Putul only 2

Toni 2014

Main

Home >Homework Answsers >Business & Finance homework help

Hello Putul,

Which of the following economic benefits do the foreign exchange markets provide?

[removed]

A mechanism for hedging the risk associated with currency fluctuations.

[removed]

All of these.

[removed]

A channel for businesses to acquire credit for international transactions.

[removed]

A mechanism to transfer purchasing power via exports and imports.

The spot rate is the cost of buying a foreign currency

[removed]

a year from today

[removed]

today

[removed]

a year ago

[removed]

a month from today

If the foreign exchange rate is the price in dollars for a foreign currency, then the exchange rate quote is called:

[removed]

a direct quote

[removed]

an indirect quote

[removed]

a cross quote

[removed]

a European quote

Bartman Corporation observes that the Swiss franc (SF) is being quoted at $0.6164/SF, while the Swedish krona (SK) is quoted at $0.1981/SK. What is the SK/SF cross rate?

[removed]

SK3.1116/SF

[removed]

SK0.3214/SF

[removed]

SK0.4183/SF

[removed]

SK2.1467/SF

Given that the spot rate is $1.5276/€ and the 90-day forward quote is $1.5174/€, we can say that:

[removed]

the dollar is at neither a premium nor a discount against the euro

[removed]

the U.S. dollar is at a forward discount against the euro

[removed]

the U.S. dollar is at a forward premium against the euro

[removed]

the euro is at a forward premium against the U.S. dollar

All of the following represent differences between Eurobonds and domestic US bonds except that

[removed]

many Eurobonds are sold without credit ratings.

[removed]

Eurobonds pay coupon interest annually.

[removed]

investors in Eurobonds regularly pay taxes on the interest they receive.

[removed]

Eurobonds are issued as bearer bonds and do not have to be registered.

All other things remaining constant, if the US$/£ exchange rate changes from $1.65/£ to $1.45/£ , which of the following will occur?

[removed]

Demand for British goods will increase.

[removed]

Demand for British goods will decrease.

[removed]

British demand for US goods will decrease.

[removed]

None of these.

Which of the following statements regarding the forward rate is false?

[removed]

Forward rates are important because business transactions may extend over long periods.

[removed]

The forward rate quoted on a particular date is very often equal to the spot rate on the same day.

[removed]

The forward rate is established on the day that the agreement is made and defines the exchange rate that will be used in the future.

[removed]

The forward rate is what one party agrees to pay for money in the future.

The most widely quoted Euro-currency interest rate is the

[removed]

CIBOR.

[removed]

SIBOR.

[removed]

HKIBOR.

[removed]

LIBOR.

All of the following represent differences between Eurobonds and domestic US bonds except that

[removed]

investors in Eurobonds regularly pay taxes on the interest they receive.

[removed]

Eurobonds pay coupon interest annually.

[removed]

many Eurobonds are sold without credit ratings.

[removed]

Eurobonds are issued as bearer bonds and do not have to be registered.

Which one of the following statements is TRUE about the effective annual rate (EAR)?

[removed]

The EAR conversion formula accounts for the number of compounding periods and, thus, effectively adjusts the annualized interest rate for the time value of money.

[removed]

The EAR is the true cost of borrowing and lending.

[removed]

All of these are true.

[removed]

The effective annual interest rate (EAR) is defined as the annual growth rate that takes compounding into account.

The true cost of lending is the

[removed]

annual percentage rate.

[removed]

quoted interest rate.

[removed]

effective annual rate.

[removed]

none of these.

Which of the following investment classes had the greatest variability in returns for recent historical data?

[removed]

Intermediate-Term Government Bonds

[removed]

Small U.S. Stocks

[removed]

Long-Term Government Bonds

[removed]

Large U.S. Stocks

If a bond's coupon rate is equal to the market rate, then the bond will sell

[removed]

at a price greater than its face value.

[removed]

at a price less than its face value.

[removed]

none of these are true.

[removed]

at a price equal to its face value.

Payback: Kathleen Dancewear Co. has bought some new machinery at a cost of $1,250,000. The impact of the new machinery will be felt in the additional annual cash flows of $375,000 over the next five years. What is the payback period for this project? If their acceptance period is three years, will this project be accepted?

[removed]

2.67 years; yes

[removed]

3.33 years; yes

[removed]

3.33 years; no

[removed]

2.67 years; no