Finance

Solution Library


Interest Rate Parity and Forward Discount or Premium of the Dollar Vis a Vis the Euro

Question In early 2001, US interest rates went from being higher than euro rates to lower than euro rates.  What does interest rate parity tell us must have happened to the forward discount or premium of the dollar vis a vis the euro? Summary This question belongs to finance and discusses ab ... Read More

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First G20 Country to Raise Interest Rates After the 2008 global Financial Crisis

Question In 2010, Australia was the first G20 country to raise interest rates following the 2008 global financial depression. Do you think their currency appreciated or depreciated when they raised rates and why? Summary This question belongs to finance and discusses about raise in interest rates ... Read More

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Studying Past Movements of the Exchange rate to Make Money

Question If  , and errors are distributed normally with mean zero, can a currency speculator make money (on average) by studying past movements of the exchange rate? Why? Summary This question belongs to finance and discusses about can a currency speculator make money (on average) by studyin ... Read More

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Information Required to Create a Net Present Value Profile-Multiple Choice Question

Question All of the following is information required to create a net present value profile except: A.NPV at a 0 discount rate B.NPV at the risk-free rate C. NPV at the cost of capital D. IRR of investment   ... Read More

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Hedging Strategies involves a Loan without a Futures Contract-Multiple Choice Question

Question Which of the following hedging strategies involves a loan without a futures contract?  A. Eurobond market B. Forward exchange market C. Money market D. IMM contract     ... Read More

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How the Value of a Country's Currency Increases-Multiple Choice Question

Question The value of a country's currency may increase by  A. continuous excessive government spending. B. a stock market rally in that country. C. an increase in that country's money supply. D. more than one of the above     ... Read More

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Significant Increase in the Price of a Firm's Common Stock-Multiple Choice Question

Question Expectations of a significant increase in the price of a firm's common stock will result in A.large conversion premiums for the firm's convertible bonds. B. small conversion premiums for the firm's convertible bonds. C. negative conversion premiums for the firm's convertible b ... Read More

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Convertible Security-Multiple Choice Question

Question A convertible security is almost always  A. a security that can be converted into any other type of security. B. a debt security that can only be converted into preferred stock. C. a security that can be converted into common stock at the holder's option. D. a secu ... Read More

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Disadvantage to the Investor of a Convertible Bond-Multiple Choice Question

Question A disadvantage to the investor of a convertible bond is that A.the stock price may never rise above conversion price. B. if interest rates rise, the pure bond value (floor price) will decline. C. the interest rate on convertibles is generally one-third below the coupon rate on ... Read More

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Service Provided by Investment Bankers-Multiple Choice Question

Question Which of the following activities is not a service provided by investment bankers?  A. Underwriting initial public offerings B. Raising capital via mutual fund offerings C. Advising in mergers D. Advising on restructurings     ... Read More

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2-for-1 Stock Split-Multiple Choice Question

Question A 2-for-1 stock split is declared. In this case which of following statements is true?  A. The cash account declines. B. The common stock account rises. C. The retained earnings fall. D. The par value of the common stock is reduced.     ... Read More

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Use of Rights in Financing-Multiple Choice Question

Question Which of the following statements is false with respect to the use of rights in financing? A. Rights offerings are used by many U.S. companies. B. Shares are usually priced at a premium. C. Right offerings are especially popular in Europe.   ... Read More

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