Question 24 5pts Assume the following information: You borrowed $1,000,000 from the US Bank and want to invest that money in the UK market in 90 days. Current spot rate of pound = $1.30p 90 day forward rate for pound in the b Forward market = $1.28p 3 month deposit rate in US = 3% annual 3 month deposit rate in UK = 4% annual If you use b covered interest arbitrage for a 90 day investment, what will be the amount of Net US $ profit which is riskless you will have after 90 days? around $91, 240 around $97,400 around $95, 700 around $93,700

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Question 1 You are considering uncovered interest arbitrage between the pound (GBP) and the US dollar (USD). The following data is available to you: Funds available: 2 million GBP Spot exchange rate: 1.40 USD per GBP Spot exchange rate one year ago: 1.26 USD per GBP USD 3 month interest rate: 2.32% GBP 3 month interest rate: 0.75% a) Calculate the profit that would be made if the exchange rate remains at its current level in 3 months' time. b) How would the profit figure change if the US dollar continues to weaken at the same rate as it has done over the previous year?

Grammal Question 20 As a currency trader, you see the following quotes on your computer screen: Exch. Rate Spot 1-month 2-month 3-month 6-month JPY/USD 98.75/85 12/10 20/16 25/19 45/35 Suppose you want to swap out of JPY 10,000,000 and into USD for 6 months. What are the cash flows associated with the swap? O Receive 101,266$ now and pay 101,523$ in 6 months Receive 101,163$ now and pay 101.729$ in 6 months Receive 101,266$ now and pay 101,729$ in 6 months Receive 101,163$ now and pay 101,523$ in 6 months

Exercise 2 (LO 2) Spot rates and forward rates. On January 1, one U.S. dollar can be exchanged for eight foreign currencies (FC). The dollar can be invested short term at a rate of 4%, and the FC can be invested at a rate of 5%. 2. Calculate the 180-day forward rate to buy FC (assume 365 days per year).

• • • 4. Your company has to make a US $1 million payment in three months' time. The dollars are available now. You decide to invest them for three months and you are given the following information - - - the US deposit rate is 8% per annum the sterling deposit rate is 10% per annum the spot exchange rate is $1.80/pound the three month forward rate is $1.78/pound Where should your company invest for better returns? a. b. Assuming that the US interest rate and the spot and forward rates remain as in the original question, where would you invest if the sterling deposit rate were 14% per annum?

Q1-14 Suppose the expected spot rate (after 1 year) for euros (in terms of dollars) is $1.50, the current interest rate on euro deposits is 4.5%, and the current interest rate on dollar deposits is 5.5%. What current spot rate would satisfy the uncovered interest parity (UIP) equation?   a. $1.65 b. $1.50 c. $1.25 d. $1.485

Exercise 2 (LO 2) Spot rates and forward rates. On January 1, one U.S. dollar can be exchanged for eight foreign currencies (FC). The dollar can be invested short term at a rate of 4%, and the FC can be invested at a rate of 5%. 3. If the spot rate is 1 FC = $0.740 and the 90-day forward rate is $0.752, what does this sug- gest about interest rates in the two countries?

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QUESTION 3 Suppose you deposit $2.500 in a CD paying 8% interest, compounded every other month. How much will you have in the account after 15 years? Round your answer to the nearest cent. below is an example how to do problem mple 4 A certificate of deposit (CD) is a savings instrument that many banks offer. It usually gives a higher interest rate, but you cannot access your investment for a specified length of ime. Suppose you deposit $3000 in a CD paying 6% interest, compounded monthly. How much will you have in the accbunt after 20 years? In this example, Pa-$3000 1=0.06 -12 the initial deposit 6% annual rate 12 months in 1 year since we're looking for how much well have after 20 N=20 years 0.06 So P 3000 1+ 12 3D%2993061(round your answer to the nearest penny) %3D Let us compare the amount of money earned from compounding against the amount you would carn from simple interest Yars Simple Interest 6% compounded (S15 per month)monthly 0.5% each month 33900 $4800 $5700 $4046 55…