Finance

Solution Library


Relationship between NPV and Discounted Payback Period

Question What is the relationship between NPV and discounted payback period. How would you use these concepts in evaluating the economic value of your course of study at the school? Summary This question belongs to finance and discusses about relationship between NPV and discounted payback period ... Read More

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A Competing PPP Index to the Economist Big Mac Index

Question If you wanted to develop a competing PPP index to the Economist Big Mac Index, what product(s) would you use and why? What are its advantages and disadvantages relative to the Big Mac? Summary This question belongs to finance and discusses about products one can use to develop a competin ... Read More

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Exchange Rate between Countries and to Absolute PPP

Question The exchange rate between Country 1 and Country 2 is 1/3 in period 1 and 1/3 in period 2 (They have a fixed exchange rate.) If these are the CPIs in those countries at the end of periods 1 and 2, does Absolute PPP hold? Does Relative PPP hold?   Period 1 CPI Period ... Read More

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Investment Options in Euros and Dollars

Question You hold $100 dollars today, but need euros in 6 months. Given these rates, would you rather invest the dollars in a 6 month dollar CD and then use a Forward to get your money into euros; or instead change the dollars into euros today and invest in a 6 month euro CD?   Summary This ... Read More

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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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