1. Select whether each of the following scenario depicts risk or exposure

You have deposited US$1.0 million in the bank and interest rates fall the day after.

a)Your vehicle tires are near becoming bald.

b)Your business carries only locally made products.

c)You are unable to pay your suppliers due to shortfall in sales.

d)The wind blows away your roof during a storm

2.Mountain Inc. has earnings of $2.0 million for common shareholders and 500,000 shares of common stock outstanding at $60 per share.The firm is currently considering a $2.00 per share in cash dividends.

a)What is the calculated Earnings Per share (EPS)?

b)What is the calculated price/earnings (P/E) ratio?

c)If the firm can repurchase stock at $62.00 per share, how many shares can be purchased in lieu of making the proposed cash dividend payment?

3.Mountain Inc. has earnings of $2.0 million for common shareholders and 500,000 shares of common stock outstanding at $60 per share.The firm is currently considering a $2.00 per share in cash dividends.

a)What is the calculated Earnings Per share (EPS)?

b)What is the calculated price/earnings (P/E) ratio?Answer

c)If the firm can repurchase stock at $62.00 per share, how many shares can be purchased in lieu of making the proposed cash dividend payment?

Which of the following is true about violations of PPP?

Select one:

a. All of the above

b. Tells us that the relative competitiveness of a country vis--vis the other has changed

c. Impact the real rate of return on any portfolio of financial assets across countries.

d. Leads to foreign exchange risk

e. Indicates a change in the purchasing power of consumers