Please use this information to answer the question below: AUS firm's expected Accounts Receivables from Canada due in 90 days Current Spot Rate (SR) for CAD The 90-day Forward Rate for CAD If the US firms uses a forward hedge, estimate the cost of hedg O $100,000 O-$100.000 O $60,000 O $60,000

Please use this information to answer the question below: AUS firm's expected Accounts Receivables from Canada due in 90 days Current Spot Rate (SR) for CAD The 90-day Forward Rate for CAD If the US firms uses a forward hedge, estimate the cost of hedg O $100,000 O-$100.000 O $60,000 O $60,000

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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Concept explainers

Exchange Rate Risk

It is the possibility that the value of a currency will fluctuate in the future. In the wake of globalization, business establishments have increasingly ventured into international markets. The volume of international trade has prospered excellently in the near past and is expected to be more affluent in the future. The use of exchange-traded derivative financial instruments has been multi-folded to provide for the requirements of various MNCs and offshore potential investors. Most banks and financial institutions have helped integrate the global economies. Our Government has introduced some bold and extreme measures to fulfil the purpose behind the fiscal, industrial, and monetary policies. The enactment of GST is a huge step towards streamlining the taxation system of the country. Owing to Covid-19, this aspect of corporate risk management has become critical.

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An Austra ian companv has decided to issue a 90-dav bank-accepted bill domestically to raise additionafunding of S18000 to buy equipment. If the bank has agreed to discount the bill at a yield of 8.5% per annum,which of the following values will the face value of the bill be closest to? a.S17913.31 b.S17641.62 O c.S18744.81 d.$18377.26 e.s17630.48 f.s18000.00 g.S18382.50.
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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$700,000, how can an investor take advantage of the situation without taking undue risks? Ignore transaction costs and income taxes
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You Answered Correct Answer Samuel Samosir works for Peregrine Investments in Jakarta, Indonesia. He focuses his time and attention on the U.S. dollar/Singapore dollar ($/S$) cross- rate. The current spot rate is $1.39/S$. After considerable study, he has concluded that the Singapore dollar will appreciate versus the U.S. dollar in the coming 90 days, probably to about $1.44/S$. He is considering trading options to profit and has the following options on the Singapore dollar to choose from Option choices on the Singapore dollar: Strike price (US$/Singapore dollar) Premium (US$/Singapore dollar) -0.132 Call on S$ -0.047 $1.371 $0.047 Put on S$ $1.37 Samuel decides to buy call options in Singapore dollars. What will be Samuel's profit/loss if the ending spot rate is $1.286/S$ in 90 days? Keep all decimal places. $0.006
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Using below information: Current spot rate CAD1 = USD 0.95 Annual interest rate in Canada: 2% Annual interest rate in US: 6% Applying International Fishier Effect theory, what should be the expected future spot rate for CAD? Use 4 numbers after decimal point.

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