easons in favour of forecasting exchange rate

Q: Explain why traditional banking has been on the decline in recent years.

A: Traditional banking refers to banks that have a physical presence and are licensed to operate in the…

Q: e Interest Coverage Ratio for pepsi company for year 2

A: Interest coverage ratio show the ability of the company to interest and debt on time without any…

Q: When the actual foreign exchange rate for the dollar is greater than the equilibrium rate, the…

A: The above statement is true.

Q: Solve manually using formulas. A perpetuity with annual payments is payable beginning 10 years from…

A: The following information has been provided in the question: Time = 10 yearsFirst payment=50…

Q: When establishing their optimal capital structure, firms should strive to     minimize the amount of…

A: The capital structure is said to be optimum capital structure when the firm has selected such a…

Q: Suppose you have purchased a 10% coupon bond with a face value of 1410 KWD at a pric that after one…

A: Current yield and capital gain yield are two components of holding period return that is being…

Q: There is 9 percent probability of recession, 24 percent probability of a poor economy, 44 percent…

A: The expected rate of return is the amount of interest an investor can hope to receive on an average…

Q: A horizontal merger takes place between companies operating: a. At different stages of the…

A: Solution: When two or more entities start working by coming together, it is called a merger. There…

Q: Which one of the following correctly states a purpose of the generation-skipping transfer tax…

A: GSTT is a federal tax. This tax comes into picture when there is a transfer of property to a…

Q: Archer Arrow Company examined its cash management policy and found that it takes an average of 5…

A: Given Number of customer per day P80,000 Number of days checks received from customers is 4 days

Q: What is the net cash flow to the firm in year 4

A: Net cash flow can be defined as the net amount of cash and cash equivalents transferred in and out…

Q: what is the difference between the e

A: The exchange rate is rate at which one currency is exchanged with currency of other country and some…

Q: The following data pertain to an investment proposal: Present investment required P26,500 Annual…

A: Present investment required = P26,500 Annual cost savings = P5,000 Time period = 10 years Tax rate =…

Q: The following are forecasts of sales and purchases for KWANGYA Company: Sales Purchases April…

A: Cash flows are the cash generated from the operation of the business organisation. In other words,…

Q: Arcmat plc owns a factory which at present is empty. Mrs X, a business strategist, has been working…

A: Incremental cash flows: The cash flows that accrue solely on account of the initiation of a new…

Q: A company has $20 billion of sales and $1 billion of net income. Its total assets are $10 billion.…

A: We are provided with financial information for a company. The provided financial information will be…

Q: Direct 24,642.07 $1,647,203,780.25 $1,924,086,640.32 $3,479,937,664- Indirect 5,457.38…

A: The present value of labor income and value added would be the equivalent cash flow considering the…

Q: An individual has two employment opportunities involving the same work conditions but different…

A: Value of money declines with the passage of time due to various market factors like interest rate,…

Q: Compare the customer segments of onshore and offshore private banking

A: Private banking refers to tailored and often customized financial services, investment services and…

Q: The risk-free rate (rRFrRF) is 4.00%, the market risk premium (RPMRPM) is 4.80%, and Portman’s beta…

A: Dividend Yield: It is a ratio that implies the percentage of the current share price that is paid…

Q: Mr. Kamal wishes to accumulate Rs. 120,000 by the end of 5 years to meet educational expenses of his…

A: Compound interest with principal (A) = P x [1 + (r / n)](n x t) Principal = the present value of…

Q: Explain liquidity risk and credit risk faced by banks and discuss how banks manage these risks

A: Liquidity risk It is characterized as the risk of bringing about misfortunes coming about because of…

Q: Mega Company purchased 12 years ago a Mega Pen for P50,000. As the life of the Mega Pen was 20…

A: Straight-line depreciation method is the most common and easiest method to calculate depreciation.…

Q: he covariance between the return on Apple stock and the S&P 500 is 0.12. The variance of  the return…

A: Beta of stock is measure the variation of stock movement with overall market movement that can be…

Q: You have 100,000$ saving that is very important for you. You want to invest it for the next two…

A: Here, Discount Rate = 1% Savings = $100,000 To Find: NPV percentage of returns for selecting a…

Q: Confidentiality and privacy

A: Confidentiality means protecting secrecy. Banks have a duty to protect the confidentiality of their…

Q: Changes in stock prices are impossible to predict from public information.

A: The efficient market hypothesis refers to the market which is efficient and leaves no chance of…

Q: The following details were summarized for National Corporation: Year 2017 Per Share Dividend P2.99…

A: Here, Current Market Price is P62 Issuance Expense per Share is P2.00

Q: Why might an investor prefer to invest directly rather than indirectly?

A: The reasons why the investors prefer to invest directly than indirectly are because: Control: It…

Q: John Doe is considering investing some money that he inherited. The following payoff table gives the…

A: Forecast of the economy is the important process of prediction of economy in the future, As we know…

Q: In computing the B/C ratio, is the annual revenue counted as benefits? Please compute the B/C ratio…

A: The B/C ratio is known as the Benefit-Cost ratio. It shows the relationship between the cost and…

Q: Profitability Ratio for pepsi CO

A: The profitability ratio shows the efficiency of a company in making a profit. The profitability…

Q: Which one of the following statements is true regarding bond valuation? a. When yield to maturity is…

A: Solution:- Bond value means the value at which the bond trades currently trades in the market. It…

Q: LENLEN Company is considering on investing in new automated machinery. The machinery will be used…

A: Present value = (C1 * (1+r)-1)+ (C2 * (1+r)-2) + ...... +(Cn * (1+r)-n)  Where r = Required rate of…

Q: e R-Bar-M Ranch in Montana would like a new mechanized barn, which will require a GH¢600,000 initial…

A: Net present value is the difference between the present value of cash flow and initial investment…

Q: If you deposit $500 in a bank account today that earns 3% interest and you deposit $20 per month…

A: Option 1: Deposit $ 500 now Future Value = Present Value*(1+ Interest rate)n Solved using Financial…

Q: 40. Josh has a savings account at a bank that charges a $12 fee for every month that his balance…

A: Generally, banks have a limit defined for the minimum balance of the deposit to be maintained by the…

Q: Jennie invested a certain amount in a bank compounded semi-anually.The bank told her that the…

A: Solution:- When an amount is deposited somewhere, it earns interest on it.  The amount invested is…

Q: A city is spending $20.3 million on a new sewage system. the expected life of the system is 50…

A: We can calculate the capitalized cost by using the data provided in the question. We can see that…

Q: Kelly invested in two stocks. She put 22% into stock A, which has an expected return of 7.3%, and…

A: Expected return refers to the return earn by an investor on the amount invested during a period of…

Q: 4.13 A company produces and sells two products at unit contribution margins of P4 for A and P10 for…

A: Break-even point is that production and sale level at which the company recovers all its cost…

Q: 2. Spring LLC is planning for investment in Debt market. The company is targeting the following…

A: Bond can be defined as a government security which acts like debt security which includes repayment…

Q: Liquidity Ratio You have the following info on Marco's Polo Shop: Total Liabilites and equity…

A: Fixed assets = Total liabilities and equity-Current assets Where Total liabilities and equity = $211…

Q: Fun Tyne plc declares a dividend payment of 20p per share. Ignoring taxes and the time value  of…

A: Solution:- In efficient markets, the price of a security reflects immediate effect of all the…

Q: What trust, privacy and ethical issues do businesses need to be concerned with when trading online?…

A: The main trust, privacy and ethical concerns of business while doing online trading are as follows:…

Q: EXPLAIN THE ADVANTAGE OF offshore trust?

A: Offshore trust is the planning tool to protect your assets, This trust is created in abroad, It is…

Q: Mia just received her bank statement. The statement lists three deposits and 32 checks that cleared.…

A: Outstanding check are check written and issued to party but not presented before banks for payment…

Q: A rich relative has bequeathed you a growing perpetuity. The first payment will occur in a year and…

A: Perpetuity is the stream of cash flows or payments that are made at equal intervals that do not have…

Q: Discuss and critically compare sensitivity analysis and scenario analysis as means of  estimating a…

A: In capital budgeting we look at different projects and determine their financial viability and then…

Q: a. Outline the three main forms of business organisation and critically discuss the benefits  and…

A: Thanks for Questions “Since you have asked multiple question, we will solve the first question for…

Exchange Rate Risk

It is the possibility that the value of a currency will fluctuate in the future. In the wake of globalization, business establishments have increasingly ventured into international markets. The volume of international trade has prospered excellently in the near past and is expected to be more affluent in the future. The use of exchange-traded derivative financial instruments has been multi-folded to provide for the requirements of various MNCs and offshore potential investors. Most banks and financial institutions have helped integrate the global economies. Our Government has introduced some bold and extreme measures to fulfil the purpose behind the fiscal, industrial, and monetary policies. The enactment of GST is a huge step towards streamlining the taxation system of the country. Owing to Covid-19, this aspect of corporate risk management has become critical.