Question
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) .
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