INSTRUCTORS MANUAL: MULTINATIONAL FINANCIAL MANAGEMENT, 9TH ED.
CHAPTER 2 SUGGESTED ANSWERS TO CHAPTER 2 QUESTIONS
1. a. Describe how these three typical transactions should affect present and future exchange rates. Joseph E. Seagram & Sons imports a year
Home Assignment Work sheet -3
RETURN, RISK AND THE SECURITY MARKET LINE
Ques-1 Define Security Market line.
The security market line (SML) is the line that results when expected returns and beta
coefficients are p
1. A call option on Australian dollars has a strike (exercise) price of $.56. The present exchange rate is
$.59. This call option can be referred to as:
A) in the money.
B) out of the money.
C) at the money.
D) at a discount.
Answer the following questions.
1. Forward versus Futures Contracts. Compare and contrast forward and futures contracts.
Currency futures contracts are standardized into small amounts and they can be valuable for small
1) Deriving Forecasts of the Future Spot Rate. As of today, assume the
following information is available:
Real rate of interest required
Nominal interest rate
Oneyear forward rate
Chapter 26: M & A
Multiple Choice Questions
1. Last month, Keyser Design acquired all of the assets and liabilities of Tenor Machine Works. The
combined firm is known as Keyser Design. Tenor Machine Works no longer exists as a separate entity.