Chance Co., the parent of a US-based MNC, uses fundamental forecasting to estimate future values of exchange rates. Suppose that Chance Co. believes that movements in the value of the British (as measured by percentage change from the previous quarter), ebpebp , pound are dictated entirely by the inflation rate differential between the pound and the U. S. dollar in the previous quarter Infi . That is, the firm uses the following regression equation: ebp = bo + b1 + Inf1 + μt

Where μt is the error term and bo is a constant.

Suppose that Chance Co. estimates bo to be 0.0 and b1 to be 0.6.

According to these estimates, which of the following is associated with a one unit increase in Inft?

a. A decrease in the value Of the pound by 0.6 percent
b. A decrease in the value Of the pound by 0.4 percent
c. An increase in the value Of the pound by 0.4 percent
d. An increase in the value of the pound by 0.6 percent

d. An increase in the value of the pound by 0.6 percent

Explanation:

Given :

Regression equation :  

Change company estimates that to be 0.0 and the value of to be 0.6.

Now, ebp = 0.6 x inf + μt     -----------------

When Inf = 1 (assume that the error term is 0)

ebp = 0.6 x 1 = 0.6

That is it is an increase in the value of pound by 0.6% with the one unit increase in the .

Therefore, option (d) is correct.

lbc corporation makes and sells a product called product wz. each unit of product wz requires 4.1 hours of direct labor at the rate of $20.00 per direct labor-hour. management would like you to prepare a direct labor budget for june. the company plans to sell 28,000 units of product wz in june. the finished goods inventories o

two years ago, when picking flowers in the mountains back of yosemite valley, i found a book. it was blotted and storm-beaten; all of its outer pages were mealy and crumbly. the paper seemed to dissolve like the snow beneath which it had been buried, however; many of the inner pages were well preserved. and although all were more or less stained and torn, whole chapters were easily readable. this is the condition of the great open book of yosemite glaciers today; its granite pages have been torn and blurred by the same storms that wasted the castaway book.

two years ago, when picking flowers in the mountains back of yosemite valley; i found a book. it was blotted and storm-beaten, all of its outer pages were mealy and crumbly. the paper seemed to dissolve like the snow beneath which it had been buried, however, many of the inner pages were well preserved. and although all were more or less stained and torn; whole chapters were easily readable. this is the condition of the great open book of yosemite glaciers today, its granite pages have been torn and blurred by the same storms that wasted the castaway book.