The three-month dollar interest rate in New York is 3% per annum. Alternatively, the three-month euro interest rate in Frankfort is 5% p.a. The current $/€ spot exchange rate is $1.1340/€. The euro three-month forward rate is quoted at $1.1326/€.

1. Show how a U.S. arbitrageur would exploit a possible covered interest arbitrage opportunity with a nominal $80,000,000. Don’t start with the formula. Explain in your own words the transactions the arbitrageur would execute and calculate the profit/loss the arbitrager would make or face.

You own the stock of Pettersson and its current price is $36.00/share. It pays no dividend today. Based on your own research, you expect Pettersson to pay its first dividend of $2.50/share at the end of Years 1, 2, and 3 (12, 24, and 36 months from now). Given its performance outlook, you further expect the Board of Pettersson to increase the Year 4 dividend by 10% to $2.75; and then to increase it further by 4% annually for the next 2 years (end of years 5 and 6); after which it will grow by 2.0% annually forever. You enjoy a number of investment alternatives that will, on average, provide you with a 9% annual return. In light of this, should you buy more Pettersson stock at the current $36 price; or should you sell all your current Pettersson holdings for $36 and reinvest the proceeds elsewhere?

A. Sell for $36.00 because the intrinsic value is $34.78

B. Sell for $36.00 because the intrinsic value is $35.57

C. Buy for $36.00 because the intrinsic value is $37.75

D. Buy for $36.00 because the intrinsic value is $38.29

E. Buy for $36.00 because the intrinsic value is $38.72

You bought a house for $150,000 and put down 10% and got a mortgage at an interest rate of 4.35 % per year. You would pay it back by paying an equal amount at the end of each month for 15 years? (Show all work) How much is your loan amount? How much is your monthly loan payment? How much is your loan balance after 2 years? How much is your total interest payment by the end of year 3?

Medical Research Corporation is expanding its research and production capacity to introduce a new line of products. Current plans call for the expenditure of $100 million on four projects of equal size ($25 million each), but different returns. Project A is in blood clotting proteins and has an expected return of 18 percent. Project B relates to a hepatitis vaccine and carries a potential return of 14 percent. Project C, dealing with a cardiovascular compound, is expected to earn 11.8 percent, and Project D, an investment in orthopedic implants, is expected to show a 10.9 percent return.

The firm has $23,000,000 in retained earnings. After a capital structure with $23,000,000 million in retained earnings is reached (in which retained earnings represent 60 percent of the financing), all additional equity financing must come in the form of new common stock.

Common stock is selling for $26 per share and underwriting costs are estimated at $2.9 if new shares are issued. Dividends for the next year will be $0.71 per share (D₁), and earnings and dividends have grown consistently at 11% percent per year.

The yield on comparative bonds has been hovering at 10 percent. The investment banker feels that the first $19,500,000 of bonds could be sold to yield 10 percent while additional debt might require a 2 percent premium and be sold to yield 12 percent. The corporate tax rate is 30 percent. Debt represents 40 percent of the capital structure.

What is the Time Value of Money and how do financial managers use it to make business decisions?

On May 6, 2013, the treasurer of a corporation enters into a long forward contract to buy £1 million in six months at an exchange rate of 1.5532

This obligates the corporation to pay $1,553,200 for £1 million on November 6, 2013

What are the possible outcomes?

Problem 5-4 Calculating Discounted Payback An investment project costs $10,000 and has annual cash flows of $2,830 for six years. a. What is the discounted payback period if the discount rate is 0 percent? (Enter 0 if the project never pays back on a discounted payback basis. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the discounted payback period if the discount rate is 4 percent? (Enter 0 if the project never pays back on a discounted payback basis. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the discounted payback period if the discount rate is 21 percent? (Enter 0 if the project never pays back on a discounted payback basis. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) This is the last question in the assignment. To submit, use Alt + S. To access other questions, proceed to the question map button.

MC algo 5-12 Calculating Crossover Rate You are evaluating two projects with the following cash flows: Year Project X Project Y 0 −$547,200 −$516,500 1 218,600 208,300 2 228,500 218,100 3 235,700 226,000 4 195,400 186,800 What is the crossover rate for these two projects? Multiple Choice .66% 22.35% 11.72% 23.01% 10.65%

You are given the following information:

1. Find the break-even quantity and the total cost at the break-even point.
2. If the requirement is 75000 units, is it more cost-effective for the firm to buy or make the components? What is the cost savings for choosing the cheaper option?

1. Complete an amortization schedule for a $15,000 loan to be repaid in equal installments at the end of each of the next 3 years. The interest rate is 9% compounded annually. If an amount is zero, enter "0". Do not round intermediate calculations. Round your answers to the nearest cent.

   	Beginning			Repayment	Remaining
   Year	Balance	Payment	Interest	of Principal	Balance
   1	$	$	$	$	$
   2
   3

2. What percentage of the payment represents interest and what percentage represents principal for each of the 3 years? Do not round intermediate calculations. Round your answers to two decimal places.

   	% Interest	% Principal
   Year 1:	%	%
   Year 2:	%	%
   Year 3:	%	%

   Why do these percentages change over time?

   1. These percentages change over time because even though the total payment is constant the amount of interest paid each year is declining as the remaining or outstanding balance declines.
   2. These percentages change over time because even though the total payment is constant the amount of interest paid each year is increasing as the remaining or outstanding balance declines.
   3. These percentages change over time because even though the total payment is constant the amount of interest paid each year is declining as the remaining or outstanding balance increases.
   4. These percentages change over time because even though the total payment is constant the amount of interest paid each year is increasing as the remaining or outstanding balance increases.
   5. These percentages do not change over time; interest and principal are each a constant percentage of the total payment.
   -Select-IIIIIIIVV

b) International standard in audit 220(ISA 220) “quality control for audit financial statements” gives 6 main requirements of quality control procedures for an audit of financial statements of the audit firm.
List the any three of the six elements of quality control and provide one example of a policy or procedure that can be used to fulfil each of the three elements listed. b)

You purchased 30.00 shares of Bank of America one year ago for $8.48 per share. Today, one share trades for $9.05 and paid a dividend of $1.18 per share.

A) What is the capital gain rate from holding the stock the past year?

B) What is the dividend yield from holding the stock the past year?

C) What is the total return for holding the stock the past year?

D) Based on your number of shares purchased, what is the total dollar return of your investment?

The potential implications that increase in non-bank lending growth have on the stability of the Australian financial system.