Question

find answers to these two problems
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one peso is worth 6.2 pound and 1.48 yuan. One yuan is worth 4.73 pound. Which statement is most consistent with the triangle arbitrage equilibrium condition?
the peso is undervalued relative to the yuan
the peso is undervalued relative to the pound
the yuan is undervalued relative to the pound
B, C correct
Non correct
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Balance Sheet
current asset 2500
PP&E 3400
Total Asset 5900
Debt 2600
Stockholders equity 3300
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Income
Salse 20650
total cost 19580
net income 1070
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this company is in an industry that has
net profit margin of 5.29%
debt-to-asset ratio 54.9%
ROE 41.83%
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select one statement most consistent with DuPont Analysis
the company's asset turnover indicates sales are unusually small relative to its assets
the company's equity multiplier indicates the firm has an unusually large debt burden
the company's profit margin indicates its revenues are unusually large relative to its costs
the company's profit margin indicates its revenues are unusually small relative to its costs
the company's equity multiplier indicates the firm has an unusually small debt burden

Answer 1

Q. 2). Answer :- Option a). The company's asset turnover indicates sales are unusually small relative to its assets.

Explanation :- The formula for calculation of asset turnover is sales divided by total assets (Sales / Total assets). Therefore, asset turnover ratio indicates the relationship between sales and total assets of firm i.e., in the above given question, The company's asset turnover indicates that sales are unusually small relative to its assets​​​​​​​.

Q. 1). Answer :- Option B). The peso is undervalued relative to the pound​​​​​​​.

Explanation :- 1 Peso = 6.2 Pounds

1 Peso = 1.48 Yuan

Theoretically, 1 Yuan = 4.19 Pounds (6.2 / 1.48)

Actually 1 Yuan = 4.73 Pounds (Given in question)

Accordingly, Yuan is stronger relative to pound where as Peso is weaker relative to pound. Therefore, The correct answer to given question is option B i.e., "The peso is undervalued relative to the pound"