QUESTION ONEa. Explain three (3) theories on why firms pursue international business.b. Suppose GT Bank quotes the following spot rates:c.Kenyan shilling per cedi: KES 24.30 - 27.00South Africa rand per cedi:ZAR 3.48 3.74What should be the bid-ask quote for KES/ZAR?You are expecting to receive $1,000,000 from a US client in 60 days which would beconverted into cedis. The current spot rate of the dollar is C4.00/$ but the cedi isexpected to depreciate over the 60-day period. If the cedi depreciates by 5%, whatwould be the amount receivable in cedis?이Using a well-labelled diagram, discuss how the impact of higher domestic inflation, higherdomestic interest rate, rising domestic income levels and imposition of taxes by theGovernment of Ghana affect the value of the cedi.eDiscuss the characteristics that make a currency system "perfect"

Question (d)Using a well-labelled diagram, discuss how the impact of higher domestic inflation,…

Answered: QUESTION ONE a. Explain three (3)…

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter7: International Arbitrage And Interest Rate Parity

Section: Chapter Questions

Problem 1BIC

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Assume the bid rate of a Canada dollar is A$.271 while the ask rate is A$.273 at Bank A. Assume the bid rate of the Canada dollar is A$.265 while the ask rate is A$.266 at Bank B. Given this information, what would be your gain if you use A$2,500,000 and execute locational arbitrage? That is, how much will you end up with over and above the A$2,500,000 you started with? Group of answer choices A$ 46,992 A$ 65,789 - A$ 65,789 A$ 18,315 - A$ 46,992
Q1. Analytical Question: China Eastern, headquartered in Shanghai, needs US $5,000,000 for one year to finance working capital. The airline has two alternatives for borrowing: a. Borrow US$5,000,000 in eurodollars in London at 7.25% per annum. b. Borrow HK $39,000,000 in Hong Kong at 7.00% per annum, and exchange these Hong Kong dollars at the present exchange rate of HK$7.8/US$ for U.S. dollars. At what ending exchange rate would China Eastern be indifferent between borrowing U.S. dollars and borrowing Hong Kong dollars? Show your calculation and discuss.
Suppose the quoted spot rates are EUR0.951/USD and JPY141.52/USD. You are a U.S. citizen that has recently graduated and applied for three corporate treasury roles with the following MNCs and are weighting up the offers they have provided you: Adidas (German): EUR129, 000 p.a Asics (Japan): JPY19,360,000 p.a. Nike (US): USD135,000 p.a The cost of a basket of goods in the US is currently USD 11,737. Rank these job offers from least to most attractive. To accept the job offer you must reside in the country in which the company operates. Suppose you're indifferent between living in Germany, the US. and Japan. Choose the correct option a. Nike, Adidas, Asics b. Adidas, Nike, Asics c. Adidas, Asics, Nike d. Asics, Nike, Adidas e. Asics, Adidas, Nike f. Nike, Asics, Adidas g. All offers are equally attractive
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You are the trade advisor to a multinational company with an investment of US1,500,000. The following are the rates quoted on the FOREX market. US $ to Euro 1.22/€ US$ to pounds 1.84/£ Euros to pounds 1.54/£ Calculate the cross rate and determine if a profit opportunity exists. What is the value of that profit if you decide to trade with the US$1.5 million?
Assume the bid rate of an Yen dollar is $ 1.8 while the ask rate is $ 3.5 at Arab Bank.Assume the bid rate of an Yen dollar is $3.4 while the ask rate is $5.7 at Palestine Bank. Given this information, what would be your gain if you use $8876.7 and execute locational arbitrage? =8876.713.5^ * 3.4b =8876.7/5.7^ * 3.5c =8876.7/3.4^ * 1.8d = 8876.7 /3.5^ * 5.7
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Hello Can you assist with problem 3b. Then assist with question 5. Question 3b is needed to answer question 5
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