Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

problem: In May 1988, Walt Disney Productions sold to Japanese investors a twenty (20) year stream of projected yen royalties from Tokyo Disneyland. The present value of that stream of royalties, discounted at 6 percent [return required by the Japanese investors], was ¥93 billion. Disney took the yen proceeds, converted them to dollars, and invested the dollars in bonds yielding 10%. According to Disney's CFO, "In effect, we got money at a 6 percent discount rate, reinvested it at 10 percent and hedged our royalty stream against yen fluctuations - all in one transaction."

[A] At the time of the sale, the exchange rate was ¥124 = $1. Determine dollar amount did Disney realize from the sale of its yen proceeds?

[B] Show the equivalence between Disney's transaction and a currency swap. [Suggestion:  A diagram would help)

[C] Did Disney achieve the equivalent of a free lunch through its transaction?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M921503

Have any Question? 


Related Questions in Basic Finance

A researcher examines the relationship between the quality

A researcher examines the relationship between the quality of breakfast and academic performance for a group of elementary-school children. For each child, the researcher interviews the parents to obtain information abou ...

Microsoft has a bond outstanding symbol msftgb with a 420

Microsoft has a bond outstanding (symbol: MSFT.GB) with a 4.20% coupon rate and a yield to maturity (continuously compounded) of 1.535%. The bond expires in June, 2019, and pays interest semi-annually. Use a face value o ...

1 why do researchers use deception2 why do some people

1. Why do researchers use deception? 2. Why do some people object to the use of deception in research? 3. What four goals should a debriefing accomplish?

Most languages are case sensitive so keywords can be

Most languages are case sensitive, so keywords can be written only one way, and the regular expressions describing their lexemes are very simple. However, some languages, like SQL, are case insensitive, so a keyword can ...

The following information was available spot rate for

The following information was available: Spot rate for Japanese yen: $0.009313 730-day forward rate for Japanese yen: $0.010475 (assume a 365-day year) U.S. risk-free rate: 7.0 percent Japanese risk-free rate: 1.0 percen ...

The following financial information is for a galler company

The following financial information is for A. Galler Company for 2011, 2010, and 2009 Required a. For 2011, 2010, and 2009, determine the following: 1. Return on assets (using end-of-year total assets) 2. Return on inves ...

Our data- ow analyses so far do not take advantage of the

Our data- ow analyses so far do not take advantage of the semantics of conditionals. Suppose we find at the end of a basic block a test such as How could we use our understanding of what the test x

1 why do researchers use deception2 why do some people

1. Why do researchers use deception? 2. Why do some people object to the use of deception in research? 3. What four goals should a debriefing accomplish?

1 explain how and why the marketing mix can vary in global

1. Explain how and why the marketing mix can vary in global markets. 2. Explain why consumer products often require more adaptation than industrial products sold in business-to-business markets. 3. Discuss the incentives ...

A stock is expected to grow 3 per year what is the price of

A stock is expected to grow 3% per year. What is the price of this stock if the required return is 9%? The stock is expected to pay a $1.4 dividend next year.

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen