Jane Cruise has U.S. dollars ($) amounting to $1,000,000, and is provided with the following quotes: Bank C: Euro/US dollar = €0.8529/$ Bank C: British pound /US dollar £0.7601/S Bank D: British pound/Euro £0.8864/€ Jane did her own direct cross rate calculation of the British pound/Euro and according to her the British pound/Euro = £0.8864/€ quotation from Bank D, provides her with an arbitrage opportunity, since the direct cross rate, based on the quotations of Bank Cis £0.8912/€. How much profit can Jane make from this opportunity? Use the space below to show the steps that Jane must take to make a profit. For example show all the steps in the following way in the space provided below (please note the example just show you how to write your steps since the currencies and exchange rates in the example are not applicable to the question): Step 1: Buy Yen with dollar 1000,000 at exchange rate of $1.0965/Yen = Yen 911,992 Step 2: Sell Yen 911,992 for Pound at exchange rate2.0561/Yen - Pound 443,554.64 Step 3: Profit=

Jane Cruise has U.S. dollars ($) amounting to $1,000,000, and is provided with the following quotes: Bank C: Euro/US dollar = €0.8529/$ Bank C: British pound /US dollar £0.7601/S Bank D: British pound/Euro £0.8864/€ Jane did her own direct cross rate calculation of the British pound/Euro and according to her the British pound/Euro = £0.8864/€ quotation from Bank D, provides her with an arbitrage opportunity, since the direct cross rate, based on the quotations of Bank Cis £0.8912/€. How much profit can Jane make from this opportunity? Use the space below to show the steps that Jane must take to make a profit. For example show all the steps in the following way in the space provided below (please note the example just show you how to write your steps since the currencies and exchange rates in the example are not applicable to the question): Step 1: Buy Yen with dollar 1000,000 at exchange rate of $1.0965/Yen = Yen 911,992 Step 2: Sell Yen 911,992 for Pound at exchange rate2.0561/Yen - Pound 443,554.64 Step 3: Profit=

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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Use the information below to answer the questions that follow. U.S. $ EQUIVALENT CURRENCY PER U.S. $ .6394 .9793 U.K. Pound (£) Canada dollar a. Which would you rather have, $100 or £100? b. Which would you rather have, $100 Canadian or £100? c-1. What is the cross-rate for Canadian dollars in terms of British pounds? (Do not include the Canadian dollar sign, C$. Round your answer to 4 decimal places, e.g., 32.1616.) c-2. What is the cross-rate for British pounds in terms of Canadian dollars? (Do not include the pound sign, £. Round your answer to 4 decimal places, e.g., 32.1616.) c-1. Cross-rate c-2. Cross-rate 1.5640 1.0211 с 1€ /Can$
ASSUME THAT THE U.S. DOLLAR IS THE FUNCTIONAL CURRENCY. Ruthie Inc. had a debit adjustment of $7900 for the year ended December 31, 2019, from restating its foreign subsidiary's accounts from their local currency units into U.S. dollars. Additionally, Ruthie had a receivable from a foreign customer. It is denominated in the customer's local currency. On December 31, 2018, this receivable for 300,000 local currency units (LCU) was correctly included in Ruthie's balance sheet at $124200. When the receivable was collected on February 15, 2019, the U.S. dollar-equivalent was $122200. In Ruthie's 2019 consolidated statement of income, how much should be reported as foreign exchange gain/(loss) in computing net income? BE SURE TO TYPE A SIMPLE NUMBER WITH NO COMMAS OR DOLLAR SIGNS. FOR EXAMPLE, TYPE 1000 INSTEAD OF $1,000. IF THE NUMBER IS NEGATIVE, TYPE -1000 INSTEAD OF ($1,000) Your Answer:
A bank in London, Ontario has a buying rate of CHF 1 = C$1.3547. If the exchange rate is CHF 1 = C$1.3841, calculate the rate of commission that the bank charges.
Brief, Inc., had a receivable from a foreign customer that is payable in the customer's local currency. On December 31, 2020, Brief correctly included this receivable for 377,500 local currency units (LCU) in its balance sheet at $290,000. When Brief collected the receivable on February 15, 2021, the U.S. dollar equivalent was $301,200. In Brief's 2021 consolidated income statement, how much should it report as a foreign exchange gain? Multiple Choice $16,200 $27,400 $0 $11,200
You observed the following quotes between Canadian dollars (C$), euros (€) and Swiss francs (CHF) on 3/1/XX: C$1=€.90, C$.70/CHF On 3/2/XX, quotes for each currency were as follows: C$1.15-€1, CS.75/CHF You converted 600,000 Swiss francs into euros on 3/1. On 3/2 you converted your euros back to Swiss francs. How many francs would you have on 3/27 Round intermediate steps to four decimals. O 715,555.56 665357.14 246,521.74 579,587.4
Winston Corp., a U.S. company, had the following foreign currency transactions during 2021: ( 1.) Purchased merchandise from a foreign supplier on July 16, 2021 for the U.S. dollar equivalent of $47,000 and paid the invoice on August 3, 2021 at the U.S. dollar equivalent of $54,000. (2.) On October 15, 2021 borrowed the U.S. dollar equivalent of $315,000 evidenced by a non-interest-bearing note payable in euros on October 15, 2022. The U.S. dollar equivalent of the note amount was $295,000 on December 31, 2021, and $299,000 on October 15, 2022. What amount should be included as a foreign exchange gain or loss from the two transactions for 2022?
ASSUME THAT THE LOCAL CURRENCY UNIT IS THE FUNCTIONAL CURRENCY. Cade Inc. had a debit adjustment of $6400 for the year ended December 31, 2019, from restating its foreign subsidiary's accounts from their local currency units into U.S. dollars. Additionally, Cade had a receivable from a foreign customer. It is denominated in the customer's local currency. On December 31, 2018, this receivable for 300,000 local currency units (LCU) was correctly included in Cade's balance sheet at $121000. When the receivable was collected on February 15, 2019, the U.S. dollar-equivalent was $123800. In Cade's 2019 consolidated statement of income, how much should be reported as foreign exchange gain/(loss) in computing net income? BE SURE TO TYPE A SIMPLE NUMBER WITH NO COMMAS OR DOLLAR SIGNS. FOR EXAMPLE, TYPE 1000 INSTEAD OF $1,000. IF THE NUMBER IS NEGATIVE, TYPE -1000 INSTEAD OF ($1,000) Your Answer:
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?
Let say, the spot rate of Swiss franc is $0.88 and the Canadian dollar is $0.35. The value of the Canadian dollar in Swiss franc is _______. A. about 0.3977 Swiss franc B. about 2.36 Swiss franc C. about 0.3621 Swiss franc D. about 2.51 Swiss franc
A bank in London, Ontario charges 2.50% commission to buy and sell currencies. Assume that the current exchange rate is US$1 = C$1.3599. a. How many Canadian dollars will you receive from the bank if you sell US$1,340? Round to the nearest cent b. How much commission will you pay the bank for this transaction? Round to the nearest cent
An investor is setting up a fund which requires 10 years of contributions. The investor pays £250 per month for 10 years. All payments are made in arrears, i.e at the end of the period. The effective annual rate i = 1%. What is the value of the fund after 10 years? £ Enter an answer correct to 2 decimal places.
You observed the following quotes between Canadian dollars (CS), euros (€) and Swiss francs (CHF) on 3/1/XX: C$1-.90, CS.70/CHF On 3/2/xx, quotes for each currency were as follows: C$1.15-1, Cs.75/CHF You converted 600,000 Swiss francs into euros on 3/1. On 3/2 you converted your euros back to Swiss francs. How many francs would you have on 3/2? flound intermediate steps to four decimals. 715,555 56 665357.14 246,521.74 579,587.4

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