(b) You are a foreign exchange trader in an investment bank. Your foreign exchange dealer has quoted the following exchange rates: USD1 = SGD 1.3328 / 38 USD1 = MYR 4.1010/ 24 (i) Given the recent changes in government policy, you foresee an appreciation in value of SGD against MYR and have decided to purchase SGD 200,000 using the above exchange rate. Calculate the amount of MYR required for this transaction. (ii) Assume you have purchased USD 70,000 at the above USD/MYR exchange rate. You plan to hold the USD overnight and would like to limit the losses to a maximum of MYR 8,000. Calculate the stop loss rate for the USD position.
(b) You are a foreign exchange trader in an investment bank. Your foreign exchange dealer has quoted the following exchange rates: USD1 = SGD 1.3328 / 38 USD1 = MYR 4.1010/ 24 (i) Given the recent changes in government policy, you foresee an appreciation in value of SGD against MYR and have decided to purchase SGD 200,000 using the above exchange rate. Calculate the amount of MYR required for this transaction. (ii) Assume you have purchased USD 70,000 at the above USD/MYR exchange rate. You plan to hold the USD overnight and would like to limit the losses to a maximum of MYR 8,000. Calculate the stop loss rate for the USD position.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education