Question

the prediction indicates that in one month 1$=2 euros. please illustrate calculations and show if this will give you a gain or a loss

Answer #1

If it is a predicted that one dollar is equal to 2 Euros, it will mean that dollar will be appreciating tremendously against Euros and Euro will be depreciating tremendously against dollar and those who will have a position in call option of dollar or one who has went long on dollar will be making higher money.

Let's say current exchange rate for $1= .80 Euro

But when it is predicted that in one month the value of Dollar will be one Dollar equals to 2 Euros and 1 who will be holding $10,000 at the current time will be having= 10000(2/.8)=$25000

Hence it can be said that the American dollar will be appreciating tremendously against euros.

If you are expecting a large quantity of euros in one month
which you need to exchange for dollars and are not sure where the
exchange rate is going but want to reduce your risk
buy a forward contract on euros
sell a forward contract on euros and buy a forward contract on
dollars
sell a forward contract on euros
remain unhedged
take a long position in a FRA

Please give one example where (and/or why) would or could a
prediction interval be used in practice or in your own professional
or interest area? What would be the benefit of using a prediction
interval over other possible statistical methods?

please do all the three questions and show me all the
calculations step by step and the diagram also.
1. Assume you have purchased a June put option on British
pounds: the strike price is $1.30/£; the option premium is $0.10/£;
and it is European style.
1) Please fill out the blanks in the table.
Spot rate at maturity (in June)
Exercise or not?
Net profit or payoff
1.10
1.15
1.20
1.25
1.30
1.35
1.40
1.45
2) Where is the...

Please show all calculations. If using Excel, please show
formulas and data.
Practice 9:
You started with a market price of $30 and 10,000 shares.
Calculate number of shares after the split and the per share
price:
*please do this example 2 ways.
part a: calculate as 4 individual splits
part b: calculate splits as successive.... begin with the
original market price and number of shares and calculate the price
and number of shares after 4 consecutive splits
split 1:...

****Please show me 2 cases for the proof, one is using
n=1, another one is n=2, otherwise, you answer will be thumbs
down****Hint: triangle inequality. Don't copy the online answer
because the question is a little bit different
use induction prove that for any n real numbers, |x1+...+xn|
<= |x1|+...+|xn|.
Case1: show me to use n=1 to prove it, because all the
online solutions are using n=2
Case2: show me to use n=2 to prove it as well.

Please show all calculations and be detailed with your answer.
If using Excel, please show data.
practice #5
If you’re the treasurer of a Japanese firm needing to buy USD
and a banker gives you a quote of 110.15 / 110.17 for USDJPY you
would be able buy USD from the bank at what rate?

Please explain your answer.
1. Suppose you short one IBM May 100 put contract at $5 and long
one IBM May 105 put contract at $2. Your maximum profit/loss from
your strategy would be Multiple Choice
gain of $200.
loss of $300.
loss of $200
gain of $300.
None of the above.
2. Suppose you purchase one WFM May 100 put contract at $5 and
write one WFM May 105 put contract at $2. The maximum potential
profit/loss per contract...

Please explain your answer.
1. Suppose you short one WFM May 100 put contract at $5 and long
one WFM May 105 put contract at $2.
Your maximum profit/loss from your strategy would be
Multiple Choice
gain of $200.
loss of $300.
loss of $200
gain of $300.
None of the above.
2. Suppose you purchase one WFM May 100 put contract at $5 and
write one WFM May 105 put contract at $2.
The maximum potential profit/loss per contract...

Please show all calculations. If using Excel, please show
formulas.
Practice Question:
Calculate the NPV & IRR for the following 5 year
project:
- discount rate of 10%
- ncf yr 0 = -250,000
- ncf yr 1 = 200,000
- ncf yr 2 = 350,000
- ncf yr 3 = 300,000
- ncf yr 4 = 300,000
- ncf yr 5 = -50,000

Please show all calculations if any.
Will give a THUMBS UP! thank you
Use the information below and the
Two-stage Growth Model to find Axis Capital’s intrinsic
value. Forecast its cash flows from t+1 to
t+3. If its current price is $37.54, is it over or under
valued?
t
t+1
t+2
t+3
t+4
Beta
0.80
ROE
0.09
0.08
0.08
0.08
DPO
0.37
0.34
0.34
0.34
Div
$1.64

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