Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1. Suppose you own 7 shares of Tesla with a current share price of 1,900. Someone offers to trade you 8,654 Euros in exchange for

1. Suppose you own 7 shares of Tesla with a current share price of 1,900. Someone offers to trade you 8,654 Euros in exchange for all your Tesla shares. In the foreign exchange market 1 Euro trades for 1.14 U.S. Dollars. What is the NPV of this trade? Round your answer to two decimals (do not include the $-sign in your answer) .

2. When making investment decisions, which of the following are true regarding the interest rate (select all that apply)?

I.

The risk free rate is the correct interest rate to use to discount cash flows that will happen with certainty.

II.

The risk free rate is not the correct interest rate to use to discount cash flows that will happen with certainty.

III.

The risk of an investment should not affect the interest rate used to discount its cash flows.

IV.

The higher the risk of an investment, the higher the interest rate should be to discount cash flows from that investment.

3. You have decided to invest $2,626 into a savings account that has an effective annual rate of 3.7%. If you keep the money invested and make no withdrawals at all, how much will be in your savings account after 15 years? Round your answer to two decimals (do not include the $-sign in your answer) .

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Essential Mathematics For Economic Analysis

Authors: Knut Sydsaeter, Peter Hammond, Arne Strom

4th Edition

0273760688, 9780273760689

More Books

Students also viewed these Finance questions

Question

highlight how to collect and record interview and diary based data;

Answered: 1 week ago

Question

clarify the relationship between research, theory and practice;

Answered: 1 week ago

Question

evaluate the quality of your data;

Answered: 1 week ago