Questions
MXNUSD .047 in nominal currency exchange rate terms. A Big Mac costs $3.99 in the U.S....

MXNUSD .047 in nominal currency exchange rate terms. A Big Mac costs $3.99 in the U.S. and 50 Pesos in Mexico. Please select the correct answer.

I.

The Mexican Peso in undervalued. I am better off purchasing the Big Mac in Mexico.

II.

The Mexican Peso in undervalued. I am better off purchasing the Big Mac in the U.S.

III.

The Mexican Peso in overvalued. I am better off purchasing the Big Mac in Mexico.

IV.

The Mexican Peso in overvalued. I am better off purchasing the Big Mac in the U.S.

In: Finance

Suppose labor demand for low-skilled workers in the United States is w = 24 - 0.1L...

Suppose labor demand for low-skilled workers in the United States is w = 24 - 0.1L where L is the number of workers (in millions) and w is the hourly wage. There are 120 million domestic U.S. low-skilled workers who supply labor inelastically. If the U.S. opened its borders to immigration, 20 million low-skilled immigrants would enter the U.S. and supply labor inelastically.

Draw a clearly labeled graph showing the equilibrium before immigration and the effect of opening the borders. (The equilibrium wage and employment level should be labeled both before and after immigration.)

In: Economics

Consider the following market information: Spot rate for the Canadian dollar C$....$0.80 90 day forward rate...

Consider the following market information: Spot rate for the Canadian dollar C$....$0.80 90 day forward rate for the C$........$0.79 90 day Canadian interest rate….....4% 90 day U.S. interest rate……………2.5% (1)Given this information, would it be feasible for a U.S. investor with US$1 million to engage in covered interest arbitrage? Provide quantitative explanation. (11)If covered interest arbitrage is feasible, determine the profit the investor could earn. (111)Is there evidence of interest rate parity between U.S and Canada? Explain.

In: Finance

I need step by step instructions on where to find the information to answer this question:...

I need step by step instructions on where to find the information to answer this question:

Your task involves an analysis of general economic conditions or systematic risk, i.e., the risk that affects all industries and companies, in the U.S. macroeconomy. Your goal is to determine in percentage terms an optimal allocation of $1,000,000 among the following three asset classes: U.S. equities, U.S. Treasury bonds, and cash.

The goal is to maximize your expected return over the next 12 months.

Complete an analysis of the asset classes' prospects and your justification of your allocation of monies among them.

In: Finance

You are a U.S. investor who is considering investments in the Australian stock market, but you...

You are a U.S. investor who is considering investments in the Australian stock market, but you worry about currency risk. You run a regression of the returns on the Australian stock index (in A$) on movements in the Australian dollar exchange rate (U.S.$ per A$) and find a slope of -0.5.

a. What is your currency exposure if you invest in a diversified portfolio of Australian stocks?


b. You invest $10 million in the diversified portfolio, but you fear that the Australian dollar will depreciate by 10 percent relative to the U.S. dollar. How much do you expect to lose because of the currency movement?

In: Finance

The top four cigarette manufactures in the U.S. are Altria, BAT, Imperial, and Liggett. Their marketing...

  1. The top four cigarette manufactures in the U.S. are Altria, BAT, Imperial, and Liggett. Their marketing shares are 68%, 22%, 5%, 2%, respectively. All other companies together have 3% of the market share.
    1. Calculate CR4 and HHI for the cigarette market in the U.S.
    2. Based on your answer to a), how would you characterize the market structure of the cigarette market in the U.S. Can you infer cigarette pricing and quantity decisions made by these firms based on the market structure. If so, what are they? If not, can you explain what additional information you need.

In: Economics

Write a response to the following scenario. Remember to correctly label all your graphs! For example,...

Write a response to the following scenario. Remember to correctly label all your graphs! For example, what the x and y axis represent.

The COVID-19 pandemic and the US-China trade tension have caused a significant decrease in China's demand for US exports.

Use the AD/AS model to explain the likely short run impacts on U.S. GDP and the aggregate price level. What do you anticipate will happen to U.S. consumption expenditure and U.S. employment? Please explain your reasoning for each of your predictions and show graphically as appropriate.

In: Economics

If you were going to Europe, would you want the U.S. dollar to be strong or...

If you were going to Europe, would you want the U.S. dollar to be strong or weak? Interpret the current exchange rate between the U.S. and the Euro (so if an item costs 10 Euros, how much does it cost in U.S. Dollars?)

What are freely floating exchange rates? What are fixed exchange rates?

Explain how supply and demand affect floating exchange rates. What causes a currency to appreciate and depreciate?

What factors influence the exchange rate between countries? Do we have any control over exchange rates?

In: Economics

After all foreign and U.S. taxes, a U.S. corporation expects to receive 2 pounds of dividends...

After all foreign and U.S. taxes, a U.S. corporation expects to receive 2 pounds of dividends per share from a British subsidiary this year. The exchange rate at the end of the year is expected to be $1.29 per pound, and the pound is expected to depreciate 5% against the dollar each year for an indefinite period. The dividend (in pounds) is expected to grow at 10% a year indefinitely. The parent U.S. corporation owns 10 million shares of the subsidiary. What is the present value in dollars of its equity ownership of the subsidiary? Assume a cost of equity capital of 11% for the subsidiary.

In: Finance

What business, economic, policy, and environmental threats to organization growth are CEOs extremely concerned about? In...

What business, economic, policy, and environmental threats to organization growth are CEOs extremely concerned about? In a survey by PricewaterhouseCoopers (PwC), 57 of 114 U.S. CEOs are extremely concerned about cyber threats, and 22 are extremely concerned about lack of trust in business.

a. Construct a 95% confidence interval estimate for the population proportion of U.S. CEOs who are extremely concerned about cyber threats.

b. Construct a 95% confidence interval estimate for the population proportion of U.S. CEOs who are extremely concerned about lack of trust in business.

c. Interpret the intervals in (a) and (b).

In: Math