An Australian firm asks the bank for a SFr/A$ quote because it received SFr and wants to change it to A$. A bank is quoting the following exchange rates against the US dollar for the Swiss franc and the Australian dollar:SFr/USS = 1.4950-60AS/USS = 1.5245-50Calculate the cross bid rate for the SFr/A$ by identifying the correct formula in the attached formula sheet.One of the following answers will be correct:a. 1.0201b. 1.0213c. 0.9813d. 0.9803

Calculate the bid rate of US$/A$ by dividing 1 by the ask rate of A$/US$ which is 1.5250. Thus, the…

An Australian firm asks the bank for a SFr/AS quote because it received SFr and wants to change it to AS. A bank is quoting the following exchange rates against the US dollar for the Swiss franc and the Australian dollar: SFr/USS = 1.4950-60 AS/US$ = 1.5245-50 Calculate the cross bid rate for the SFr/AS by identifying the correct formula in the attached formula sheet. One of the following answers will be correct: a. 1.0201 b. 1.0213 c. 0.9813 d. 0.9803

An Australian firm asks the bank for a SFr/AS quote because it received SFr and wants to change it to AS. A bank is quoting the following exchange rates against the US dollar for the Swiss franc and the Australian dollar: SFr/USS = 1.4950-60 AS/US$ = 1.5245-50 Calculate the cross bid rate for the SFr/AS by identifying the correct formula in the attached formula sheet. One of the following answers will be correct: a. 1.0201 b. 1.0213 c. 0.9813 d. 0.9803

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A U.S. firm, sells merchandise today to a British company for £100,000. The current exchange rate is $1.38/£, the account is payable in three months, and the firm chooses to hedge by borrowing £98,765.43 today and exchanging the proceeds today for dollars; the loan will be paid back with the £100,000 accounts receivable (money market hedge). If Husky converted the borrowed pounds into dollars today and invested that amount at its WACC of 6% (1.5% for 90 days), how much much money in U.S. dollars will Husky Sporting Goods Company have in 90 days?
The following four banks of Switzerland have offered exchange rates against OMR to Mr. Ammar: CHF/OMR Bid Ask Swiss National Bank 2.3033 2.3160 Bank Morgan Stanley 2.3731 2.4157 Rothschild Bank 2.2967 2.2973 Valiant Bank 2.3262 2.3601 On returning from Switzerland Mr. Ammar wants to exchange 1.000 CHF into OMR Which bank's offer Mr. Ammar should? Swiss National Bank Rothschild Bank Bank Morgan Stanley Valiant Bank Assume that USD is the home currency and exchange rates displayed in the market as INR 74.27-80/USD. D
a) Explain to Mrs. Kaleji the differences of the quotations given above and the differences between BID and ASK prices in exchange rate b) How much Zambian kwacha is Mrs Kaleji expecting to be given by the bank if she sells US$ 2,000 and How much South African is Mrs Kaleji expecting if she sold US$ 2,000 to the bank c) Explain the functions of the exchange rate in international trade
Peter Sheffield has Euros (€) amounting to €500,000 and is provided with the following quotes: Bank A: Euro/US dollar = €0.8418/$ Bank A: British pound /US dollar = £0.7538/S Bank B: British pound/Euro = £0.8863/€ Determine whether an arbitrage opportunity exists. Show your calculation in the space below and briefly explain (in one or two sentences) why the arbitrage opportunity exists or not. For example, show your calculation as follows (The currencies used in the example are not applicable to your calculation. It just provide you with information how you should show your calculation): Yen/ZAR = 11.7654/1.3954 = 8.4316 (Round your answer to 4 decimals) Reason why arbitrage opportunity exists/ does not exist:
Assume the bid rate of a Canada dollar is A$.271 while the ask rate is A$.273 at Bank A. Assume the bid rate of the Canada dollar is A$.265 while the ask rate is A$.266 at Bank B. Given this information, what would be your gain if you use A$2,500,000 and execute locational arbitrage? That is, how much will you end up with over and above the A$2,500,000 you started with? Group of answer choices A$ 46,992 A$ 65,789 - A$ 65,789 A$ 18,315 - A$ 46,992
You have the following spot bid and ask rates between the Australian dollar (AUD), the Danish krone (DKK), and the Japanese yen (JPY): Bid Ask JPY 14.804/DKK JPY 14.952/DKK JPY 72.229/AUD JPY 72.955/AUD DKK 4.5722/AUD DKK 4.6182/AUD Which of the following is the closest to the arbitrage profit that is possible at these rates? a. 4.11% b. 3.70% c. 4.60% d. 4.44% е. 4.85%
cYou observe that the exchange rates for Japanese Yen at Tokyo Bank are given as follows: bid = JY101/$; ask = JY102/$, whereas they are given at New York Bank as: bid = $ 0.0097 Y; ask = $ 0.0098y. J J Calculate the arbitrage profit for $1 million (up to nearest cents, e.g., 100.23)
Dineshbhai
For an investor who starts with dollars and wants to end up with dollars, which of the following choices is an example of speculating in the FX market? Sell dollars at the spot rate, invest the proceeds in foreign currency-denominated financial instruments, and sign a forward exchange contract to buy the foreign currency. Sell dollars at the spot rate, invest the proceeds in foreign currency-denominated financial instruments, and sign a forward exchange contract to buy dollars. Sell dollars at the spot rate, invest the proceeds in foreign currency-denominated financial instruments, and then buy dollars at the future spot rate. Buy a dollar-denominated financial asset.
Let's say a bank offers the following exchange rates between US Dollar ($), Euro (€), British Pound (£) and Japanese Yen (¥): $/€ 1.20 i.e., €1 equals $1.20 $/£1.40 i.e., £1 equals $1.40 €/£1,16 i.e., £1 equals €1.16 ¥/$120 i.e., $1 equals 120¥ ¥/€140 i.e., €1 equals 140¥ Show how you can make a profit with triangular arbitrage by trading at the above exchange rates by following two alternative strategies. More specifically, the first strategy should only use transactions/conversions between dollar ($), Euro (€) and poundsterling (£), while the second strategy should only use transactions/conversions between dollar ($), Euro (€) and Japanese yen (¥). In both strategies, suppose you start with $1 ($) in your hands. Calculate the profit of each strategy. Which of the two strategies is more advantageous?
The theory of purchasing power parity (PPP) states that in the long-run exchange rates between two countries adjusts so that the price of an identical good is the same when expressed in the same currency. A scanner sells for $65.45 in the United States. The exchange rate between the U.S. dollar and the Swiss franc (SFr) is $0.8245 per Swiss franc. Suppose the price of the scanner in Switzerland was actually SFr 63.50. Assuming no transaction costs, transportation costs, or import restrictions, PPP predicts that the demand would (decrease or Increase) in Switzerland.
Assume the following bid and ask rates of the pound for two banks as shown below: Bid Ask Royal Bank of Canada CS 0.871 C$ 0.876 Westpac Bank in Australia CS 0.879 C$ 0.899 What is the arbitrage profit per Australian dollar? Group of answer choices There is no arbitrage opportunity. C$ 0.023 C$ 0.003 C$ 0.028 C$ 0.008

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