What is a spot-forward swap? A) the purchase of foreign currency spot against the sale of the same amount of foreign currency forward B) the sale of foreign currency spot against the purchase of the same amount of the foreign currency forward C) both the purchase or sale of a foreign currency spot against the […]
Date: September 19th, 2020
If the forward price of a currency contract is lower than the spot rate, the currency is said to be at a A) forward discount. B) forward premium. C) future expected exchange rate. D) forward swap rate. ANSWER Answer: A
Date: September 19th, 2020
If the forward price of a currency contract is higher than the spot rate, the currency is said to be at a A) forward discount. B) forward premium. C) future expected exchange rate. D) forward swap rate. ANSWER Answer: B
Date: September 19th, 2020
In the forward market the bid-ask spreads begin to ________ as the maturity date of the contract grows closer. A) widen B) narrow C) stabilize D) disappear ANSWER Answer: A
Date: September 19th, 2020
Outlaws is a general goods retail chain in the High Plains region. Use the financial information in the table to calculate Outlaws maximum sustainable growth rate. Selected Ratios Outlaws Inc. Year 5 ROE 9.98% ROA 4.27% Net Profit Margin 2.15% Total Asset Turnover 1.99 Dividend Payout Rate 0% A) 11.0% B) 11.1% C) 11.2% D) […]
Date: September 19th, 2020
In a forward contract no monies change hands until the maturity date of the contract known as the ________, A) spot value date B) exercise date C) forward contract date D) forward settlement date ANSWER Answer: D
Date: September 19th, 2020
The Oval Bearing Corp manufactures ball bearings. Oval Bearing Corp is all equity financed and its shareholders require a return of 8%. Elliptical Bearing Inc is also a manufacturer of ball bearings. Elliptical has 30% debt in its capital structure (debt-to-equity is 0.4286), and its cost of debt is 4%. What is Elliptical’s WACC? Assume […]
Date: September 19th, 2020
According to Modigliani and Miller’s second paper, firms should use ________% debt to maximize the value of the firm. A) 100 B) 20 C) 40 D) 80 E) 60 ANSWER A
Date: September 19th, 2020
On Friday, January 4, Oceanic Airlines declared a $0.75 per share dividend to be paid on Monday, March 11; the date of record will be Friday, February 15. What is Oceanic’s ex-dividend date? A) Monday B) Tuesday C) Wednesday D) Thursday E) Friday ANSWER C
Date: September 19th, 2020
What is the name of the contract where corporations, institutional investors, and individuals are required to pay or to receive a specific amount of foreign currency at a specific exchange rate at a particular date in the future? A) forward foreign exchange market B) forward currency contract C) forward rate contract D) future hedge contract […]
Date: September 19th, 2020
