problem 2.1 to 2.6 by excel two types of investors in view of these a. Long purc
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problem 2.1 to 2.6 by excel
two types of investors in view of these a. Long purchase b. Margin trading c. Short selling P2.1 The current exchange rate between the U.S. dollar and the Japanese yen is 116.915 (Yen/S). How many dollars would you get for 1,000 Japanese yen? LG L4 P2.2 An investor recently sold some stock that was a Eurodollar investment for 20,000 euros. The U.S.S/euro exchange rate is currently 1.100. How many U.S. dollars will the investor receive? LG4 P2.3 In each of the following cases, calculate the price of one share of the foreigr stock measured in United States dollars (US$ a. A Belgian stock priced at 103.2 euros () when the exchange rate is .8595 E/USS. b. A Swiss stock priced at 93.3 Swiss francs (Sf) when the exchange rate is 1.333 Sf/USS c. A Japanese stock priced at 1,350 yen (Y) when the exchange rate is 110 YUSS. LG4 P2.4 Lola Paretti purchased 50 shares of BMW, a German stock traded on the Frankfurt Exchange, for 64.5 curos () per share exactly 1 year ago, when the exchange rate was .78 E/USS. Today the stock is trading at 68.4 rate is .86 E/US$. per share, and the exchange a. Did the depreciate or appreciate relative to the US$ during the past year? Explain. purchased them a year ago? realize on her BMW stock if she sells it today? b. How much in US$ did Lola pay for her 50 shares of BMW when she c. For how much in USS can Lola sell her BMW shares today? d. Ignoring brokerage fees and taxes, how much profit (or loss) in USS will Lola LG 4 P2.5 An investor believes that the U.S. dollar will rise in value relative to the Japanese yen. The same investor is considering two investments with identical risk and return characteristics: One is a Japanese yen investment and the other is a U.S. dollar investment. Should the investor purchase the Japanese yen investment? P2.6 Elmo Inc.'s stock is currently selling at $60 per share. For each of the following situations (ignoring brokerage commissions), calculate the gain or loss that Maureen Katz realizes if she makes a 100-share transaction She sells short and repurchases the borrowed shares at $70 per share. She takes a long position and sells the stock at $75 per share She sells short and repurchases the borrowed shares at $45 per share She takes a long position and sells the stock at $60 per share a. b. d.Explanation / Answer
2.1) Current exchange rate : 1$ = 116.915 yen
? =1000 yen
=1000*1/116.915
=8.5532$
Thus we will get 8.5532$ for 1000 yen
2.2) Current exchange rate : 1 euro = 1.1$
: 20,000 euro = ?
=20,000*1.1
=22,000$
Thus investor will receive 22,000$
2.3)
2.4) Exchange rate at time of purchase : 1$ = 0.78 euro
Exchange rate 1 year latter : 1$= 0.86 euro
a) Here it is seen that now one has to pay more euro to acquire 1 $ hence $ has appreciated and euro has depreciated
b) 1 share =64.5 euro
thus to buy 50 shares she must have paid = 50*64.5 = 3225 euro
Exchange rate at time of purchase : 1$ = 0.78 euro
: ? = 3225 euro
=3225/0.78
=4134.62$
C) Exchange rate 1 year later : 1$= 0.86 euro
:? = 3225 euro
=3225/0.86
=3750$
D) Loss = 4134.62-3750
=384.62$
2.5) Here investor believes that US $ will appreciate and Yen will depreciate. hence he should buy $ investment instead of Japanese yen investment
2.6)
a)
-10
Loss = 100*10 = 1000$
b)
Profit = 100*15 = 1500$
C)
Profit = 100*15 = 1500$
D)
No profit no loss
Particulars Current exchange rate Stock price Stock price in USD a 1$ = 0.8595 euro 103.2 euro 120.07 b 1$ = 1.333 sf 93.3 sf 69.99 c 1$=110 yen 1350 yen 12.27Related Questions
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