)a currency dealer has good credit and can borrow either $1,000,000 or €800,000 for one year. the one-year interest rate in the u. s. is i$ = 5% and in the euro zone the one-year interest rate is i€ = 4%. the spot exchange rate is $1.25/€ and the one-year forward exchange rate is $1.40/€. a.) show how to realize a certain profit via covered interest arbitrage.

a) borrow $1,000,000 at 2%. trade $1,000,000 for €800,000; invest at i_€=6%; translate proceeds back at forward rate of $1.20 = €1.00, gross proceeds = $1,017,600

b) borrow €800,000 at i_€=6%. translate to dollars at the spot, invest in the u. s at i_$=2% for one year; translate €848,000 back into euro at the forward rate of $1.20 = €1.00 net profit $2400

c) borrow €800,000 at i_€=6%. translate to dollars at the spot, invest in the u. s at i_$=2% for one year; translate €850,000 back into euro at the forward rate of $1.20 = €1.00 net profit $2000

d) both c and b.

What are the main advantages and disadvantages of organizing a firm as a c corporation? the advantages are: (select all the choices that apply.) a. there is no limit on the number of owners a c corporation may have, thus allowing the corporation to raise substantial amounts of capital. b. the life of the business can continue beyond the death of any of the owners. c. the corporation can use the assets of the owners to pay for corporate liabilities. this attracts smaller investors to the corporation. d. the liability of the owners is limited to the amount of their investment in the firm. the disadvantages are: (select all the choices that apply.) a. income to a c corporation is subject to double taxation, once at the corporate level and again when received by the owners in the form of a dividend. b. the life of the business usually ends with the death of any of the owners. c. the c corporation is more complicated and more expensive to set up than other business entities. d. corporate liabilities can be passed on to the share

Suppose a firm faces a fixed price of output, 푝푝= 1200. the firm hires workers from a union at a daily wage, 푤푤, to produce output according to the production function 푞푞= 2퐸퐸12. there are 225 workers in the union. any union worker who does not work for this firm is guaranteed to find nonunion employment at a wage of $96 per day. a.what is the firm’s labor demand function? b.if the firm is allowed to choose 푤푤, but then the union decides how many workers to provide (up to 225) at that wage, what wage will the firm set? how many workers will the union provide? what is the firm’s output and profit? what is the total income of the 225 union workers? c.now suppose that the union sets the wage, but the firm decides how many workers to hire at that wage (up to 225). what wage will the union set to maximize the total income of all 225 workers? how many workers will the firm hire? what is the firm’s output and profit? what is the total income of the 225 union workers? [hint: to maximize total income of union, take the first order condition with respect to w and set equal to 0.]

Yowell company granted a sales discount of $360 to a customer when it collected the amount due on account. yowell uses the perpetual inventory system. which of the following answers reflects the effects on the financial statements of only the discount? assets = liab. + equity rev. − exp. = net inc. cash flow a. (360 ) = na + (360 ) (360 ) − na = (360 ) (360 ) oa b. na = (360 ) + 360 360 − na = 360 na c. (360 ) = na + (360 ) (360 ) − na = (360 ) na d. na = (360 ) + 360 360 − na = 360 na