If the spot exchange rate is yen120/€1 and the one year forward exchange rate is yen130/€1. Then the euro is at a forward: Select one: a. O b. C. d. premium and the one-year European interest rate is lower than the one-year Japanese interest rate. discount and the one-year European interest rate is higher than the one-year Japanese interest rate. premium and the one-year European interest rate is higher than the one-year Japanese interest rate. discount and the one-year European interest rate is lower than the one-year Japanese interest rate.

If the spot exchange rate is yen120/€1 and the one year forward exchange rate is yen130/€1. Then the euro is at a forward: Select one: a. O b. C. d. premium and the one-year European interest rate is lower than the one-year Japanese interest rate. discount and the one-year European interest rate is higher than the one-year Japanese interest rate. premium and the one-year European interest rate is higher than the one-year Japanese interest rate. discount and the one-year European interest rate is lower than the one-year Japanese interest rate.

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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The Spot Exchange Rate is OMR 0.385030 = 1 USD and 90 days forward rate is OMR 0.394030 = 1USD (Home Currency is OMR, which is given as Direct quotes). Does the OMR is trading at premium or discount in 90 days forward market?
Today's spot exchange rate: 1 euro = $1.25.US interest rate (home interest rate) is 7%.EU interest rate (foreign interest rate) is 10%.a) If the IRP (Interest rate parity) holds, what should the forward exchange rate be today?b) Assume that today, you invest $500 in the EU market for one year and at the same time, enter a currency forward contract to sell euro in a year at the forward rate from part a). If today's spot exchange rate is: 1 euro=$1.32 instead of $1.25, show how much profits or losses you make next year.
If the real exchange rates between the USD and CAD, AUD, and BRL respectively are 1.20, 0.90, and 1.40 respectively with the percentage of trade between the US and Canada, US and Australia, and US and Brazil are 50%, 20%, and 30% respectively (assuming these are only countries on the planet!), what is the effective real exchange rate for the USD? Question options: a)0.9 b)1.4 c)1.2 d)1.0
Assume interest rate parity holds. The one-year risk-free rate in the U.S. is 4.98 percent and the one-year risk-free rate in Japan is 5.37 percent. The spot rate between the Japanese yen and the U.S. dollar is ¥116.85/$. What is the one-year forward exchange rate? Multiple Choice ¥117.28/$ ¥119.15/$ ¥120.12/$ ¥116.85/$ ¥116.42/$
i need the answer quickly
Suppose you observe the following spot and forward exchange rates between the U.S. dollar ($) and the Canadian dollar (C$): Spot Exchange Rate One-Year Forward Exchange Rate Canadian dollar (U.S. dollar/Canadian dollar) 0.8842 0.9001 The current one-year interest rate on U.S. Treasury securities is 6.89%. If interest rate parity holds, what is the expected yield on one-year Canadian securities of equal risk? 4.75% 4.00% 5.00% 5.75%
Assume that the bilateral spot exchange rate between the € and the $ is E€/$=0.82, the Eurozone's annual interest rate is 4%, and the annual forward exchange rate is F€/$=0.84. i. Find the current US interest rate that satisfies the covered interest-rate parity ii. Suppose that the annual US interest rate is the one you found in (i) and the Eurozone introduces a tax t=7.5% on capital gains from investing abroad (e.g., on foreign bonds, deposits abroad, etc.). Find the new annual forward exchange rate F*€/$ that satisfies the covered interest-rate parity on an after-tax basis
Assume that interest rate parity holds. The Mexican interest rate is 50 percent, and the U.S. interest rate is 8 percent. Subsequently, the U.S. will interest rate decreases to 7 percent. According to interest rate parity, the peso's forward O a. premium; decrease O b. premium: increase O c. discount; decrease O d. discount; increase
Currently, the spot exchange rate is $0.80/A$ and the one-year forward exchange rate is $0.76/A$. One-year interest is 3.5% in the United States and 4.2% in Australia. You may borrow up to $1,000,000 or A$1,250,000, which is equivalent to $1,000,000 at the current spot rate. Determine if IRP is holding between Australia and the United States. Yes O No
Question II: The premium of a 100-strike yen-denominated put on the euro is 8.763. The current exchange rate is 95 /c. What is the strike of the corresponding curo-denominated yen call, and what is its premium?
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If the Australian/US dollar exchange rate is 0.72 USD/AUD, US interest rates are 0.25% and Australian interest rates are 0.75% (both for 1 year), what should the 1-year forward USD/AUD exchange rate be?

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