The spot rate of the Australian dollar (AUD) is 0.7315 and the 1 year forward rate is 0.7189. Which of the following statements is most accurate concerning the forward premium of the AUD? O The forward rate exhibits a discount of 0.017% O The forward rate exhibits a premium of 1.7% O The forward rate exhibits a premium of 0.017% O The forward rate exhibits a discount of 1.7% You purchase a call option on Australian dollars (AUD) with a strike price of $0.70 at a premium of $0.08 per unit. There are 100,000 units in this option contract. This option matures in 3 months; if the AUD's spot rate is $0.74 at the time the option is exercised, what is your total profit for this 100,000 unit contract? O $4,000 O $0.04 O $4,000 O $0.04

A manufacturer is planning to sell a total of 500 machines to both foreign and domestic firms. The price the manufacturer can expect to receive for the machines will depend on the number of machines made available. It is estimated that if the manufacturer supplies x machines to the domestic market and y machines to the foreign market, the machines will 5y sell for 1200 - 3x + pesos per unit domestically, and 7 2x 2200 - 2y + pesos per unit abroad. 7 the rev (b) Evaluate Ry (100, 400) and interpret this value in the context of the problem.

Suppose that the one-year interest rate in Australia is 7.66% p.a. and in New Zealand, it is 8.63% p.a. Suppose also that the current spot rate is EAUD/NZD=1.1578 and the current 12-month forward rate is FAUD/NZD=1.046. Assuming there are no transaction costs, which of the following is true? Selected Answer:     A. An arbitrager can make a profit of 0.1054 AUD for every AUD he borrows to invest in NZD assets.   B. An arbitrager can make a profit of 0.1054 NZD for every NZD he borrows to invest in AUD assets.   C. An arbitrager can make a profit of 0.0186 AUD for every AUD he borrows to invest in NZD assets.   D. An arbitrager can make a profit of 0.0186 NZD for every NZD he borrows to invest in AUD assets.   E. An arbitrager cannot profit in this scenario as covered interest parity holds The correct answer is B please explian it and show your calculation process

(1) Explain the uncovered interest parity condition. (2) Suppose that you have $1 to invest. You have two investment options: one is to buy 1-year U.S. bonds that offer a market interest rate of 8% per year, and the other is to buy 1-year Japanese bonds that pay 12% interest per year. Assume that you decide to buy the Japanese bonds with $1. This time you don't enter into a forward contract to protect your investment from possible fluctuations in the exchange rate. Today's exchange rate is ¥100: $1, and the expected future exchange rate that will prevail one year from today is ¥98: $1. (You can answer this question step by step as follows.) O Calculate the proceeds from investing in the U.S. bonds for one year. ® Calculate the proceeds from investing in the Japanese bonds for one year. ® Convert the yen-denominated proceeds into dollars using the future exchange rate one year later.

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What is Mean Reversion in general and specifically relative to commodity-based currencies? Is this strategy one you would or would not adopt relative to the two other strategies available for trading commodity-based currencies?

Given that: C = 0.7Y + 100 Consumption Investment %3D I =-40r + 1000 Money supply Transaction-precautionary demand for money Speculative demand for money Ms = 4300 L1 = 0.2Y L2 = -40r + 230 %3D %3D ;Value of interest rate (r) is 10 O 12 O 60

Martin Shrood purchased a vacant lot outside of London for £13,500, because he heard that a shopping mall was going to be built on the other side of the road. He figured that he could make a bundle by puttingin a fast-food outlet on the site. As it turned out, the rumor was false. A sanitary landfill was located on the other side of the road, and Martin’s land was worthless. (£ denotes the British monetary unit, pounds sterling.)*Required: With respect to the economic characteristics of costs, what type of cost is the £13,500 that Martin paid for the vacant lot?

An investor located in the US has two investment options for her $105,000. One option is the US, where the interest rate is 3.5%. The other option is Australia, where the interest rate is in. The current exchange rate is $1 US buys 1.6 Australian dollars and the future expected exchange rate is $1 US buys 1.62 Australian. If the investor believes the the two future values are the same, what is in? O 3.10% O3.95% O4.79% 5.25%

What is the calculation to get 187,641?