Use the information in the table below to answer the following questions:per U.S. Sin U.S. S009211108.56009304107.481582363201.57956331Japanese yen6-mos forwardBritish pound3-mos forwarda. The six-month forward rate for the Japanese yen isplaces, e.g. 32.16.)in the forward market than in the spot marketb. The three-month forward rate for British pounds is9.32.1616)in the forward market than in the spot marketper US dollar. The yen is selling at abecause it is(Do not round intermediate calculations and round your answer to 2 decimalper US dollar. The British pound is selling at abecause it is(Do not round intermediate calculations and round your answer to 4 decimal places,

When forward rate is more than spot rate then the forward rate is at premium to the spot rate and…

places, e.g. 32.16.) in the forward market than in the spot market. b. The three month forward rate for Betish pounds is 9.32.1616) in the forward market than in the spot market (Do not round intermediate calculations and round your answer to 2 decimal per US dollar. The British pound is selling at a because it is (Do not round intermediate calculations and round your answer to 4 decimal places,

places, e.g. 32.16.) in the forward market than in the spot market. b. The three month forward rate for Betish pounds is 9.32.1616) in the forward market than in the spot market (Do not round intermediate calculations and round your answer to 2 decimal per US dollar. The British pound is selling at a because it is (Do not round intermediate calculations and round your answer to 4 decimal places,

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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b) In a daily meeting, the Chief Financial Officer (CFO) gave Ari the following table of market rates Spot exchange rate: Yen 106/$ U.S. dollar interest rate per 10% annum Japanese Yen interest rate per 6% annum and told Ari that the company's financial analyst expected the Japanese Yen to depreciate against the U.S. dollar by 3.46% in 90 days. Assume there are 360 days in a year, and all interest rates are simple interest rates. If the financial analyst's prediction about the US dollar and Japanese Yen turned out to be true: b.1) What would the spot exchange rate (Yen/$) be in 90 days? in l b.2) Would Ari make a profit by borrowing 1 million US dollar and investing in the money markets? If yes, how much profit would Ari realize in 90 days? If no, explain why.
unc.3 Your company can get yen loans for 2.0%. Dollar rates on the same loans are 4.5%. The spot yen per dollar exchange rate is 104. The forward rates for years 1 thru 4 are, 101.51, 99.08, 96.71, and 94.40, respectively. What is the present value of the market-maker's net cash flow if spot rates are 102 instead? A) $188.59 B) $206.43 C) $219.96 D) $242.06
Carry Trade, Inc., borrows yen when the yen is trading at ¥120/US$. If the nominal annual interest rate of the loan is 5% and at the end of the year the yen trades at ¥130/USS, what is the effective annual interest rate of the loan? The effective annual interest rate is %. (Round to two decimal places. Enter a negative number for a depreciation of the yen.)
Assume the following information is available for the United States and Europe: Nominal interest rate Expected inflation Spot rate One-year forward rate a. Does IRP hold? IRP -Select- $ U.S. 4% 2% $ in this case. b. According to PPP, what is the expected spot rate of the euro in one year? Do not round intermediate calculations. Round your answer to three decimal places. EUROPE 6% 5% $1.13 $1.10 c. According to the IFE, what is the expected spot rate of the euro in one year? Do not round intermediate calculations. Round your answer to three decimal places. d. Reconcile your answers to parts (a) and (c). Parts a and c combined say that the forward rate premium or discount is [-Select- of the euro. ✓the expected percentage appreciation or depreciation
The 6-month interest rate in the US is 12.25% p.a. The 6-month interest rate in Canada is 15.25% p.a. The spot rate is US$0.8203/Canadian$ and the 6-month forward rate is US$0.8113/Canadian$. For a transaction size of US$700,000, how can an investor take advantage of the situation without taking undue risks? Ignore transaction costs and income taxes
a. If a firm buys under terms of 3/15, net 30, but actually pays on the 20th day and still takes the discount, what is the nominal cost of its nonfree trade credit? Assume a 365-day year. Do not round intermediate calculations. Round your answer to two decimal places. %
Raghubhai
Q8: Calculate the cross rate between the Costa Rican colón (CRC) and the Canadian dollar (CAD) from the following spot rates: CRC 600.29 = USD 1.00 and 1.2205 CAD = USD 1.00. What is the cross rate expressed as the number of CRC per CAD. Give your answer to 2 dp (2 decimal places).
Treasury bills are currently paying 8 percent and the inflation rate is 3 percent. What is the approximate real rate of interest? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) What is the exact real rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
1. As all values are denominated in U.S. dollars, you do not have to enter any dollar signs. 2. Round all interest payments down to the nearest whole dollar. 3. Rounding creates a situation in which the numbers in the loan's final payment are often unequal. Notice in this problem, the ending balance for payment 6 is -$2. Therefore, your final payment would actually be reduced by $2 to $26,903. In the real world, to prevent over paying, you should call the lender to learn the actual amount due. Payment Beginning Amount Payment Interest Repayment of Principal Ending Balance 1. 5 6. -2 Total: 161,430 The total of the Interest column indicates the amount of interest expected to be paid over the life of the loan, and the sum of the Payment column details the total paid ($161,430) to purchase your $145,750 home. This is an amortized loan, because its payments contain: O Only the principal that must be repaid O Both interest and principal O Only accrued interest
On December 31, 2001 Historic Bank had long positions of 200,000,000 Japanese Yen and 50,000,000 Swiss Francs. The closing exchange rates were ¥92/$ and SF 1.89/$. (keep 4 decimal places in your computation) Question 1 : What is the value of delta in dollars for Japanese Yen position? Question 2 : What is the value of delta in dollars for Swiss Francs position? Question 3 : Over the past 500 days, the 25th worst day for adverse exchange rate changes saw a change in the exchange rates of 0.78 percent for the Yen and 0.30 percent for the Swiss Franc. What is the expected VAR exposure on December 31?
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