Category Archives: Accounting

Help-Discussion prompts


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 Discussion Prompt #1

Identify and discuss an example of self-serving bias in a workplace. Describe how you engaged in self-serving bias to explain your own or a co-worker’s behavior, or how a co-worker engaged in self-serving bias in explaining your or their behavior. How did this impact the situation and the relationship?

Discussion Prompt #2

Analyze the attributional patterns you use to explain a mean or disappointing behavior by a good friend and by someone whom you do not like. Analyze how differences in your feelings about the two individuals affect your attributional tendencies.

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W4 Discussion Options Menu: Forum

Discussion Prompt #1

Identify and define at least one regulative and constitutive rule for interacting in face-to-face situations, and one of each type of rule when communicating over e-mail. Discuss how you learned each of these rules. What happens if these rules are not followed?

Discussion Prompt #2

Describe verbal communication between you and a close friend or romantic partner of the other sex. How do you both follow the gender patterns for your respective gender? How do gender stereotypes factor into this interaction?

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W5 Discussion Options Menu: Forum

Discussion Prompt #1

Consider three different friends that you have and discuss their physical appearance. Does their physical appearance affect their personality? Are there certain things about their physical appearance that cause others to stereotype them or prejudge them? If they went to a different country, how would people view them?

Discussion Prompt #2

Look around your office or bedroom. How would you analyze the artifacts and environment? What do you these nonverbal say about who you are? How do these items impact your feelings of comfort, identity and security? How would it be different if all of these things disappeared?

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W6 Discussion Options Menu: Forum

Discussion Prompt #1

Analyze your own listening effectiveness. Using the textbook to guide you, analyze your strengths and weaknesses in terms of the text’s guidelines for effective informational listening and effective relational listening. Identify two listening skills you would like to improve and describe how you plan to develop greater competence in each.

Discussion Prompt #2

Effective listening varies according to listening purposes and people with whom we interact. Explain how we adapt styles and behaviors of listening to diverse situations and individuals. Use the textbook for definitions and supporting material.

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W7 Discussion Options Menu: Forum

Discussion Prompt #1

Consider how conflict can be detrimental and/or beneficial to a relationship. Give examples and how it applies to the basic principle of conflict.

Discussion Prompt #2

Consider a friendship that you sustain over long distances. What technologies (e.g., phone, e-mail, e-Cards, web pages, chat rooms, video phones, etc.) do you use to sustain this relationship? Do you use different technologies for different kinds of communication activities?

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W8 Discussion Options Menu: Forum

Discussion Prompt #1

Consider the four guidelines for effective communication in families. Discuss how you have used or not used each of these guidelines in your family.

Discussion Prompt #2

Watch a television show about a family. Describe how your family is different from the television show that you watch. Relate it terms that were discussed in the book.

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ACC6040: Integrated Accounting Projects


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ACC6040: Integrated Accounting Projects

Unit learning outcomes:

  1. Evaluate a research problem and specify key variables of the underlying accounting relationship.
  2. Conduct a targeted search of the accounting literature.
  3. Formulate a conceptual framework to guide the examination of the research problem.
  4. Develop hypotheses to support the testing of a relationship.
  5. Evaluate the most appropriate method of data collection in addressing a research problem.

Providing AoL for CLO 1:

  1. Demonstrate mastery of a global body of ACCOUNTING knowledge and practice, including knowledge of research principles and methods [AQF K1, K2, S1].
    • Demonstrate breadth and depth of global discipline knowledge;
    • Demonstrate knowledge of practice in the global environment;
    • Demonstrate knowledge of relevant research principles and methods;
    • Integrate theory and practice.

Providing AoL for CLO 4:

  1. Independently initiate, plan and execute a substantial project to meet agreed deliverables [AQF S5, A1, A2, A3].
    • Demonstrate autonomy and accountability in the execution of a substantial research or industry project;
    • Apply knowledge and skills with initiative and/or creativity to new situations.

Assignment 1: Literature Review 30%

The objective for this assignment is to fulfil the first stage of completing an accounting research proposal. As a research proposal you should look at current unresolved issues in accounting research and practice. The Literature Review will help to identify unresolved accounting issues and research opportunities. Accounting here is broadly defined to include financial accounting, corporate accountability, management accounting, auditing and accounting education.

Marking Criteria

  • Demonstrates breadth and depth of global knowledge and practice [CLO1.1, 1.2, 1.4].
  • Critically evaluates discipline literature [CLO1.3].
  • Positions research within a conceptual framework for the area of study [CLO4.2].
  • Structure, language, referencing, conventions etc.

 

 

Criteria Fail

 

Pass

Threshold

Credit Distinction High Distinction

 

Demonstrates breadth and depth of global knowledge and practice
[10 marks]
Does not demonstrate sufficient knowledge of the topic. Insufficient research, research is irrelevant to the topic, or out of date. Demonstrates adequate global knowledge of the topic from a satisfactory range of research. Research is fairly contemporary and mostly related to the topic. Demonstrates thorough global knowledge of the topic from the breadth and depth of research. Research is up to date and related to the topic. Demonstrates comprehensive global knowledge of the topic from the wide-ranging breadth and depth of research. Research is up to date and explicitly related to the topic. Demonstrates profound global knowledge of the topic from the extensive breadth and depth of research. Research is discerning, up to date and explicitly related to the topic.
  0–4 5 6 7 8–10
Critically evaluates discipline literature
[10 marks]
Fails to critically evaluate the literature. Summarises only. Literature is critically evaluated in a satisfactory manner considering quality, reliability and validity, theories and methods applied and areas of consensus and contradiction. Literature is critically evaluated in an effective manner considering quality, reliability and validity, theories and methods applied and areas of consensus and contradiction. Literature is critically evaluated in a comprehensive manner considering quality, reliability and validity, theories and methods applied and areas of consensus and contradiction. Literature is critically evaluated in a meticulous manner considering quality, reliability and validity, theories and methods applied and areas of consensus and contradiction.
  0–4 5 6 7 8–10
Positions research within a conceptual framework for the area of study
[5 marks]
Fails to identify a general area or ‘gap’ for the research and does not present a satisfactory rationale for further research. Identifies a general area or ‘gap’ for the research and presents a satisfactory reason for further research. Identifies the ‘gap’ or position for the research and presents an effective argument for further research. Clearly identifies the ‘gap’ or position for the research and presents a strong argument for further research. Very clearly identifies the ‘gap’ or position for the research and presents a compelling argument for further research.
  0–2 2.5 3 3.5 4-5
Structure, language, referencing, conventions, presentation
[5 marks]
The review is confusing, lacks cohesion and demonstrates poor command of language with too many errors that affect comprehension. Inconsistent in-text referencing with many omissions on the reference list. Poor presentation. Mostly, the review is logical, cohesive, and uses appropriate language with some errors. Appropriate and consistent in-text referencing with some omissions on the reference list. Adequate presentation. Good logical flow, cohesive, and uses appropriate language with minor errors or typos. Appropriate and consistent in-text referencing with few omissions on the reference list. A capable presentation. Very good logical flow, cohesion, and excellent command of language with minor typos. Appropriate and consistent in-text referencing and accurate and complete reference list. A successful presentation. Outstanding logical flow, cohesion, and command of language. Appropriate and consistent in-text referencing and accurate and complete reference list. Highly polished presentation.
  0-2 2.5 3 3.5 4-5

 

 

 

 

 

 

 

 

 

Guide to Prepare a Self- Reflection Sheet for Assignment 1

Each member of group needs to submit this individually to the instructor via an email. If the assignment is done individually this is not a requirement and not applicable.

  • Self-reflection should be limited to 1 page of “Word Document”
  • Use Font as Times New Roman 12 point, 1.5 spacing
  • Self-reflection should describe individual contribution towards “Literature Review” Task (e.g. which journal articles you read, what sections of the literature review you developed etc)
  • Self-reflection should also highlight what were the positive outcomes experienced from the assignment and what were the issues encountered/possible improvements for future tasks

 

Guide to Prepare Group Evidence

Each group needs to submit this document via an email to the instructor may be as a PDF combined document. (One from each group). If the assignment is done individually this is not a requirement and not applicable. It should indicate evidence for group meetings/tasks allocation and also % of contribution of each group member towards the task.

Evidence may include the following but not limited to:

  • Group contract
  • Meeting logs

 

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  1. Find the present value, P, for the following cash flows.

i = 12%

 

  1. Star Inc. must purchase a small size milling machine. The following is known about the machine and about possible cash flows. The machine is expected to have a useful life of 8 years. The company has a MARR of 7%. Determine the NPW of the machine.
  p=.25 p=.50 p=.25
First cost $40,000 $40,000 $40,000
Annual savings 2,000 5,000 8,000
Annual costs 12,000 8,000 6,000
Actual salvage value 4,000 5,000 6,500

 

 

  1. The company accountant is uncertain which of three depreciation methods the firm should use for welding equipment that costs $150,000, and has a zero salvage value at the end of a 10-year depreciable life. Compute the depreciation schedule for the welding equipment using the methods listed:
    1. Straight line
    2. Double declining balance
    3. Sum-of-years’ –digits

Based on your analysis, which depreciation method is most profitable for the firm?

  1. A Petroleum company recently completed construction on a large refinery in Louisiana. The final construction cost was $71,000,000. The refinery covers a total of 260 acres. The Expansion and Acquisition Department at the company is currently working on plans for a new refinery in Texas. The anticipated size is approximately 360 acres. If the power-sizing exponent for this type of facility is .70, what is the estimated cost of construction?

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  1. Discuss any managerial discretion available to the enterprises when devaluing/revaluing the non-current assets? (about 300 words)
  2. Name two types of firms that are more likely to choose to revalue the non-current assets and why they choose to revalue and provide example. (around 300 words).

 

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Buy Answers for_ Fiscal Policy Questions


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University

College of Business

ECON 201

Spring                                                                                         Name: ________________________

Fiscal Policy Questions (25 Points)                                           

Dr.                                                         Grade: ________________________

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 Please read chapter 13 on “Fiscal Policy, Deficits, and Debt” and answer the following 3 questions. Identify your answers clearly by using the numbers preceding the questions. Questions must be answered from the book. The book name is mcconnell brue flynn macroeconomics 20th edition.

                                                         

  1. Discuss the problems that government may encounter in enacting and applying fiscal policy?

 

 

  1. Discuss the size, composition, and consequences of the U.S. public debt.

 

 

 

  1. What are the Social Security and Medicare trust funds, and how long will they have money left in them? What is the key long-run problem of both Social Security and Medicare? What are some of the unpleasant options to restore long –run balance to both Social Security and Medicare?

 

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In analyzing the case, please respond to the following questions:

  1. Consider the following dates in the evolution of the Pentium chip flaw during 1994:

June 30:               Intel discovered the flaw

October 31:        Dr. Nicely posted information about the flaw on the Internet and started an active discussion group

November 24:   Article in Electrical Engineering Times appeared, a story has been broadcast on CNN and articles have appeared in the New York Times and Boston Globe

December 12:    IBM announces that it has stopped shipments of its computers with the flawed Pentium chip

At any of these dates, did Intel have a contingent liability as defined by FAS No. 5?

  1. At the end of the December 17 meeting, what should Intel management do? Should they expand their Pentium chip replacement program by (i) covering more individuals; and/or (ii) providing or paying for some or all of the (non-chip) incidental costs of replacing the defective chips?
  2. Independent of your answer in question 2, assume that in December 1994, Intel’s management decided to expand its program by offering to supply a replacement chip to all purchases of a defective Pentium chip, regardless of how they use it.  Intel will provide a new chip free of charge, but will not pay for any other costs.  What expense/liability should Intel reflect on its 1994 financial statements?
  3. How would your answer to question 3 change if Intel also offered to pay for the labor and direct incidental costs in addition to offering to supply a new chip to all individuals?
  4. After the December 17 meeting, how should Intel’s management communicate its decision to the financial markets? Should Intel file a form 8-K?
  5. On December 20, 1994, XYZ corp. had a chemical spill in a field adjacent to their factory.  They completed and paid cash for the immediate clean up prior to their December 31 year-end.  However, they have consulted with an environmental engineering firm that indicated that there is a 90% chance that XYZ will have to perform a further clean up in six months.  The cost of such a clean up would most likely be $100,000.  If the weather is perfect during the clean up, it could cost as little as $95,000.  On the other hand, there is a small chance that soil contamination could spread, increasing the costs to $150,000.  Should XYZ recognize a liability in their 1994 financial statements?  Assuming they do, what amount should be recognized?  How would XYZ record such a liability on their books? What impact would the subsequent cash payment have if the liability were settled for the amount accrued? What if the actual clean-up costs are more or less than was accrued in 1994?

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Retirement Planning at J&J Bagel


Retirement Planning at J&J Bagel

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You recently graduated from Suffolk University, and your job search led you to J&J Bagel, Inc.

As you are finishing your employment paperwork, Jerry Chen, one of the co-owners of J&J Bagel,

informs you about the company’s new 401(k) plan.

A 401(k) is a type of retirement plan, offered by many companies. A 401(k) is tax deferred,

which means that any deposits you make into the plan are deducted from your current income, so no

current taxes are paid on these deposits. For example, if your annual salary is $30,000 and you contribute

$1,500 to the 401(k) plan, you will pay taxes only on the $28,500 in income. No taxes will be due on any

capital gains or plan income while you are invested in the plan, but you will pay taxes when you withdraw

the money at retirement. You can contribute up to 15 percent of your salary to the plan. As is common,

J&J Bagel has a 5 percent match program. This means that the company will match your contribution

dollar-for-dollar up to 5 percent of your salary, but you must contribute to get the match. In other words,

if you contribute 5 percent of your $30,000 salary (which is $1,500) towards the 401(k) plan, J&J Bagel

will match your contribution by adding another $1,500 to your plan, so that $3,000 in total will be

contributed to your 401(k) plan.

The 401(k) plan has several options for investments, most of which are mutual funds. As you

know, a mutual fund is a portfolio of assets. When you purchase shares in a mutual fund, you are actually

purchasing partial ownership of the fund’s assets, similar to purchasing shares of stock in a company. The

return of the fund is the weighted average of the return of the assets owned by the fund, minus expenses.

The largest expense is typically the management fee paid to the fund managers, who make all of the

investment decisions for the fund. J&J Bagel uses Imperium Financial Services as its 401(k) plan

administrator.

Jerry Chen then explains the following retirement investment options available for employees:

  1. Company Stock. One option is stock in J&J Bagel. The company is currently privately held. The price

you would pay for the stock is based on an annual appraisal, less a 20 percent discount. When you are

interviewed by the owners, John Benson and Jerry Chen, they informed you that the company stock

was expected to be publically sold in three to five years. If you needed to sell the stock before it

became publicly traded, the company would buy it back at the then-current appraised value.

  1. Imperium S&P 500 Index Fund. This mutual fund tracks the S&P 500 Index. Stocks in the fund are

weighted exactly the same as they are in the S&P 500 Index. This means that the fund’s return is

approximately the return of the S&P 500 Index, minus expenses. With an index fund, the manager is

not required to research stocks and make investment decisions, so fund expenses are usually low. The

Imperium S&P 500 Index Fund charges expenses of 0.20 percent of assets per year.1

  1. Imperium Small-Cap Fund. This fund primarily invests in small capitalization stocks. As such, the

returns of the fund are more volatile. The fund can also invest 10 percent of its assets in companies

based outside of the U.S. This fund charges 1.7 percent of assets in expenses per year.

  1. Imperium Large-Cap Fund. This fund invests primarily in large capitalization stocks of companies

based in the U.S. The fund is managed by Jenna King and has outperformed the market in six out of

the last eight years. The fund charges 1.5 percent in expenses.

  1. Imperium Bond Fund. This fund invests in long-term corporate bonds issued by U.S. companies. The

fund is restricted to investments in bonds with investment grade credit rating. This fund charges 1.4

percent in expenses.

  1. Imperium Money Market Fund. This fund invests in short-term, high credit quality debt instruments,

which include Treasury Bills. As such, the return on money market funds is only slightly higher than

the return on Treasury Bills. Because of the credit quality and short-term nature of the investments,

there is only a very slight risk of negative return. The fund charges 0.60 percent in expenses.

1 The return on a mutual fund after accounting for management expenses is calculated as follows. If a fund charges 2

percent in expenses and it is expected to yield a 10 percent return before expenses, then the return on this fund after

expenses will be (1 + 0.10)×(1 – 0.02) – 1 = 0.078 or 7.8 percent.

QUESTIONS

  1. What advantages/disadvantages do the mutual funds offer compared to company stock for your

retirement investing?

  1. One can assess investment risk by looking forward to how assets are expected to react to a particular

set of circumstances or “states of economy”. Use the following set of assumptions for the coming

year to compute the expected rates of return (before expenses) and the standard deviations for the

mutual funds described above.

Expected Rate of Return (before expenses)

Scenario Probability S&P 500

Index Fund

Small-Cap

Fund

Large-Cap

Fund

Bond

Fund

Money

Market Fund

Recession 20% -12% -30% -10% 18% 2%

Near Recession 10% -8% -20% -6% 14% 3%

Normal 30% 12% 22% 12% 8% 4%

Near Boom 20% 22% 38% 15% -1% 5%

Boom 20% 36% 54% 20% -6% 6%

  1. Given the expected returns calculated for each of the mutual funds above, estimate the betas of these

funds. Assume a risk-free rate of 4 percent and the expected market return equal to the expected

return on the S&P 500 Index.

  1. If you decide to invest your money equally in the Small-Cap and Bond funds, what would your

portfolio’s expected return and risk level (standard deviation and beta) be? (Hint: Adjust mutual fund

returns for management expenses as explained in footnote 1.)

  1. What would happen if you were to put 70 percent of your portfolio in the Small-Cap fund and 30

percent in the S&P 500 Index fund? Would this combination be better for you?

  1. The returns of the Imperium Small-Cap Fund are the most volatile of all the mutual funds offered in

the 401(k) plan. Why would you ever want to invest in this fund? When you examine the expenses of

the mutual funds, you will notice that this fund also has the highest expenses. Will this affect your

decision to invest in this fund?

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CASE 2: Roxbury Manufacturing Company by Khursheed Omer


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CASE 2

Roxbury Manufacturing Company

by

Khursheed Omer

Roxbury Manufacturing Company is a privately owned business. Products manufactured by Roxbury had been doing very well until the year 2011. The last two years have seen a steady decline in sales and profit. If this declining trend continues, the company might come under financial distress. Income statements for the last two years are given below.

Year 1 Percent Year 2 Percent

Sales $ 4,000,000 100 $ 3,600,000 100

Less Variable Expenses $ 3,000,000 75 $ 2,700,000 75

——————————————————————–

Total Contribution Margin $ 1,000,000 25 $ 900,000 25

Less Fixed Expenses $ 500,000 $ 500,000

———————————————————————

Net Income before taxes $ 500,000 $ 400,000

==========================================

Mr. Creighton, the owner of the company is baffled that only a ten percent decline in sales has resulted in a twenty percent decline in profits. He asks you to explain to him how in spite of maintaining efficiency in operations by keeping variable expenses and contribution margin at the same percentage level, he has experienced a greater percentage decline in profits.

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ACCT-101; PRINCIPLES OF ACCOUNTING


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ACCT-101; PRINCIPLES OF ACCOUNTING

2nd ASSIGNMENT

Last Date for Submission 18thMarch 2017

Total of 10 Marks

 

Note: You are required to work in this assignment individually and you should use your own words to solve this assignment. If you cheat from your classmate or copy from any sources (Plagiarism), your assignment will be forward to the College with cheating code!

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Question 1:

 

You are the financial officer for N.A.E Fun Store, a retailer that sells toys for kids. The business owner, Abdullah recently reviewed the annual financial statements you prepare and sent you an email stating that he thinks you overstated net income. He explains that although he has invested a great deal in security, he is sure shoplifting and other forms of inventory shrinkage have occurred, but he does not see any deduction for shrinkage on the income statement. The store uses a perpetual inventory system. (3 marks)

Required:Prepare a two paragraphs memorandum that responds to the owner’s concerns.

 

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Question 2:

 

  • On May 11, Salam Co. accepts delivery of $30,000 of merchandise it purchases for resale from Hiyyah Corporation.With the merchandise is an invoice dated May 11, with terms of 3/10, n/90, FOB shipping point. The goods cost Hiyyah $20,000.
  • On May 11, when the goods are delivered, Salam pays $335 to Express Shipping for delivery charges on the merchandise.
  • On May 12, Salam returns $1,200 of goods to Hiyyah, who receives them one day later and restores them to inventory. The returned goods had cost Hiyyah$800.
  • On May 20, Salammails a check to Hiyyah Corporation for the amount owed. Hiyyah receives it the following day.

Required:

  • Please prepare entries that Salam Co. records for these transactions.(2 marks)(Note: Salam Company and Hiyyah Corporation use a perpetual inventory system.)

 

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Question 3

 

Use the following adjusted trial balance of Juffali Trading Est. to answer the below:
Juffali Trading Est

Adjusted Trial Balance

For Year Ended December 31, 2016


Account Title                                                                       Debit  Credit
Cash                                                                                     $7,000
Accounts receivable                                                             16,500
Office supplies                                                                  2,000
Trucks                                                                               170,000
Accumulated depreciation—Trucks                     .                                   $35,000
Land                                                                                     75,000
Accounts payable                                                                                        11,000
Interest payable                                                                                             3,000
Long-term notes payable                                                                            52,000
Common Stock                                                                                           10,000
Retained Earnings                                                                                     151,000

Dividends                                                                         19,000
Sales Revenue                                                                                           128,000
Depreciation expense—Trucks                                         22,500
Salaries expense                                                                60,000
Office supplies expense                                                      7,000
Repairs expense—Trucks                                      _11,000_         ____       
Totals                                                                                $390,000$390,000

 

 Required:

  • Prepare the Single-Step Income Statement as of December 31, 2016. (2 marks)
  • Prepare the Classified Balance Sheet as of December 31, 2016. (3 marks)

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Assignment help-FIN 415 Spring 2017 Homework Set 4


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FIN 415 Spring 2017 Homework Set 4

Please turn in page 3 only – Thanks!

Problem 1: Assume that the forward rate of a 1-Year long forward GBP is 𝐹1𝑈𝑆𝐷𝐺𝐵𝑃⁄=1.30. The amount of the contract is USD 250,000. What is the size of the contract?

Problem 2: The size of a 1-Year forward AUD (Australian dollars) is AUD 260,000 and the amount is USD 182,000. What is the 1-Year USD/AUD forward rate?

Problem 3: What is the profit/loss on a 1-Year long forward EUR at t=1 when 𝑋1𝑈𝑆𝐷𝐸𝑈𝑅⁄=1.11; 𝐹1𝑈𝑆𝐷𝐸𝑈𝑅⁄=1.22 and the size of the contract is EUR 350,000?

Problem 4: What is the size of a difference check on a 1-Year short forward GBP contract given that the size of the contract is GBP 500,000; the amount of the contract is USD 625,000; and 𝑋1𝑈𝑆𝐷𝐺𝐵𝑃⁄=1.30 ?

Problem 5: Assume that 𝑟𝐸𝑈𝑅=7% and 𝑟𝑈𝑆𝐷=4%. What is the 1-Year synthetic forward rate, given that 𝑋0𝑈𝑆𝐷𝐸𝑈𝑅⁄=1.16?

Problem 6: Today’s GBP/USD spot rate is, 𝑋0𝑈𝑆𝐷𝐺𝐵𝑃⁄=1.28. Assume that 𝑟𝐺𝐵𝑃=6% and 𝑟𝑈𝑆𝐷=4%, if the 1-Year USD/GBP forward rate is 𝐹1𝑈𝑆𝐷𝐺𝐵𝑃⁄=1.28, according to the Covered Interest Rate parity (CIRP), is the GBP underpriced/overpriced in the actual forward contract?
2
Problem 7: Based on the information in Problem 6, assuming that you can borrow 500,000 units in the synthetic forward position at t=0, what would your profit be from CIRP arbitrage (in USD)?

Problem 8: Assume that 𝑟𝐸𝑈𝑅=10%, 𝑟𝑈𝑆𝐷=3% and 𝑋0𝑈𝑆𝐷𝐸𝑈𝑅⁄=1.32. You want a long forward position in EUR 210,000 1-Year forward, i.e. receive EUR one year in the future. Your banker quotes you the following USD/EUR forward rate: 𝐹1𝑈𝑆𝐷𝐸𝑈𝑅⁄=1.22. Will you enter the actual forward contract or set up a synthetic forward position?

Problem 9: Assume you want a short position in AUD in a 1-Year USD/AUD contract. You calculate the synthetic forward at 𝐹𝑌1𝑈𝑆𝐷𝐴𝑈𝐷⁄=0.80 and your banker quotes you 𝐹1𝑈𝑆𝐷𝐴𝑈𝐷⁄=0.82. Do you choose the actual forward contract or the synthetic forward?
Problem 10: Compute the mark-to-market value of the following short forward NZD (New Zealand Dollar) contract. The size of the short position is NZD 450,000 and the forward rate is 𝐹𝑁𝑈𝑆𝐷𝑁𝑍𝐷⁄=0.66; the current spot rate (at time of valuation) 𝑋0𝑈𝑆𝐷𝑁𝑍𝐷⁄=0.64 . The NZD and USD interest rates are: 𝑟𝑁𝑍𝐷=9% and 𝑟𝑈𝑆𝐷=3%; assume the contract matures in two years from now (so at t=2).
Bonus Problem: Which of the following two statements is correct?
S1: According to CIRP, the spot price of the high interest rate currency is expected to appreciate.
S2: According to CIRP, forward rates and synthetic forward rates are the same.
a) S1 is true but S2 is false
b) S2 is true but S1 is false
c) Both statements are true
d) Both statements are false
3
FIN 415 Homework 4 Spring 2017 Name:____________________________________
Problem 1:
Problem 2:
Problem 3:
Problem 4:
Problem 5:
Problem 6:
Problem 7:
Problem 8:
Problem 9:
Problem 10:
Bonus Question:

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