Consider the Following Assume the Current Market Futures Price Is 1

question 55

Multiple Choice

Consider the following: $$\begin{array}{l}\begin{array} { l l r } \text {Risk-free rate in Canada }&0.04 \text { year } \\\text {Risk-free rate in Switzerland }&0.03 / \text { year } \\\text {Spot exchange rate }&1.67 \mathrm{SF} / \$\end{array}\end{array}$$
Assume the current market futures price is 1.66 SF/$.You borrow 167,000 SF and convert the proceeds to Canadian dollars and invest them in Canada at the risk-free rate.You simultaneously enter a contract to purchase 170,340 SF at the current futures prices (maturity of 1 year) .What would be your profit (loss) ?

• A) Profit of 630 SF
• B) Loss of 2300 SF
• C) Profit of 2300 SF
• D) Loss of 630 SF
• E) None of these

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Definitions:

Raise

typically denotes an increase in salary or wages given to an employee based on performance, tenure, or negotiation.

Training

The process of enhancing the skills, knowledge, and competencies of employees to perform specific jobs.

Equity Theory

An individual’s perception of fair and equitable treatment.

Expectancy Theory

The process people use to evaluate the likelihood that their efforts will yield the results they want, along with the degree to which they want those results.