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1. Assume that capital is perfectly mobile and substitutable and that the interest rate in the United States and the European Union is currently 5%. Investors expect the euro to rise against the dollar by 2% and they thus demand a _____ in the _____.

a. higher return equal to 7%; European Union

b. lower return equal to 3%; United States

c. lower return equal to 3%; United States

d. higher return equal to 7%; United States

2. Suppose the current exchange rate for the Russian ruble is RUB 37.74. The expected exchange rate in three years is RUB 34.54. What is the difference in the annual inflation rates for the United States and Russia over this period? Difference in the Annual inflation rate %

3. Financial analyst forecast Safeco Corporation growth for the future to be a constant 9%. Safeco recent dividend was $0.88. What is the value of Safeco stock when the required return is 12%?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92756763

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