Question
Supposethatthecurrentexchangerateis 125cfaperghs. Aghanaianinvestorbuysanivorianbondpaying 6%interestfor 1millioncfa,whichthereforecostsghs8000.Thebondwillpay 60000cfainterestperyear;butthe cedi valueofthisdependsonfutureexchange rate,whichfrom todaysperspextivearerandom. A.Supposetheexchangeratenextyearisdistributednormallywith ameanof 120andstandarddeviationof 10.Findtheprobabilitythattheexchangeratewillbgreat or greaternextyear B.findtheprobability thattheinterestfromthebondwillne worthatleastghs550 C.Theinvestorcaninsteadbuy ,forthesameprice, aghanaianbondpaying 5.5%interest,which guaranteeteedtopayghs440.Whatistheprobability thattheghanaianbondisbetterinvestment?
Supposethatthecurrentexchangerateis 125cfaperghs. Aghanaianinvestorbuysanivorianbondpaying 6%interestfor 1millioncfa,whichthereforecostsghs8000.Thebondwillpay 60000cfainterestperyear;butthe cedi valueofthisdependsonfutureexchange rate,whichfrom todaysperspextivearerandom.
A.Supposetheexchangeratenextyearisdistributednormallywith ameanof 120andstandarddeviationof 10.Findtheprobabilitythattheexchangeratewillbgreat or greaternextyear
B.findtheprobability thattheinterestfromthebondwillne worthatleastghs550
C.Theinvestorcaninsteadbuy ,forthesameprice, aghanaianbondpaying 5.5%interest,which guaranteeteedtopayghs440.Whatistheprobability thattheghanaianbondisbetterinvestment?
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