Suppose you have been offered a new job in Australia in one year and you want tomake sure your investments give you similar spending power. If the interest rate inSingapore is 1.80 % and Australian interest is 0.35 %, the AUD/SGD spot exchangerate is 0.97 (0.97 AUD for 1 SGD), finally the one year ahead expected inflation inAustralia is 3.80 % and for Singapore is 2.90 %. The real interest in Australia wouldbeif Singapore real interest rate is 0.30 percent.Your Answer:Answer

A real loan fee is a loan cost that has been changed in accordance with eliminate the impacts of…

Suppose you have been offered a new job in Australia in one year and you want to make sure your investments give you similar spending power. If the interest rate in singapore is 1.80 % and Australian interest is 0.35 %, the AUD/SGD spot exchange ate is 0.97 (0.97 AUD for 1 SGD), finally the one year ahead expected inflation in ustralia is 3.80 % and for Singapore is 2.90 %. The real interest in Australia would if Singapore real interest rate is 0.30 percent. ur Answer:

Suppose you have been offered a new job in Australia in one year and you want to make sure your investments give you similar spending power. If the interest rate in singapore is 1.80 % and Australian interest is 0.35 %, the AUD/SGD spot exchange ate is 0.97 (0.97 AUD for 1 SGD), finally the one year ahead expected inflation in ustralia is 3.80 % and for Singapore is 2.90 %. The real interest in Australia would if Singapore real interest rate is 0.30 percent. ur Answer:

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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Assume the following information: Current spot rate of New Zealand dollar = $.41 Forecasted spot rate of New Zealand dollar six months from now = $.43 Six month forward rate of the New Zealand dollar = $.44 Six month interest rate on New Zealand dollars (annual rate) = 8% Six month interest rate on U.S. dollars (annual rate) = 9% What are the potential profits in USD or NZD from interest rate arbitrage if you can start with 1,000,000 USD or 1,000,000 NZD? a. 13.27% b. 5.87% c. 58340.20 NZD d. $115,271
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Suppose that right now, the market price of one Chinese yuan (CNY) is USD 0.15; that is, one can purchase or sell CNY1.00 for USD0.15. The proportional standard deviation for CNY in terms of USD is 20%. The Chinese riskless return rate over a two-year period is projected to be 8%; U.S. ratesover the same period are 2%. What is the dollar value of a two-year European put on a single yuan if the exercise price of the put is USD0.20?
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Use the following information for the next 8 questions. UCD (U.S. based MNC) will receive 250,000 euros in one year. The spot exchange rate today is $1.20 per euro. It observes that1. The one-year interest rate for euros is 8%, and the one-year interest rate for U.S. dollars is 3%.2. In the option market, there is one-year call option or put option available. Both options have the same exercise price of $1.18 per euro, and a premium of $0.02 per euro.3. In the forward market, the one-year forward rate exhibits a 5% discount from the current spot exchange rate. 4 If UCD decides to use options contracts to hedge its receivables, UCD shall
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Samuel works for Peregrine Investments Indonesia. He focuses his time and attention on the U.S. dollar/Singapore dollar ($/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: Call on S$ Put on S$ Strike price (US$/Singapore dollar) $1.35 $1.45 Premium (US$/Singapore dollar) $0.047 $0.065 Samuel decides to sell put options on Singapore dollars. What is Samuel's break-even spot rate at maturity?
29. You are analyzing a potential 3-year investment in Switzerland. It will require an initial investment of SFr 540,000.00 and is forecasted to yield cashflows of SFr 540,000.00 for the next 3 years. As of today, the spot exchange rate is $0.6667 / SFr and the rates of inflation expected to prevail for the next year in the US is 7% and in 8% in Switzerland. Your estimated cost of capital in dollars is 16.7%. What is the NPV in dollars? (a) $425,391.63 (b) $245,409.63 (c) $638,055.54 (d) $548,449.87 (e) None of the above
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