ic wants to start a tennis academy in India and is looking for funding options. He finds that the interest rates in India are around 12% per annum. Lenders in his parent country, Serbia are willing to extend similar loans at 3% per annum. a. Advise him on the suitability of the two options. b. If 1 Serbian Dinar can be bought in the spot market for Rs 0.72 and in the 3- month forward market at 0.78, calculate the annualised forward premium/ discount of the rupee to the Serbian Dinar.
ic wants to start a tennis academy in India and is looking for funding options. He finds that the interest rates in India are around 12% per annum. Lenders in his parent country, Serbia are willing to extend similar loans at 3% per annum. a. Advise him on the suitability of the two options. b. If 1 Serbian Dinar can be bought in the spot market for Rs 0.72 and in the 3- month forward market at 0.78, calculate the annualised forward premium/ discount of the rupee to the Serbian Dinar.
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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Novak Djokovic wants to start a tennis academy in India and is looking for
funding options. He finds that the interest rates in India are around 12% per annum.
Lenders in his parent country, Serbia are willing to extend similar loans at 3% per
annum.
a. Advise him on the suitability of the two options.
b. If 1 Serbian Dinar can be bought in the spot market for Rs 0.72 and in the
3- month forward market at 0.78, calculate the annualised forward premium/
discount of the rupee to the Serbian Dinar.
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