Eager for a master to answer a few financial calculation questions in English! 100

Option B What my teacher told me.

First, find the beta value of equity without financial leverage Beta value without leverage = Beta value with leverage (1+(1-t) b s) is Then find the beta value after the change of financial leverage = (1+(1-t) b s) Beta value without leverage =(1+(1-40%)1 1) 75 68=50 17 The adjusted cost of equity capital can be calculated directly by camp 5%+50 17 8%= The general idea is to unload the financial leverage first to obtain the full equity beta Then load the new financial leverage to find a new beta

Why is the new financial leverage 1 1,

(1) 3-month forward exchange rate GPB1=USD(

The swap rate is small before and then large, that is, the forward exchange rate is smaller than the spot exchange rate, and the forward pound is discounted (2) According to the theory of interest rate parity, the forward depreciation of the currency with a high interest rate, in this example, the pound is a currency with a low spot interest rate, and the forward depreciation is instead, that is, the investment arbitrageur can also obtain the benefit of exchange rate changes while obtaining arbitrage benefits. Sterling holders should of course invest in the New York market, so that they can benefit from both arbitrage and exchange rate movements.

Assuming that the exchange rate remains unchanged, GBP holders will convert to USD at spot for 3 months of investment, and the investment will be recouped after 3 months**, minus the opportunity cost of GBP investment, and the income:

3) the use of swap transactions to avoid foreign exchange risk, the owner of the pound at the spot into the US dollar, three months of investment, at the same time, the forward of the US dollar investment principal and interest, at the time of maturity, the US dollar investment principal and interest recovered, the implementation of the forward contract ** to obtain the pound, minus the opportunity cost of the pound investment, that is, the net income of arbitrage:

(1) If the US dollar is at a three-month forward premium.

Three-month forward rate for GBP/USD: 1=$(

2) If the dollar is discounted for a three-month forward.

Three-month forward rate for GBP/USD: 1=$(

1. There is no forward time here, and for the convenience of calculation, the forward time is set to one year. According to the theory of interest rate parity. When the currency is an interest rate differential, the currency with the higher interest rate depreciates in the forward. According to risk-free arbitrage, the relevant data can be calculated according to the following formula:

Spot exchange rate * (1 + USD interest rate) Forward rate = 1 + GBP interest rate (1) 2 * (1 + 10%) Forward rate = 1 + 5% forward rate = 2 * (1 + 10%) (1 + 5%) =, i.e. USD GBP (2) 2 * (1 + 8%) GBP interest rate.

GBP interest rate = 2 * (1 + 8%), that is.

3) Because the interest rates of the two currencies are the same, the spot exchange rate is the same as the forward exchange rate, which is the same as the US dollar pound sterling (4) 2 * (1 + US dollar interest rate).

USD interest rate = (1+9%)*.

2. (1) Judgment: First, convert the three markets to the same price (i.e., the base currency is not the same) USD dem=

dem/gbp=（1/

gbp/usd=

Multiply the exchange rate (available mid-price) = ((.)

It is not equal to 1, that is, there is an opportunity for arbitrage.

2) Arbitrage direction: If the exchange rate is multiplied by more than 1, US dollar holders can exchange it for marks in the market where US dollars are the base currency (New York), and then in the Frankfurt market for pounds sterling, and then in the London market for US dollars.

3) Arbitrage result (profit) calculation.

$100,000*.

b (1+5%)/(1+2%)

a A 5 per cent increase in exchange rates and a 2 per cent difference in inflation were 3 per cent