You Are a U

question 91

Multiple Choice

You are a U.S. investor who is trying to calculate the present value (PV) of £15 million cash inflow that will occur one year from now. The spot exchange rate is $1.5742/£ and the forward rate is F1 = $1.5682/£. The appropriate dollar discount rate for this cash flow is 1.05% and the appropriate £ discount rate is 1.45%. What is the present value of the dollar cash inflow computed by first converting the £ into dollars and then discounting the dollars?

• A) $23,275,505
• B) $23,186,792
• C) $23,278,575
• D) $23,367,640

Grasp the significance of diversification in reducing portfolio risk.

Know the measures of risk including variance, standard deviation, and the coefficient of variation.

Understand the impact of risk aversion on investment decisions and market outcomes.

Recognize the relevance of the Capital Asset Pricing Model (CAPM) in evaluating investments.

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Definitions:

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A theoretical approach that explains personality traits through the lens of evolutionary processes, suggesting traits have evolved because they were advantageous or adaptive.

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The social institution under which individuals establish a legally recognized partnership typically involving emotional and economic ties.

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