax rate = 20%
C . Complete The Table Below For The Mean And Standard Deviation Of The
C . Complete the table below for the mean and standard deviation of the given portfolios
B . Calculate The Covariance Between The Returns Of Asset X And Asset Y.
B . Calculate the covariance between the returns of asset X and asset Y.
A (yearly) Cash Flow Stream Is X = (-65, 21, 21, 21, 21, 21,
A (yearly) cash flow stream is X = (-65, 21, 21, 21, 21, 21, 21). The spot rates (yearly in percentage) are s = (5.0, 5.3, 5.6, 5.8, 6.0, 6.1). (a) Find the current discount factors dk. (b) Use the discount factors to determine the (net) present value of the cash flow stream. (Keep your answer to 2 decimal places, e.g. xxx.12)
Please Use Your (own Words), Don’t Copy And Paste, Don’t Use Handwriting (use Keyboard).
Please use your (own words), don’t copy and paste, don’t use handwriting (use keyboard). i need (references) please answer the Q by good and perfect answers. In many businesses, employees are not only the most important assets and key enablers of future success but often the biggest expense (or rather investment). It is therefore important to understand to what extent employees add value to the financial performance of the organization. Employees are often a missing ingredient in accounting and finance (except as an expense) and with a little effort we can calculate the effects of people on financial performance. In the past, companies used over-simplified KPIs such as revenue per employee. If businesses are to understand the real profit impact of employees then we need to calculate human capital value added (HCVA). To get the HCVA we take all non-employee-related expenses away from the revenue generated and divide this (adjusted profit figure) by the number of full-time employees. HCVA therefore gives us the profitability of the average employee. Data Collection Method: The data for this can be easily extracted from the financial accounting systems or the financial statements. Formula: HCVA can be calculated by subtracting all corporate expenses except for pay and benefits from the revenue generated and dividing the adjusted profit by the average headcount. Exercise 1: i want long answer (5 marks) If a company has the following figures: Revenue: $100,000,000 Total costs: $80,000,000 Employee costs: $30,000,000 ($20,000,000 in pay and $10,000,000 in benefits). Number of employees: 650 Calculate the HCVA for the company. Exercise 2: i want long answer (5 marks) If a company has the following figures: Revenue: $250,000,000 Total costs: $200,000,000 Employee costs: $50,000,000 ($350,000,000 in pay and $15,000,000 in benefits). Number of employees: 500 Calculate the HCVA for the company. Is this a good HCVA? Why or why not?
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