Exercise 2.12. At the close of business on 20 November 2020, the exchange rate for Australiandollars against the British pound is 1.7148 (GBP is the domestic currency). This means thatyou get A$1.7148 for £1. The Bank of England rate is 0.5% and the Reserve Bank of Australiarate is 2.5%. Find the 3-months forward price of a Australian dollar (in GBP).

The objective of the question is to calculate the 3-month forward price of the Australian dollar in…

Answered: Exercise 2.12. At the close of business…

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter20: Short-term Financing

Section: Chapter Questions

Problem 4ST

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EXCHANGE RATES Table 17.1 lists foreign exchange rates for August 30, 2018. On that day, how many dollars would be required to purchase 1,000 units of each of the following: British pounds, Canadian dollars, EMU euros, Japanese yen, Mexican pesos, and Swedish kronas?
Match each term in Column A with its related definition in Column B. Column A 1. ____________ Spot rate 2. ____________ Currency appreciation 3. ____________ Translation risk 4. ____________ Transaction risk 5. ____________ Exchange rate Column B a. The rate at which one currency can be traded for another currency. b. The possibility that future cash transactions will be affected by changing exchange rates. c. A month ago, 1 U.S. was worth 8.5 Mexican pesos. Today, 1 is worth 9.0 Mexican pesos. The U.S. dollar has undergone what? d. The degree to which a firms financial statements are exposed to exchange rate fluctuation. e. The exchange rate of one currency for another for immediate delivery (today).
Using Exhibit 5.7, calculate the six-month forward premium or discount for the Euro versus the U.S. dollar. For simplicity, assume each month has 30 days. (X.XX%) or (-X.XX%)
Using Exhibit 5.7, calculate the six-month forward premium or discount for the Swiss franc versus the U.S. dollar. For simplicity, assume each month has 30 days. (X.XX%) or (-X.XX%)
Current exchange rate (Feb 15, 2018) is .0090 $/Yen. You speculate the exchange rate will be .0087 $/Yen on Mar 15, 2018. You plan to make money in the currency exchange market through the 'Short-selling' method. In this case, the first step is you borrow ________. Group of answer choices Yen US$
Use the information below to answer the following questions. Currency per U.S. $ 1.2380 1.2353 Australia dollar 6-months forward Japan Yen 6-months forward U.K. Pound 6-months forward 100.3600 100.0200 .6789 .6784 Suppose interest rate parity holds, and the current six month risk-free rate in the United States is 5 percent. Use the approximate interest rate parity equation to answer the following questions. a. What must the six-month risk-free rate be in Australia? (Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What must the six-month risk-free rate be in Japan? (Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Australian risk-free rate b. Japanese risk-free rate c. Great Britain risk-free rate c. What must the six-month risk-free rate be in Great Britain? (Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) % % %
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3- Sri Lanka Rupee (SLRS) fluctuates in recent times due to its economic situation. The Sri Lanka Rs trading in December 2020 at SLRS 181.5/$. The Sri Lanka Rs. is expected to appreciate by 7% in 2021. a- What will be the exchange rate after appreciation of the Sri Lankan currency? b- What will be the percentage change of Sri Lanka currency if, on March 31, 2021, it is trading at SL Rs 179.9/$?
DO NOT USE AI TO COMPLETE An investor enters today into a one-year-long currency forward on 1000000 units of foreign currency. The current exchange rate is 1.05 dollars per Swiss franc. Interest rates in the US and Switzerland are 3% and 4% per annum, respectively, with continuous compounding. A. What should be the delivery price for this contract? B. Explain the transactions that will occur at maturity if the spot exchange rate at that moment is1.03 dollars per Swiss franc
Assume that a bank has assets located in Germany worth €150 million earning an average of 8 percent. It also holds €100 in liabilities and pays an average of 6 percent per year. The current spot rate is €1.50 for $1. If the exchange rate at the end of the year is €2.00 for $1, ( LG 19-1) a. What happened to the dollar? Did it appreciate or depreciate against the euro (€)? b. What is the effect of the exchange rate change on the net interest margin (interest received minus interest paid) in dollars from its foreign assets and liabilities? c. What is the effect of the exchange rate change on the value of the assets and liabilities in dollars?
1. Given the following data on 13th March 2007: Interest rate on 12-month German T-bills: 4% Interest rate on 12-month Japanese T-bills: 0.61% Spot exchange rate €1.00 = Yen 154.2 (a) Making clear your assumptions, compute the market's expectation of the exchange rate on 13th March 2008. (b) If on 13th March 2007 you find a bank quoting a 12-month for- ward rate of €1.00 = Yen 152.0, explain how you could profit by speculating. Show your calculations/workings.
Assume that a bank has assets located in Germany worth €390 million earning an average of 6 percent. It also holds €190 in liabilities and pays an average of 4 percent per year. The current spot rate is €1.50 for $1. If the exchange rate at the end of the year is €2.00 for $1: a. What happened to the dollar? Did it appreciate or depreciate against the euro (€)?b. What is the effect of the exchange rate change on the net interest margin (interest received minus interest paid) in dollars from its foreign assets and liabilities?c. What is the effect of the exchange rate change on the value of the assets and liabilities in dollars?

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