Suppose the cfo of an american corporation with surplus, Ask an Expert

Economics

Suppose the CFO of an American corporation with surplus cash flow had $50million to invest last March 20, 2015 and the corporation did not believe it would need to utilize these funds to retool or expand production capacity for 1 year. Suppose further that the interest rate on 1year CD deposits in US banks was 1%, while the rate on 1 year CD deposits in England (denominated in British Pounds) was 2% at the time. Suppose further that the exchange rate at that time was $1.55 per British pound. A) Suppose that now a year later the exchange rate is $1.42 per British pound. What rate of return did the CFO earn on the investment in the British CD?

What must the CFO have expected about the value of the British pound in $ today to believe in March, 2015that investment in 1 year British CD’s would be more profitable than investment in US CD’s.

View complete question

Business Economics, Economics

Category:- Business Economics
Reference No.:- M91835752

Have any Question?Write your Review or question?

Related Questions in Business Economics

If a low-income-undernutrition-low-income circle is

If a low-income-undernutrition-low-income circle is possible in poor countries, why is it not possible for some groups of people in rich countries? (hint: demand and supply)

You work for a firm that manufactures dvd players your dvd

You work for a firm that manufactures DVD players. Your DVD players last an average of 800 days with a standard deviation of 200 days. You want to set the warranty length such that you only have to replace 1.5% of all th ...

During the winter of 2008-2009 the average utility bill for

During the winter of? 2008-2009, the average utility bill for residents of a certain state was ?$173 per month. A random sample of 30 customers was selected during the winter of? 2009-2010, and the average bill was found ...

If the probability of making a type i error is decreased

If the probability of making a Type I error is decreased, the probability of making a Type-II error: A) also decreases B) remains the same C) increases D) depends on the sample size Which of the following statements is ...

With smaller companies saving thousands and larger

With smaller companies saving thousands and larger companies saving billions through flexible manufacturing, if you are a discrete parts manufacturer seeking to be more lean, it is important to consider whether this migh ...

Given two eventsnbspgnbspandnbsph the probabilities of

Given two events G and H , the probabilities of each occurring are as follows: P( G ) = 0.22; P( H ) = 0.34; P( H AND G ) = 0.09. Using this information: Find the complement of P ( H AND G ). Round to 2 places.

Determine the internal rate of return for a project that

Determine the internal rate of return for a project that costs -$149,500 and would yield after-tax cash flows of $23,000 the first year, $25,000 the second year, $28,000 the third year, $30,000 the fourth year, $34,000 t ...

What is monetary approach in neoclassical economic theory

What is monetary approach in Neoclassical Economic Theory? How is poverty defined under the monetary approach? What are the two main reasons that cause poverty under Neoclassical Economic Theory? Briefly describe each on ...

Robust data loading poses a challenge in database systems

Robust data loading poses a challenge in database systems because the input data are often dirty. In many cases, an input record may have several missing values and some records could be contaminated (i.e., with some dat ...

Four balls are independently projected onto one target the

Four balls are independently projected onto one target, the probability of a hit for each is P1 = 0.1 , P2 = 0.2 , P3 = 0.3 , P4 = 0.4. What are the probabilities P04, P14, P24, P34, P44 that zero, one (1), two (2), thre ...

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

Recent Questions

Ask Business Economics Expert