Business, 23.11.2020 14:00 sophie5988

The entrepreneurial attitude of the firm prompts it to think out of the box. How? What? Carry trade pops up. After some research, Nanotronics assembles the following data with the aim of executing a carry trade practice on $65,000.00 of its cash in the first round. In the first round, the firm stays conservative and decides not to tie up more than $65,000.00, with the aim of having its final position in USD. The firm needs to decide whether to invest (or deposit) the funds in the U. S. or in Mexico. The firm is looking for a riskless investment activity. Its horizon is exactly 9 months. The following data are assembled. Note: Nanotronics is neither a banker nor an FX (foreign exchange) dealer. It takes the rates and figures in the market as they are given to it.

Spot rate: Buy rate MXN 19.235/USD;

Spot rate: Sell rate MXN 19.385/USD

Nine-month forward rate: Buy rate MXN 20.115/USD

Nine-month forward rate: Sell rate MXN 20.265/USD

U. S commercial interest rate (borrowing) 4.5 percent

U. S commercial interest rate (lending) 1.0 percent

Mexico commercial interest rate (borrowing or lending) 6.5 percent

What happens if Nanotronics relaxes its desire to stay riskless?

Discuss the pros and cons of such investment practice?

Would it be possible to forecast the outcome if the risk factor is left open (not managed)?

At the outset, how can a person check whether the U. S. and Mexican markets are in equilibrium or disequilibrium?

Answers: 2

Show answers

Another question on Business

Business, 22.06.2019 19:30

Alaska king crab fishing in the 1960s and '70s was a dangerous but rich fishery. boats from as far away as california and japan braved the treacherous gulf of alaska crossing to reach the abundant king crab beds in cook inlet and bristol bay. suddenly, in the early 1980s, the fishery crashed due to over fishing. all crabbing in those areas ended. to this day, there is no crabbing in bristol bay or cook inlet. a. how would an economist explain the decline of the alaska king crab fishery

Answers: 3

Answer

Business, 23.06.2019 02:10

You are the owner of a local honda dealership. unlike other dealerships in the area, you take pride in your “no haggle” sales policy. last year, your dealership earned record profits of $1.5 million. however, according to the local chamber of commerce, your earnings were 10 percent less than either of your competitors. in your market, the price elasticity of demand for midsized honda automobiles is 4.5. in each of the last five years, your dealership has sold more midsized automobiles than any other honda dealership in the nation. this entitled your dealership to an additional 30 percent off the manufacturer’s suggested retail price (msrp) in each year. taking this into account, your marginal cost of a midsized automobile is $11,000. what price should you charge for a midsized automobile if you expect to maintain your record sales?

Answers: 1

Answer

Business, 23.06.2019 08:30

During his last performance review, franco's boss urged him to set some short-term and long-term sales goals to him perform better at work. which workplace skill does franco's boss want him to improve?

Answers: 2

Answer

Business, 23.06.2019 09:00

You tour a company and notice that employees all seem to have a common goal and understanding of procedures. what would be the contributing factor for this?

Answers: 3

Answer

You know the right answer?

The entrepreneurial attitude of the firm prompts it to think out of the box. How? What? Carry trade...

Questions