Use the Following Information to Answer Questions 10-12

question 42

Multiple Choice

Use the following information to answer questions 10-12.
Table 6.2: Spot and Forward Exchange Rates on May 5, 2012.

-Refer to Table 6.2.On May 5,2012,the 3-month forward yen was selling at a:

• A) 13.10% premium per annum against the dollar.
• B) 52.40% premium per annum against the dollar.
• C) 13.10% discount per annum against the dollar.
• D) 52.40% discount per annum against the dollar.

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Definitions:

Annuity

A financial product that pays out a fixed stream of payments to an individual, typically used as part of retirement planning.

Sensitivity Analysis

A technique used in financial modeling to determine how different values of an independent variable affect a particular dependent variable under a given set of assumptions.

Residual Value

The estimated value of a fixed asset at the end of its useful life, important for calculating depreciation.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time.