The following information is available to a Zambian trader:i. Percentage spread given for Zambian kwacha per US dollar is 0.1%. The ask rate for Zambian kwachaper C$ dollar is K9.526C$ 1.2780/US$ii. Canadian dollars per US dollarii. Kwacha per US dollarK8.524/USŞa) Calculate the bid rateb) Determine if there is any opportunity for arbitrationc) Explain How a Zambian trader with K1, 200,000 can use this amount to benefit from the inter marketarbitrage?What will be the profit or loss for the trader?

The bid rate is the rate at which a trader is ready to buy or invest in a stock and the ask rate is…

The following information is available to a Zambian trader: i. Percentage spread given for Zambian kwacha per US dollar is 0.1%. The ask rate for Zambian kwacha per C$ dollar is K9.526 ii. Canadian dollars per US dollar iii. Kwacha per US dollar a) Calculate the bid rate b) Determine if there is any opportunity for arbitration c) Explain How a Zambian trader with K1, 200,000 can use this amount to benefit from the inter market arbitrage? What will be the profit or loss for the trader? C$ 1.2780/US$ K8.524/US$

The following information is available to a Zambian trader: i. Percentage spread given for Zambian kwacha per US dollar is 0.1%. The ask rate for Zambian kwacha per C$ dollar is K9.526 ii. Canadian dollars per US dollar iii. Kwacha per US dollar a) Calculate the bid rate b) Determine if there is any opportunity for arbitration c) Explain How a Zambian trader with K1, 200,000 can use this amount to benefit from the inter market arbitrage? What will be the profit or loss for the trader? C$ 1.2780/US$ K8.524/US$

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 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
Suppose that you are a finance manager at a U.S. based MNC. On January 1st, you anticipate you will need to purchase C$170,000.00 (Canadian dollars) worth of supplies from a Canadian supplier in March using Canadian dollars (C$). The current spot rate for the Canadian dollar is $0.73. In order to lock in spot rate for this exchange, you purchase a futures contract specifying C$170,000.00 at $0.73 per Canadian dollar with a March 10th settlement date. On the settlement date, your MNC will need to pay (U.S. dollars) for the C$170,000.00.
Mrs Ireen Ndhlovu kaleji has US$ 2,000 which she is planning to exchange with Zambian Kwacha. She inquires from the bank and is given the following information: Ask price Bid price 1 USD K10 K9.5 1 ZWM K0.806 K0.79 The other information showed the following: Ask price Bid price 1 ZMW US$ 0.10 US$ 0.105 1 ZMW ZAR 1.241 ZAR 1.268 a) Explain to Mrs. Kaleji the differences of the quotations given above and the differences between BID and ASK prices in exchange rate b) How much Zambian kwacha is Mrs Kaleji expecting to be given by the bank if she sells US$ 2,000 and How much…
Please explain how the bolded option is the correct answer
You have the following spot bid and ask rates between the Australian dollar (AUD), the Danish krone (DKK), and the Japanese yen (JPY): Bid Ask JPY 14.804/DKK JPY 14.952/DKK JPY 72.229/AUD JPY 72.955/AUD DKK 4.5722/AUD DKK 4.6182/AUD Which of the following is the closest to the arbitrage profit that is possible at these rates? a. 4.11% b. 3.70% c. 4.60% d. 4.44% е. 4.85%
cYou observe that the exchange rates for Japanese Yen at Tokyo Bank are given as follows: bid = JY101/$; ask = JY102/$, whereas they are given at New York Bank as: bid = $ 0.0097 Y; ask = $ 0.0098y. J J Calculate the arbitrage profit for $1 million (up to nearest cents, e.g., 100.23)
An Omani businessman has just completed transactions in UAE. He is now holding AED 880,000 and $120,000 wants to convert it to Omani rial (OMR). His currency dealer provides this quotation: Bid Ask USD/AED 0.2722 - 08 OMR/USD 0.3846 - 04 What are his proceeds from conversions?
A foreign exchange dealer in Kigali Rwanda provides quotes for the spot and 3 month forward rates for the RFr against the dollar. Bid (RFr/U$$) ask (RFr/U$$) Spot 4.0040 4.0200 3-month forward 3.9690 3.9888 Required: a. What would you receive in dollars if you sell RFr 5 million at the spot rate? b. What would it cost in dollars to purchase RFr 20 million forward 3 month? When would you make payment?
how to solve this?
Assume the following bid and ask rates of the pound for two banks as shown below: Bid Ask Royal Bank of Canada CS 0.871 C$ 0.876 Westpac Bank in Australia CS 0.879 C$ 0.899 What is the arbitrage profit per Australian dollar? Group of answer choices There is no arbitrage opportunity. C$ 0.023 C$ 0.003 C$ 0.028 C$ 0.008
The graph below shows contingency net profits for a buyer of a Swiss franc (CHF) straddle, in which the exercise price is $1.09 per CHF, the call and put premiums are $0.03 and $0.04 per CHF, respectively. Explain why the buyer's net profit per unit is V-shaped, and why his break-even points are at the future exchange rates of $1.02 and$1.16. Net profit per unit S1.09 $1.02 $1.16 S1.09 Future spot rate -$0.07
Suppose the spot exchange rate for the U.S. dollar is CAD$1.01 and the six-month forward rate is CAD$1.03. a. Which is worth more, a U.S. dollar or a Canadian dollar? multiple choice 1 U.S. dollar Canadian dollar b. Assuming absolute PPP holds, what is the cost in the United States of an Elkhead beer if the price in Canada is CAD$3.10? (Round the answer to 2 decimal places. Omit $ sign in your response.) Cost in U.S dollar $ c. Is the U.S. dollar selling at a premium or a discount relative to the Canadian dollar? multiple choice 2 Discount Premium d. Which currency is expected to appreciate in value? multiple choice 3 Canada dollar U.S. dollar e. Which country do you think has higher interest rates—the United States or Canada? multiple choice 4 U.S. Canada please do all parts

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