Laura Cervantes. Laura Cervantes is a currency speculator and she sells eight June futures contracts for 500,000 pesos at the closing price quoted here:a. What is the value of her position at maturity if the ending spot rate is $0.12007/Ps?b. What is the value of her position at maturity if the ending spot rate is $0.09804/Ps?c. What is the value of her position at maturity if the ending spot rate is $0.11009/Ps?.....a. What is the value of her position at maturity if the ending spot rate is $0.12007/Ps?The value of Amber's position is $(Round to the nearest cent. Use a minus sign if value is negative.) Data table........(Click on the icon e to import the table into a spreadsheet.)Mexican Peso (CME) – MXN 500,000, $ per MXNLifetimeMaturityOpenHighLowSettleChangeHighLowOpen InterestMarch0.109530.109880.109300.109580.110000.0977034,481.00...June0.107900.107950.107780.107730.108000.097303,405.00...Sept0.106150.106150.106100.105730.106150.099301,481.00...

Given, No. of pesos per contract = 500,000 No. of contracts = 8 Total no. of pesos = 500,000 * 8 =…

Laura Cervantes. Laura Cervantes is a currency speculator and she sells eight June futures contracts for 500,000 pesos at the closing price quoted here: a. What is the value of her position at maturity if the ending spot rate is $0.12007/Ps? b. What is the value of her position at maturity if the ending spot rate is $0.09804/Ps? c. What is the value of her position at maturity if the ending spot rate is $0.11009/Ps? .....

Laura Cervantes. Laura Cervantes is a currency speculator and she sells eight June futures contracts for 500,000 pesos at the closing price quoted here: a. What is the value of her position at maturity if the ending spot rate is $0.12007/Ps? b. What is the value of her position at maturity if the ending spot rate is $0.09804/Ps? c. What is the value of her position at maturity if the ending spot rate is $0.11009/Ps? .....

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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Suppose we wish to borrow $10 million for 91 days beginning next June, and that the quoted Eurodollar futures price is 93.23. What 3-month LIBOR rate is implied by this price? How much will be needed to repay the loan? Show work and discuss result.
Suppose you are a speculator from France. You observe the following 1-year interest rates, spot exchange rates and forward prices. Forward contract sizes are $10,000 each. Exchange rate €0.6500 = $1.00 €0.6731 = $1.00 Interest rate APR So(€/S) is 3% F3so(€/S) 4% Assume you did your own calculation of the forward price based on interest rate parity (IRP). It shows that an arbitrage opportunity exists because the forward price that you calculated is: F3so(€/S) of €0.6563 = $1.00. What actions will you take to make use of the arbitrage opportunity and what will your profit be? Page 1 of 5 а. €167.89. b. €240.24. C. $70.29. d. $43.08. е. None of the above. See my workings below.
23. Assume that a speculator purchases a put option on British pounds (with a strike price of $1.50) for $.05 per unit. A pound option represents 31,250 units. Assume that at the time of the purchase, the spot rate of the pound is $1.51 and continually rises to $1.62 by the expiration date. The highest net profit possible for the speculator based on the information above is: A) $1,562.50. B) -$1,562.50. C) -$1,250.00. D) -$625.00.
(c) BingBing Co has borrowed a £25 million money market loan, where the interest rate is LIBOR +300 basis points. It is currently 15th May 20X0 and LIBOR is 2.5%. The interest rate is due to be reset for the following 3 months on the 1st July 20X0 (i.e. LIBOR will be reset). The company wishes to hedge its exposure using short term interest rate futures contracts (STIRS). Assume the actual futures price on the 15th May 20X0 is 97. Calculate and discuss the outcome of the hedge if basis is 0.2 and LIBOR is 3% on the 1st July 20X0. The discussion should include basis risk.
A bank customer will be going to London in June to purchase £100,000 in new inventory. The current spot and futures exchange rates are as follows: Exchange Rates dollars/pound Period Spot March June September December Rate 1.5342 1.6212 1.6901 1.7549 1.8416 The customer enters into a position in June futures to fully hedge her position. When June arrives, the actual exchange rate is $1.735 per pound. How much did she save? $ (Round your response to the nearest whole number.)
June 2021 Mexican peso futures contract has a price of $0.05197 per MXN. You believe the spot price in June will be $0.05831 per MXN. MXN500,000 is the contract size of one MXN contract. Required: What speculative position would you enter into to attempt to profit from your beliefs? Calculate your anticipated profits, assuming you take a position in three contracts. What is the size of your profit (loss) if the futures price is indeed an unbiased predictor of the future spot price and this price materializes?
Sysco corporation has purchased currency call options to hedge a 4,320,000 Swedish krona payable. The premium is $0.015 (per unit of Swedish krona) and the exercise price of the option is $0.097 per Swedish krona. If the spot rate at the time of maturity is S0.105 per Swedish krona, what is the total amount paid by the corporation if it acts rationally (after accounting for the premium paid)? Question 27 options: S 419,040. $354,240. $518,400. S453,600. $483,840.
A European call that will expire in one year is currently trading for $3. Assume the risk-free rate (based on continuous compounding) is 5%, the underlying stock price is $60 and the strike price is $55. a. Is there an arbitrage opportunity? b. Describe exactly what a trader should do to take advantage of the arbitrage opportunity assuming it exists. c. Determine the present value of the profit that the trader can earn assuming you identify an arbitrage opportunity. Use at least four decimal places for those questions that require a numerical answer.
Today's price of Microsoft (MSFT) is $150 per share. A retail investor purchases an at-the-money European put option on MSFT with a maturity of one year. She pays a premium of $14.11. The c.c. risk-free interest rate is one percent. What is the potentiality value of the option? Round your answer to three decimal places.
June 2021 Mexican peso futures contract has a price of $0.05194 per MXN. You believe the spot price in June will be $0.04525 per MXN. Required: a. What speculative position would you enter into to attempt to profit from your beliefs? b. Calculate your anticipated profits, assuming you take a position in three contracts. c. What is the size of your profit (loss) if the futures price is indeed an unbiased predictor of the future spot price and this price materializes? Complete this question by entering your answers in the tabs below. Required A Required B Required C Calculate your anticipated profits, assuming you take a position in three contracts. Note: Do not round intermediate calculations. Round your answer to the nearest whole number. Anticipated profit
Cachita Haynes. Cachita Haynes works as a currency speculator for Vatic Capital of Los Angeles. Her latest speculative position is to profit from her expectation that the U.S dollar will rise significantly against the Japanese yen. The current spot rate is 119.00 = $1.00. She must choose between the following 90-day options on the Japanese yen: a. Should Cachita buy a put on yen or a call on yen? b. What is Cachita's breakeven price on the option purchased in part (a)? c. Using your answer from part (a), what is Cachita's gross profit and net profit (including premium) if the spot rate at the end of 90 days is ¥140.00 = $1.00? a. Should Cachita buy a put on yen or a call on yen? (Select the best choice below.) A. Cachita should buy a put on yen to profit from the rise of the dollar (the fall of the yen) OB. Cachita should buy a call on yen to profit from the fall of the dollar (the nse of the yen). OC. Cachita should buy a call on yen to profit from the rise of the dollar (the fall of…
Suppose that you are a speculator that anticipates a depreciation of the Singapore dollar (S$). You purchase a put option contract on Singapore dollars. Each contract represents S$40,000, with a strike price of $0.68 and an option premium of $0.02 per unit. Suppose that the spot price of the Singapore dollar is $0.62 just before the expiration of the put option contract. At this time, you exercise the option, while also purchasing S$40,000 in the spot market at the current spot rate. Use the drop-down selections to fill in the following table from your (the buyer's) perspective to determine your net profit (on a per contract basis). (Note: Assume there are no brokerage fees.) Note: Assume there are no brokerage fees. Transaction Selling Price of S$ - Purchase Price of S$ - Premium Paid for Option = Net Profit Per Unit $0.68 -$0.62 -$0.02 Per Contract

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